Financing a skid steer for a small landscaping company and financing a fleet of excavators for a site work contractor are different conversations. As the amount grows, lenders spend less time on personal credit and more on the business itself. Knowing what they look for helps you get approved faster and on better terms.
1. Time in business and experience
Lenders want to see that the company has made it through slow seasons and changing markets. Years in business count, and so does the owner's experience in the trade. A contractor who ran crews for years before starting the business has a stronger story than the company's age alone suggests.
2. Bank statements and cash flow
For smaller deals, three to six months of business bank statements are often the main document. Lenders look for consistent deposits, healthy balances and few overdrafts. Construction cash flow is lumpy, so a strong season followed by a slower one is normal. It's the overall pattern that matters.
3. Financial statements
Larger requests usually need two to three years of business tax returns and year-to-date interim financials. Bigger contractors may be asked for a work-in-progress schedule or a backlog of signed jobs. Lenders look at:
- Revenue trend: growing, steady or declining, and why.
- Profitability: margins after labor, materials, fuel and equipment costs.
- Leverage: how much debt the company carries compared to its equity.
- Liquidity: cash and receivables available to cover slow-paying jobs.
4. Seasonality
Many contractors, especially in the Midwest, earn most of their revenue between spring and fall. Lenders who work with construction understand this, and some programs offer payment structures that account for slower months. Be upfront about your season. It's easier to structure a deal around it than to explain a slow quarter later.
5. Existing debt and payment history
A list of your current equipment loans and leases, with balances, payments and maturity dates, shows your total obligations. A track record of paying equipment loans on time is one of the strongest things you can bring.
6. The machine itself
The equipment is the collateral, so its value matters. Lenders look at year, make, model, hours and condition. Well-known brands such as CAT, Deere, Komatsu, Kubota and Bobcat hold their value well, which supports better terms. Older, high-hour machines usually mean shorter terms.
7. Owner credit and guarantees
Most lenders still review the owners' personal credit and ask for personal guarantees, especially for closely held companies. Strong business performance can offset a weaker score, but it helps to know where you stand before you apply.
8. Customers and contracts
If a large share of your work comes from one general contractor or municipality, expect questions about that relationship. Signed contracts that need the new equipment are a strong supporting document.
Checklist before you apply
- Three to six months of business bank statements
- Two to three years of business tax returns for larger requests
- Interim financials, and a backlog or work-in-progress schedule if you have one
- A list of the equipment you own and finance today
- The quote for the new machine, including serial number and hours if used
- A short note on what the equipment is for: a new job, replacing a machine or ending a rental
Planning an equipment purchase? Send us the details and we'll tell you what the deal will need, or see what we finance for contractors.