What is Heavy Equipment Financing?

What is Heavy Equipment Financing? – A Complete Guide

What is Heavy Equipment Financing

Big dreams shouldn’t always come with big sacrifices and will discuss the benefits of Heavy Equipment Financing. 

As a business owner, the logistical demands of your business can seem insurmountable, but with the right financing partner, it doesn’t have to be. 

For many businesses, heavy equipment financing can be a great way to get the tools and machinery necessary to operate without making hefty investments upfront. 

Having access to the right tools and technology will help your business grow and succeed over time, and heavy equipment financing is a great option for entrepreneurs who need help acquiring new pieces of machinery or equipment for their businesses. 

Whether you’re planning to own or lease trucks, excavators, forklifts, and other dream equipment for your new business or expanding on your existing heavy equipment inventory, heavy equipment financing can help make the process easier and more cost-effective. 

Sounds like a lifeline, isn’t it? 

This step-by-step guide on Heavy Equipment Financing will help you understand the process of securing an equipment loan fast to purchase your business’s core equipment without spending a fortune upfront and paying only monthly installments over a fixed term.

We’ll explore the different types of equipment financing, the benefits of heavy equipment leasing, and how you can get started with a funding partner, you can trust.

Let’s explore what exactly qualifies as heavy equipment and how heavy equipment financing works. 

What qualifies as Heavy Equipment

What is Heavy Equipment Financing?

Need heavy equipment for your business? 

You don’t readily need to pay the lump sum amount to get the equipment. 

Instead, you can get financed for the purchase.

Heavy equipment financing is a type of loan dedicated to business-related purchases of heavy machinery and associated tools. These loans are specialized and differ from traditional loans in terms of repayment period, interest rates, and other criteria. 

Using heavy equipment finance helps companies leverage their financial position without limiting their cash flow. It’s not only easier to purchase the equipment you require, but also helps in preserving your credit and having better liquidity. 

What qualifies as Heavy Equipment?

Heavy equipment refers to machines, tools, and vehicles that are large and used for industrial or manufacturing purposes.

Heavy equipment includes: 

  • Bulldozers 
  • Forklifts 
  • Excavators 
  • Loaders 
  • Cranes 
  • Dump Trucks 
  • Raw Material Trucks
  • Reach Stackers 

Your business credit can come to great use when it comes to financing heavy equipment for your business. You can take new or old equipment on rent or loan and use older equipment as collateral to secure the deal.

As you can imagine, the flexibility is unbound. And so are the options of choosing the best deal with the lowest interest rates that work perfectly with your credit score.

Businesses with idle or underutilized equipment can also explore options to leverage their existing assets, ensuring maximum efficiency and returns. 

This is especially helpful for aspiring chefs, food enthusiasts, and enterprising foodpreneurs, who have ever dreamt of owning a food business, but the thought of financing made them freeze.

Heavy equipment financing has broken barriers for them to enter the food industry with a mobile truck or catering operation. If you share a similar vision, this newfound accessibility will certainly add fuel to your entrepreneurial fire. With all its possibilities, heavy equipment financing fosters an environment of creativity & culinary innovation.

Heavy equipment financing extends its benefits beyond the realm of food trucks. Construction, agriculture, manufacturing, and transportation are the most common industries that leverage this financing type to acquire specialized machinery. No matter what industry you’re in, you might qualify to finance equipment that can help you achieve your goals.

Every business has unique needs, and a standardized solution may not work for everyone. But don’t worry, even if you have a limited budget, with BitX by your side, you can still explore a range of customized financing options tailored to meet your specific financial requirements.

Heavy Equipment vs. Equipment

Heavy equipment loans or financing are not the same as equipment loans; heavy equipment is a segment in itself. 

Earth movers and large equipment required at the construction site are heavy equipment. 

Think of construction, and you will automatically think of bulldozers, cement mixers, drills, farm equipment, forklifts, jackhammers, dump trucks, pile boring machines, pile driving machines, etc. 

You’re right. These are all heavy equipment.

Then what is NOT heavy equipment? 

Think of equipment such as a printing machine, lawn mower, bike, car, or delivery van. These are not big enough to be called heavy equipment.

Ultimately, with trucks, it can be slightly confusing if it is heavy equipment or not. It depends majorly on the specific features and intended use of the truck.

What is equipment financing & How is it different from heavy equipment financing?

Equipment financing is the umbrella of all financing paths & all types of equipment. You are right if you think heavy equipment financing comes under equipment financing itself. But let’s say you were to seek a financing option; what are the differences between these financing options that you should consider?


Equipment financing may cover your needs for heavy equipment financing at times. While equipment financing can be perfect for lending refrigerators, cars, AC, pumps, and so on, it does not specialize in lending for heavy equipment. When it comes to financing powerful machinery used for mining, construction, and other heavy-duty applications, it’s best to use specialized financing options for heavy equipment.

Lending considerations:

The terms of the deal differ for different lenders. If you seek equipment financing for heavy equipment, you may have to deal with lenders who are not industry experts. But heavy equipment financing lenders are adept with associated risks and requirements. They can also be a plus point if you seek guidance along with financing options.

Costs & terms:

If you are eyeing heavy equipment, your deal calls for higher amounts and longer terms. Isn’t it? A financing option that deals with light equipment is certainly not your go-to option here.

What is commercial equipment finance?

Commercial equipment financing is a type of loan that allows businesses to purchase, lease, or rent equipment they need without using up all their capital. It’s a more flexible financing option than bank loans as it can offer longer repayment terms and low-interest rates. The lender takes the cost of the equipment you want to purchase as collateral against the money they lend you.

Let’s assume you own a bakery. You want to scale your business and require commercial-grade ovens and mixers. The financing you require here is commercial equipment financing.

Beyond baking, commercial equipment financing also works for hospitality, fitness & recreation, retail, technology, healthcare, professional services, agriculture, and manufacturing industries. 

The major difference between heavy equipment financing and commercial equipment financing is the industry-specific considerations. Heavy equipment financing considers equipment resale value, maintenance costs, and potential risks associated with the line of work & environment. Whereas, for commercial equipment, the terms of your agreement will be more generalized.

Why Heavy Equipment Financing Is The Ideal Solution To Your Business

The benefits of heavy equipment financing can vary depending on the nature of your business. However, what follows are the most common ways through which heavy equipment financing can aid businesses:

Conserves Cash Flow

Businesses require a steady flow of funds to cover various expenses, such as payroll, marketing, inventory maintenance, and daily operations. Investing in expensive equipment without proper financing can negatively impact your business’s financial stability.

Offers Tax Benefits

Offers Tax Benefits

This is subjective to which financing option you can secure. However, on a more generalized level, It can help you with depreciation deductions and interest expense deductions.

Flexible Payment Options & Plans

Starting from the tenure of the financing contract to the type of payment (seasonal payment, balloon payment, and variable interest rates), the flexibility in the payment options helps you pick the most suitable offer for yourself.

Upgraded Equipment & Bigger Business Prospects

Upgraded Equipment & Bigger Business Prospects

Buying the latest machinery can boost your execution and gains with upgraded performance. This may not be possible with your old equipment or, even worse, “no equipment.” Using better equipment can help you nail bigger business prospects, making heavy equipment financing a highly profitable plan.

How to understand which type of Heavy Equipment Financing will work best for you?

Before even applying for a loan, you should have eligibility in these three categories:

  • A credit score of 600
  • Your business should be registered for at least a year
  • Annual revenue of min. $250,000

Let’s say your account is perfect, considering the business registration and the annual revenue requirements, but your credit score is not on point – no need to fret. You can still find some great financing options by adding additional collateral, getting a reliable party to co-sign the agreement with you, and making a down payment.

There are four key factors that you should consider while evaluating heavy equipment financing options:


A strong credit score will help you secure low-interest-rate loans or leases. If your credit score is poor, a loan may be out of the park. Then the lease should work as the best option.

Equipment type

Based on the equipment type, it is easier to find some financial institutions that specialize in lending for those equipment types.

Term length

Short-term loans can be an option if you’re worried about the interest rates. But here, you’ll have to settle for paying higher amounts in installments. While longer-term options can relieve you with lower amounts in installments, the interest rate of the installments will go up. The key here is to find a middle ground.

Tax implications

Leasing heavy equipment can help you with your tax liabilities. You can present this on your financial reports and claim depreciation deductions on your taxes. While taking a loan can add to your tax liabilities.

Let’s dive deep into understanding the intricacies of securing a loan vs. a lease for your heavy equipment needs.

Loaning vs. Leasing a Heavy Equipment

Simply put, loaning is the traditional way to secure a loan and purchase equipment upfront. You take out a loan from the lender, which you will pay back with interest over time, plus any other fees that may be associated with the loan. With loaning, you own the equipment outright once it’s paid off.

Leasing, on the other hand, is more like a rent-to-own agreement. You’ll pay an initial fee (usually lower than a loan) and then make monthly payments until you own the equipment or decide to return it. 

Leasing allows entrepreneurs to explore different locations or test a market. Let’s take, for example, leasing a food truck.

The process of leasing a food truck with monthly installments also comes with an opportunity to purchase the food truck by the end of the term. 

But let’s say, four months into the leasing contract, you don’t need the food truck anymore. In that case, you have the freedom to terminate the contract and go separate ways.

Or, if your lease lasts for two years, fulfilling the total payment, then you have an opportunity to acquire the food truck under your ownership.

But for many, the food business is a long-term vision. In this scenario, you may want to start with owning the food truck. A loan makes this possible. 

With a loan, you can finance your desired equipment, and start as a rightful owner of the equipment, while paying the monthly installments until the end of the loan term.

Deciding on whether to go for a loan or lease?

Let us see which factors you should consider making this decision easier:

Leasing: Pros 

  • Down payments are smaller, and sometimes no down payment is required at all.
  • Based on the agreement, your lease can be flexible, and you can extend the agreement, buy the equipment or return it.
  • The repair and maintenance costs are handled by the owner, usually.
  • For business owners with bad credit, loans can be a challenging option. Therefore, leasing is a more attractive and easier-to-secure option.

Leasing: Cons

  • It ends up being more expensive than a loan or short-term equipment renting.
  • It can get tricky to judge if the equipment is depreciating and, based on that, if the lease is getting more expensive than fair.
  • Likewise, it’s not a healthy financial option to show on your financial statement, as it harms your business credit profile.

Loan: Pros

  • Ownership of equipment lies with you
  • It helps build your business’s bottom line
  • Helps spread the cost of equipment over the long term, which brings stability to the business cash flow
  • No collateral is required, as your equipment serves as the collateral.

Loan: Cons

  • Higher interest rates than traditional loans. If you have a better credit score, it can help you get lower interest rates.
  • Repair and maintenance responsibilities lie on you.
  • Once you own the equipment, upgrading it to new equipment is challenging.

The time frame you require the equipment for and the number of equipment you require can be two essential things to think about before finalizing your decision. It may be obvious that even the stability of your business can play a role in deciding which financing option to go for.

Four Steps on how heavy Equipment loans work

Four steps on how heavy equipment loans work:

A heavy equipment loan can help you finance your agricultural equipment, construction equipment & even commercial vehicles. From application to completion of all installments, let’s understand what steps you need to take.

Step 1: Finalize which equipment and financial plan suits your business needs the best.

In this stage, once you finalize which equipment you require and where to source it, the next thing to do is calculate its lifetime value and the invoice cost. This will help you determine whether it is a profitable offer. If the cost of new equipment is too much to bear, then older equipment will be your feasible solution. 

You can compare different financing plans and preferably look for plans with no down payment. Yes, these types of financing options are available in the market.

Step 2: Next, you should collect all documents in place to apply for heavy equipment financing.

But what are the documents you require? This may vary, but the basic documents that are required to apply for a loan are:

  • Driver’s license 
  • Invoice of the equipment from the vendor or distributor 
  • Voided checks from your business account
  • Bank statements that show your past three months of cash flow
  • Financial reports of your business
  • Company’s tax returns documents

The application process is usually easy, and you can seek the help of a financing representative to guide you throughout the process. 

Step 3: Next, the financing institution will evaluate your ask based on these three factors:

  • Price of the equipment
  • Business credit score & personal credit score
  • Financial standing of the business

The loan you can take or the amount you can borrow, plus the interest rate, depends highly on this evaluation.

We suggest that you receive rates from a few lenders & compare to make sure you are getting the best deal.

Step 4: Finally, ascertain which financing offer gives you the best terms. 

But don’t forget to go over the payment schedule and other terms & conditions.

You can then approve the loan, and once the lender receives your approval, they can start with disbursement.

How can you secure heavy equipment financing with bad credit?

A year gone bad in business might have depreciated your credit score, or uncertain events might have hampered your prospects. There can be a zillion different reasons, but that is fine.

It can be troublesome & we get it. That is why BitX Capital has been helping people secure capital for their dream equipment with no history. Even if you are in a category of Credit B, C, or D, you deserve a fair financing option. 

Let us see what bad business credit means for financing your equipment:

  • Lender options are limited.

Securing loans from most traditional banks & financial institutions may not be an option here. 

  • Interest rates shoot up.

Your bad credit usually means a higher risk for the lenders. It is natural if you see financial institutions trying to make up for the risk by charging higher interest.

  • Add-ons over traditional deals.

In a place where you could have secured a deal with no down payment or collateral, bad credit may lead lenders to ask for more security with collateral or a balance with higher down payments. 

  • Shorter terms & higher monthly installments

Well, this is self-explanatory, and we have discussed it above. However, it’s on you to see whether your business can handle this cash flow.

Unsecured Heavy Equipment Financing – The BitX Promise

Unsecured heavy equipment financing can be a great option for business owners that are looking to purchase equipment without the need for history, fleet, authority, a down payment, or enough funds to buy the equipment outright. The advantage here is that the business can take ownership of the equipment once they leave the lot, which they can then use as collateral or a down payment for future equipment. 

At BitX Capital, we have developed a unique financing option for business owners that might not have access to traditional equipment financing. We offer personal and commercial term loan stacking (unsecured) that allows startup companies with no history or collateral to secure the equipment they need easily without any hassles. 

What is Personal-Term loan stacking, and how does it work?

Personal-Term Loan Stacking is a financing structure in which multiple business owners pool their resources to purchase equipment. This allows each business owner to be able to secure the equipment they require without the need for collateral or history. Each business owner is responsible for their own portion of the loan, and they can choose a repayment term that works best for them.

With our unsecured financing option, businesses have access to low-interest rates and flexible terms. Qualifications are also less strict compared to traditional lenders, so it’s easier for new business owners to take advantage of the opportunity. 

To qualify:

  • Startups welcome 
  • An individual with a minimum credit score of, 700 is required 
  • Verifiable personal income of >$50K  

Heavy Equipment Financing – Scams to avoid

If you started considering a financial option because they said it would be $1000 per month, but after the tedious process of setting everything in almost concrete, they said, “So, the total amount you’ll be paying will come to $1500.” 

You’ll be shocked, feeling cheated, and too tired to review the process with another lender. 

Do you wish to sidestep the potholes? Here are some crisp pointers that can save you most of the scams out there.

  • Companies often quote 5% interest rates with *, which means the interest rates only start at 5%, which is also rare. You can potentially land a 5-6% of interest rate only if your credit score and financial standing are TOO strong. Oh, and did we mention long years in business?
  • Most people get attracted by the claims of the lowest installment amount possible. Well, those are possible, but again rarely ever. You can try calculating the installment amount yourself. There are multiple online installment calculating tools for your aide. 
  • Ever heard claims like “This truck can be yours at a $1 buyout”? That may also mean you may end up paying 10% or even more by the end of the contract in interest. This is why figuring out the numbers from the start is crucial to land the right deal and not falling for scams. Because many people do fall & fall hard.
  • It’s best to habitually check the company’s reviews on Google before applying or inquiring about a loan or lease. It can save you time & money with most of the companies out there.
  • Automatic rollover of leasing contracts is a reality in the industry. So, make sure to read your contract carefully and look for such clauses where the onus of notifying lies on you.
  • Did someone ever tell you leasing is better than renting? Don’t believe them. Not yet. It is true that, in most cases, leasing is better than renting, but your case may be special. We look at your RPO paperwork and present to you the possibilities of both cases truthfully. And then the ball lies in your court to decide with all the information clearly stated.

Is it better to buy new or old equipment?

This is the first question that comes to mind before considering financing. If you wish to answer this for your business, then this list can help:

Benefits of getting new equipment:

  • More capable with upgrades
  • Less energy consumption
  • Increased productivity & output
  • Low maintenance cost
  • Low chances of equipment breaking down

Benefits of getting old equipment:

  • Low cost of the equipment
  • Depreciates lesser than new equipment

The need of your business can help you determine which equipment you should go for. Beyond that, if you have a financing partner that makes the process easier for you, you may not have to compromise your business goals.

Now that you may know which equipment to go for, it’s time to look at different financing options available in the market.

Heavy Equipment Financing Options

Heavy Equipment Financing Options

There are a variety of financing options available in the market for buying equipment. But just like every business is different, so are the financing options. Let’s explore the roadmaps to financing new heavy equipment further with the most prominent financing options available:

Equipment loans:

  • The amount that you can loan for heavy equipment ranges from $50,000 to millions of dollars.
  • Based on your creditworthiness, loan term, and business profile, the interest rates vary mostly between 5% to 20%. 
  • Assuming your credit score is extremely poor, the interest rates can increase. 
  • Depending on the loan amount, the contract term can be three years to 7 years or longer than that. The longer terms mean smaller installment amounts for you. 
  • But longer terms are more suited to equipment that demand extremely heavy financing.
  • Let’s say you need to finance a new excavator. Its price is $200,000. If your credit score is good and you obtain a loan term of 7 years with an 8% interest rate, then your monthly installments would be $3,073 approx.

Equipment leasing:

  • Is the loan expensive? The lease may be a better option as the monthly payments are lower than loan payments. The amount is calculated based on factors like equipment cost, lease term, residual value, and whether you can buy the equipment by the end of the lease.
  • You can see the installment amount you’re comfortable with and decide the term, ranging from 2 to 7 years.
  • Let’s say you decide to lease a bulldozer. The lender agrees to the monthly payment of $2,500 per month for a 5-year term. You may incorporate in your agreement that at the end of the term, you should have the option to buy the bulldozer for $20,000, that is, the residual amount.

Manufacturer financing:

  • Sometimes the equipment manufacturers can present great deals such as 0% interest rate or discounted rates to encourage you to buy. 
  • Often you’ll be asked to pay a down payment to secure these offers. And there are terms and conditions to qualify for these offers (as with any other financing option). 

SBA Loans:

  • If you are a small business owner, this loan option might be worth looking into. This U.S. Small Business Administration program is designed specifically to support small businesses.
  • Want a $50,000 or more loan amount? What about a repayment term extending to 25 years? And what if you get even interest rates lower than market rates? SBA loans typically offer all of these, provided you’re eligible for them. 
  • Let’s say you qualify for an SBA loan, and you loan $300,000 with a 10-year term for a 6% interest rate. As extraordinary as it may sound, you only need to pay $3,333 monthly in installments.

Asset-based financing:

  • Do you own older equipment or real estate assets you can use as collateral? Then this might be the perfect deal for you, in case you have a poor credit score.
  • In this financing type, the lender will evaluate the appraised value of your asset. The interest rates, loan amount, and term will depend based on your collateral asset.
  • Let’s say you own a property whose value is $500,000. You put it down as collateral to raise the loan amount for new heavy equipment. The lender may decide to loan you 70% of the value, which is $350,000. 

P.S. – The figures used in examples are only for your reference and by no means relate to real-world figures.

How big is the equipment financing industry?

In 2021, the equipment financing industry hit a mark of $1.16 Trillion. This figure is based on a 2022 Equipment Leasing & Finance Industry Horizon report. What made this possible was that 80% of firms that acquired software or any other form of equipment took the aid of financing tools in one form or another. 

We had discussed the popularity of leasing earlier, so it may not be shocking to know that leasing was the most common mode of payment for these acquisitions. 

But what does the boom of equipment financing mean for us anyway? Well, it means we have higher accessibility to equipment than ever before. This higher accessibility means bigger business opportunities. 

Improved medical equipment will lead to enhanced healthcare services if you are into the medical industry and draw a medical equipment loan based on commercial equipment financing options.

Also, this cash flow will directly impact technological advancements and result in more efficient solutions that help your business prosper.

BitX Capital is invested in your growth and offers competitive financing plans with rates that don’t dig holes in your pocket. If you are exploring financing options, given your credit score (strong or weak), we can help you evaluate different plans and advise you on what works best for you.


What credit score do you need to buy heavy equipment?

A credit score of 680 is always considered a strong start to secure the best heavy equipment financing deals. But if you have lower credit, such as 650, you can still secure deals with slightly higher interest rates. It might be challenging with a credit score under 600, but this is where BitX Capital can help you.

What is the interest rate on an equipment loan?

The interest rate can range from 5% to 20% or higher. When we say 5%, this is once in a blue moon if a business has a too strong financial standing and credit score. 

How long can you finance heavy equipment?

The term depends on various factors, such as the price of the equipment, the installment amount you are comfortable with, and the equipment itself. The most common terms for financing heavy equipment range from 3 to 7 years or longer. Sometimes the terms may run as long as 25 years.