Understanding Financing in the Aerial Lift Equipment Industry

Understanding Financing in the Aerial Lift Equipment Industry

March 28, 2024

Understanding Financing in the Aerial Lift Equipment Industry

You’ve decided to invest in aerial lift equipment, but you don’t quite know where to start with your purchase. We know how complex the financing process can be, so we created this handy guide to help you understand the different routes you can pursue. We’ll cover various areas, including:

What Does It Mean to Finance Equipment?

Financing involves getting funds for a particular activity, like purchasing equipment for personal or commercial use. These funds can be supplied by an individual or a financial organization, like a bank or leasing company.

Equipment financing refers to a lease or loan used to obtain equipment. Debt financing describes a loan from a bank or other financial institution. Generally, you must pay back the money obtained through debt financing on a predetermined schedule and with interest. Rather than paying the full equipment purchase price upfront, financing lets you spread out payments over a year or longer.

Essential Considerations for Equipment Financing and Leasing

You’ll have a few factors to consider during the financing process. Ask yourself these questions before determining the best financing option for your lift equipment.

1. How Long Do You Need the Equipment?

Think about the trajectory of your business and how long you’ll require the equipment. Where do you see your company in the next few years? What are your goals?

Perhaps you plan to use a particular aerial lift frequently for a prolonged period. Or, maybe you’ll require different lifts for different projects. Say most of your projects are indoors, but you want to start tackling more outdoor work. Can you use the same equipment, or should you purchase additional lifts?

If your business is quickly evolving, your equipment needs could rapidly change along with it. In that case, leasing could be more viable than purchasing.

2. What Is Your Monthly Budget?

Establish how much your business can comfortably spend before financing aerial lift equipment. Factor in your current expenses, the income you currently bring in and how much you anticipate bringing in.

While leasing provides significantly lower monthly payments than purchasing, it’s still important to account for your monthly budget. Rather than getting quotes and trying to factor them into your budget, figure out what you can afford first and work from there.

3. What Type of Aerial Lift Equipment Are You Looking For?

Consider the primary role of the aerial lift equipment. For example, if you routinely perform outdoor tasks like window washing, roofing, tree trimming and exterior painting, a boom lift is a must-have. For indoor applications like hanging signs and constructing ceilings, scissor lifts are ideal due to their lower reach capabilities.

Understanding Lift Equipment Financing Options

Understanding Lift Equipment Financing Options

You have a few possibilities when financing aerial lift equipment. Some possible avenues are:

  • Leasing: Leasing enables you to use the aerial lift for a specified duration in exchange for regular payments. Once your leasing period is up, you can either return the equipment, purchase it or upgrade to a newer model.
  • Loans: In a loan agreement, you borrow money from a bank or individual lender to purchase the aerial lift. You repay the agreed-upon amount — plus interest — over a preestablished period.

Understanding Leasing Options for Aerial Lift Equipment

Leasing is typically the best course of action when you plan to use the aerial lift equipment for one to three years, as this is often how long the contracts last. It’s also ideal if you don’t have cash on hand for a down payment. A lease could also be a more sensible alternative to buying if your business is growing rapidly. There are multiple forms of equipment leasing, such as:

  • Operating lease: An operating lease is a short-term agreement where you rent equipment for a set period. This duration is usually shorter than the equipment’s operational life. An operating lease typically covers servicing, maintenance and insurance. This option is suitable if you need an aerial lift for a limited time or a specific project.
  • Sale and leaseback: A sale and leaseback is a financial agreement where a business or individual sells a piece of equipment and then leases it back for an extended duration. In other words, they can use the equipment but no longer own it. A sale and leaseback agreement allows a business to convert capital tied to owned equipment into usable funds.
  • Capital lease: Also called a finance lease, a capital lease lets you use equipment for a specified duration. It also gives you the option of purchasing the equipment at the end of the term. Unlike an operating lease, you may also be responsible for equipment maintenance and insurance. If you need an aerial lift long-term or eventually plan to purchase one, capital leasing could be a feasible solution.

Understanding Debt Financing

Debt financing involves borrowing money from a bank or individual lender and repaying it later. A form of debt financing — such as a standard line of credit or bank loan — is likely more practical than leasing if you plan to use the equipment for three years or longer.

There are various types of debt financing, including:

  • Bank loans: As the name suggests, a bank loan is a type of debt financing where an individual or business borrows money from a bank. This loan usually includes regular installments and fixed interest rates over a set term. Banks often assess the financial situation of the individual or company before offering loan amounts and interest rates accordingly.
  • Lines of credit: A line of credit is a flexible loan from a bank or financial institution. It gives your business a revolving credit facility specifically for purchasing equipment. You can access funds when necessary and repay them over time. If you consistently require equipment replacements or upgrades for your projects, a line of credit makes sense.

The Benefits of Website and Online Services for Financing

When financing your aerial lift equipment, online services offer a simpler alternative to conventional in-person banking methods. Here are some ways online tools can streamline the equipment financing process:

  • Accessibility: Digital platforms make it seamless to access and monitor your financial accounts, activities and data. Tasks like managing business finances, transferring funds and reviewing transactions are easier than ever. You can access this information in real time. As a bonus, you can skip the extra paperwork and unnecessary visits to brick-and-mortar institutions, saving considerable time and effort.
  • Security: Online financial tools usually implement robust security measures to safeguard sensitive user data. These measures include multifactor authentication, encryption and secure data storage. You can also receive alerts for suspicious account activity and report them as needed.
  • Cost savings: Online financial services minimize the expenses that accompany traditional baking. You can skip the added fees from in-person transactions, checkbooks and paper statements. Many virtual platforms also provide rate discounts, reduced fees and competitive interest rates to help customers save money.

Explore Our Financing Options at Wellbuilt Equipment Inc.

Navigating equipment purchases and payments can seem daunting. Fortunately, Wellbuilt Equipment Inc. can make the process smoother. In addition to our aerial lifts for rent and purchase, our flexible financing and leasing program can help you obtain the equipment you need on your terms.

Browse our selection of aerial lift equipment and explore our financing options today. Feel free to contact us if you need assistance or have questions.

Explore Our Financing Options at Wellbuilt Equipment Inc.