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Explore your construction equipment financing options as a small contractor. Learn how to qualify, what lenders look for, and which funding solution fits your needs.
If you're a small contractor, you already know that big jobs require big tools—and big tools come with a big price tag. From backhoes to bulldozers, owning or upgrading equipment is one of the most capital-intensive parts of running a construction business. The good news? You don’t need to pay out-of-pocket to stay competitive.
Construction equipment financing makes it possible to get the machinery you need, when you need it—without sacrificing cash flow or growth potential. This guide breaks down what financing options exist, how to qualify, and how to choose the right approach for your business.
While large firms may buy heavy equipment outright, small contractors often can't afford to tie up working capital. Financing provides an affordable, strategic way to grow:
According to the U.S. Small Business Administration (SBA), equipment financing is a common tool for businesses looking to scale efficiently.
This is the most straightforward method. The loan is used to purchase specific equipment, which serves as collateral. Payments are typically made over 2–7 years.
Best for: Contractors investing in equipment with a long useful life.
Leasing allows you to use equipment for a fixed term with the option to purchase it later.
Investopedia’s guide on leasing offers more insights into how these agreements work.
Best for: Contractors who frequently upgrade or want minimal maintenance responsibilities.
For small or recurring equipment needs, a line of credit gives you flexible access to funds. Borrow what you need, when you need it—only paying interest on what you use.
Best for: Ongoing access to working capital or short-term needs.
Lenders evaluate several factors before extending credit. Fortunately, equipment-backed loans are among the most accessible types of small business financing.
Here’s what they’ll typically look for:
While a score of 600–650 can be sufficient, higher scores lead to better rates. Even with average credit, collateral helps reduce the risk for lenders.
Most lenders want to see 6+ months in business. However, new contractors may still qualify with strong personal credit or a co-signer.
Lenders will evaluate your monthly or annual business income to ensure you can support the loan or lease payments.
The make, model, age, and condition of the equipment matter. Some lenders avoid financing equipment older than 10 years.
To prepare, check out the SBA’s business loan requirements and gather key financial statements in advance.
When deciding between an equipment loan, lease, or line of credit, consider:
Also weigh tax advantages: financed purchases may be deductible under IRS Section 179, allowing you to write off the full purchase price.
Not all financing is created equal. Watch out for:
Always read the fine print, and compare offers from multiple lenders or financing platforms before committing.
For small contractors, access to the right equipment can be the key to competing on larger projects, reducing job site delays, and growing revenue. Financing gives you that access—without compromising your working capital.
Whether you’re looking to purchase your first excavator or expand your fleet, a well-structured financing plan can move your business forward.
Need help figuring out what option fits your situation best? Reach out to National Legacy Capital Group for a personalized consultation and fast, flexible solutions tailored to contractors like you.
Yes. Startups may qualify with strong personal credit or through leasing programs designed for new contractors.
Rates vary by lender, credit profile, and loan term—but often range from 6% to 15% for equipment-backed loans.
Some lenders offer approvals within 24 hours, and funding within 1–3 business days, especially with complete documentation.
Many equipment loans require 5–20% down. Some leases and business lines of credit may offer 0% down options.
