Construction equipment financing
According to the Construction Equipment Association (CEA), in a press release dated the 29th of April 2019, the UK’s construction sector occupies top spot in Europe with a 24% share of the total market.
Not only is the UK Europe’s biggest manufacturer of construction equipment but it is also ranked 5th in the world and earns an estimated £13 billion in sales. Within the UK, at least, particularly favourable construction equipment financing rates significantly help maintain a buoyant market.
There are a number of major infrastructure projects fuelling this impressive performance, but it also continues to be stimulated by countless housing projects – large and small – across the country.
How well-placed is your own construction company?
Whether you are a large, medium or small construction firm, much of what you do depends on the equipment you have at your disposal.
A lot of that equipment is neither cheap, nor does it have a long, useful working life. There always seems to be new or replacement equipment needed to be able to fulfil your contracts.
Where is that money going to come from? Your balance of working capital may be an obvious choice, but there are typically just as many very good reasons for not tapping into that finely managed source of funding.
External funding for your construction equipment purchases then becomes a possibility – and there are a number of options you might want to pursue:
- the assets you already own represent a wealth of stored-up value;
- asset finance offers a way of releasing that value, while still leaving you the exclusive use of the assets concerned;
- effectively, you are borrowing by way of offering the assets you own as collateral against further borrowing;
- this not only gives any potential lender the confidence and reassurance of the security you have pledged but is also likely to result in a lower rate of borrowing – making what you pay for your construction equipment financing rates still more attractive;
- but there are assets other than the equipment you already own which may also open the door to the additional finance you need;
- those assets lie in the invoices receivable from your customers – many of whom may be notoriously tardy when it comes to paying on construction project phases;
- a specialist invoice factor, however, may agree to advance a cash sum against a proportion – up to 95% – of the value of those invoices receivable;
- this gives you the immediate access to the cash which you may want to invest in construction equipment and gives you the ease and convenience of repaying the factor’s advance as and when the invoices are paid;
- when you have looked for external financing for your construction business in the past, you might have turned straight to the bank with which you do business;
- since banks have become somewhat more wary of business lending in recent years, you might want to take advantage of the network of contacts we have built up here at Peak Business Finance to identify the competitive rates offered by those banks still eager to lend – not to mention the wide variety of alternative financing solutions which we may also be able to suggest.
Favourable construction equipment financing rates – such as those we here at Peak Business Finance may be able to help you secure – may open the door to the funding you require for investing in the machinery and equipment your next construction projects require.