Equipment financing problems

[mark686]

I have recently been trying to get financing for some larger equipment but I have either been rejected or been autherised for way to little. Anyone else had this problem and how did you finaly get the equipment financed?

[Decked]

I was 'behind the 8-ball" due to major breakdowns  with the old A model when I bought mine new (540D). Banks wouldn't touch a new one for me. I dunno if it can be done nowadays, but , I went with a lease-to buy deal that worked out very well for me. 10K down, $1000 a month for 60 months, then buyout was 10% of financed amount,and...all payments were 100% tax deductible. I was able to close the deal up 54 months into it.

[Northern Timber Harvesting]

What are you trying to finance? New, used, over $75k, good credit or bad, years in business, age of equipment. These things are very important to consider when looking for financing. There is a source for almost every situation. There are places that will finance old equipment to people that have bad credit and have not been in business very long, but if you have good credit, looking at newer equipment and good time in business, you have much better options.

[thenorthman]

I just went the bad way and mortgaged the house... granted I'm not into it much and should have it paid off by july...  That being said I still can't get a fuel card... so I either pay pump prices for on road or plan on bringing the fuel cans when I head north and stop at the bulk plant...

[mark686]

I just went the bad way and mortgaged the house... granted I'm not into it much and should have it paid off by july...  That being said I still can't get a fuel card... so I either pay pump prices for on road or plan on bringing the fuel cans when I head north and stop at the bulk plant...

unfortanatley I am unable to do that my mom owens the house and she whont part with it. I have tried to by it from her on a land contract  :-[

[lumberjack48]

This was yrs ago, i always leased with option to buy. Their responsible for breakdowns, your responsible for oil, fuel and rigging, this is on a skidder.
I personally would never buy a piece of equipment out right. I liked to use it for a few months before sighing a contract, i leased month to month. Back in 76 a lease a C5 was $1750. a month, the lease on my S8 IH was $1500. I leased a new JD 450 feller buncher for $2500. I had my S8 3 months and the motor went out. They brought me a new skidder to use while they fixed that one. The only money i put down was my first month lease payment. When i leased the S8 i didn't have 1500. i was starting over again. They took my snowmobile for the first month lease payment. If theres the will theres always a way, i was back in business. ;D

[Black_Bear]

The lease to own option is fairly common around here. A well written business plan may help your relationship with the bankers. It shows you are committed to the venture and gives the banker something tangible to look at. Without future hard numbers all they see is your past financial record and current credit rating. 

Collateral, other than the machine(s) being purchased, may help. If you have any wood under contract, a local mill may finance the equipment or land purchase, but that generally comes with a contract that requires the wood to be sent exclusively to that mill. In northern NH a particular bank is well known for their willingness and ability to work specifically with loggers. You may have to get away from home, but there may be a bank like this in your state or in your region.   

[mark686]

The lease to own option is fairly common around here. A well writtene  business plan may help your relationship with the bankers. It shows you are committed to the venture and gives the banker something tangible to look at. Without future hard numbers all they see is your past financial record and current credit rating. 

Collateral, other than the machine(s) being purchased, may help. If you have any wood under contract, a local mill may finance the equipment or land purchase, but that generally comes with a contract that requires the wood to be sent exclusively to that mill. In northern NH a particular bank is well known for their willingness and ability to work specifically with loggers. You may have to get away from home, but there may be a bank like this in your state or in your region.

there is one of my biggest down falls is the bussinss plan. I found a underwriteing company and they are going to help me with getting financed, they warantey service.

[Dom]

I can't blame your mother for not wanting to mortgage her house.
Try to avoid doing business with family in my opinion. Its one thing if your mother would be working with you and would have a bit of responsibility on the outcome, but she would only be the lein for your business. All the risk, and no gain. If the bank doesn't want the land contract as a secure lein, why would your mother?

Many people over here did business plans and would get financing from BDC and other institutions, local business groups can help with that.

Also, the bigger dealerships like Cat and JD can do financing.  GE Financial is another place, but they also scaled back on logging activities.
Financing can be had, but it requires work.  Also, once you get it, be sure to maintain your line of credit and other banking activities. Keep everything tidy and if you ever need a bit of a temporary bump in credit, simply communicating with the banker can get you what you need (sometimes). Like anything else, communication is key.

A few of my friends are commercial lenders, its a big business.

My 2 cents, which are now rounded to 0 cents in Canada.  :D
Dom

[mark686]

I think I found the solution to my problems  here it will cost me money today :'( to get it back tomorrow ;D they always say it takes money to make money. the institution that I am using will do all the paperwork and I can go and cut the paper they will need to get the job done 8)