Skid Steer Financing: A Complete Guide to Equipment Loans and Leasing
Skid Steer Financing: A Complete Guide to Equipment Loans and Leasing
Skid steer financing can help contractors, landscapers, construction companies, farmers, and other businesses acquire essential equipment without paying the entire purchase price upfront. Whether you're buying a new skid steer, financing a used machine, or replacing an older model, the right financing option can help you manage cash flow while putting productive equipment to work.
In this guide, we'll explain how skid steer financing works, what lenders typically consider, how much it can cost, and what to look for when comparing equipment financing options.
What Is Skid Steer Financing?
Skid steer financing is a form of equipment financing that allows a business to purchase or lease a skid steer while making payments over an agreed period.
Instead of paying the full cost upfront, you spread the expense across scheduled payments. Depending on the lender and financing structure, you may be able to finance new or used skid steers from equipment dealers, manufacturers, auctions, or private sellers.
Common options include:
- Skid steer equipment loans
- Equipment leases
- Commercial equipment loans
- Dealer financing
- Manufacturer financing
- Equipment lines of credit
The best structure depends on your business finances, the equipment you're purchasing, how long you plan to use it, and your ownership goals.
Why Finance a Skid Steer?
A skid steer can be an important revenue-producing asset for a business. However, purchasing one outright can require a significant amount of capital.
Financing can offer several potential advantages.
Preserve Working Capital
Instead of using a large portion of your available cash on equipment, financing allows you to distribute the cost over time.
This can leave capital available for:
- Payroll
- Fuel
- Materials
- Insurance
- Repairs and maintenance
- Marketing
- Project expenses
- Other equipment purchases
Maintaining sufficient working capital can be particularly important for seasonal businesses and contractors managing multiple projects.
Get Equipment Into Operation Faster
Waiting until your business has accumulated enough cash to purchase a skid steer could delay an equipment upgrade or prevent you from taking on certain jobs.
Financing may allow qualified businesses to acquire the machine sooner and begin using it on projects.
Upgrade Older Equipment
If your existing skid steer requires frequent repairs or has become unreliable, financing may provide a way to replace it with newer equipment.
A newer machine may offer updated technology, improved operator features, and potentially lower maintenance requirements.
Match Equipment Costs With Revenue
When equipment generates income, spreading the purchase cost over several years can allow the expense to align more closely with the period in which the equipment is being used to generate revenue.
How Does Skid Steer Financing Work?
The application process is generally straightforward.
###1. Choose Your Skid Steer
Start by identifying the equipment you need. Consider the machine's:
- Purchase price
- Make and model
- Year
- Operating hours
- Lift capacity
- Horsepower
- Attachments
- Condition
- Expected useful life
2. Determine Your Financing Requirements
Decide how much you want to finance and whether you plan to make a down payment.
You should also establish a monthly payment range that fits your business's cash flow.
3. Apply With a Lender
The lender may request information about your business, credit history, revenue, bank accounts, tax returns, and the equipment you're purchasing.
4. Review Your Financing Offer
If approved, carefully review the proposed:
- Interest rate
- Repayment term
- Monthly payment
- Down payment
- Fees
- Collateral requirements
- Personal guarantee requirements
- Prepayment conditions
5. Purchase the Equipment
Once the financing agreement is finalized, the lender typically provides funds according to the terms of the transaction.
6. Make Regular Payments
You then make payments according to the financing schedule.
How Much Does Skid Steer Financing Cost?
The cost of financing depends on numerous factors. There isn't one standard rate or payment that applies to every borrower.
Important factors include:
- Skid steer purchase price
- New or used equipment
- Equipment age
- Equipment condition
- Loan term
- Interest rate
- Down payment
- Business credit
- Personal credit, when applicable
- Annual business revenue
- Time in business
- Lender requirements
For example, financing a $75,000 skid steer with a down payment will have a different payment structure than financing the full purchase price. Similarly, extending the repayment term can reduce the monthly payment while potentially increasing the total interest paid.
That's why businesses should evaluate total financing cost, not just the monthly payment.
New vs. Used Skid Steer Financing
Both new and used skid steers can potentially be financed, but financing terms may differ.
Financing a New Skid Steer
New skid steers are often available through equipment dealers and manufacturers that may offer financing programs.
Advantages can include:
- New equipment
- Manufacturer warranty
- Longer expected service life
- Latest features and technology
- Potentially lower initial maintenance needs
New equipment can have a higher purchase price, so it's important to determine whether the additional cost makes sense for your business.
Financing a Used Skid Steer
Used equipment can provide a lower-cost alternative to purchasing new.
A used skid steer may allow a business to acquire the capabilities it needs while borrowing less money.
However, lenders may evaluate:
- Equipment age
- Operating hours
- Condition
- Maintenance records
- Market value
- Expected useful life
- Resale value
If you're buying a used skid steer, consider having the equipment inspected before completing the transaction.
Skid Steer Loan vs. Equipment Lease
Two common ways to finance equipment are loans and leases.
Skid Steer Equipment Loan
With an equipment loan, you borrow money to purchase the skid steer and repay the lender according to an agreed schedule.
Once the financing has been fully repaid, ownership generally remains with your business, subject to the terms of the agreement.
An equipment loan may be appropriate for businesses that expect to keep the skid steer for many years.
Skid Steer Equipment Lease
With an equipment lease, your business makes payments to use the skid steer for a specified period.
Depending on the lease structure, you may have options at the end of the term, including returning the equipment, renewing the lease, or purchasing the machine.
Because lease structures differ, review the ownership provisions, end-of-term options, fees, and total cost carefully.
What Do Lenders Look For?
When reviewing a skid steer financing application, lenders may consider several aspects of your business and financial profile.
Credit History
Your business credit history can affect approval and financing terms. Some lenders may also consider the owner's personal credit.
Time in Business
Established businesses typically have more operating history for lenders to evaluate. New businesses may still qualify but could face additional requirements.
Revenue and Cash Flow
Lenders may review revenue, bank statements, financial statements, or tax returns to determine whether the business has sufficient cash flow to support the proposed payments.
Equipment Value
The skid steer itself can be an important part of the financing decision, particularly when the equipment is used as collateral.
Down Payment
Depending on the lender and borrower profile, a down payment may be required. Some financing programs may offer low- or no-down-payment options for qualified applicants.
Can You Get Skid Steer Financing With Bad Credit?
Bad credit does not automatically prevent you from obtaining skid steer financing.
Some equipment-finance providers work with borrowers who have less-than-perfect credit. However, credit challenges can affect the terms available.
Depending on the situation, a lender may require:
- A larger down payment
- Higher interest rates
- Additional documentation
- A personal guarantee
- Additional collateral
If you have poor credit, compare the total cost of financing rather than focusing solely on whether an application is approved.
Can Startups Finance a Skid Steer?
Yes, some new businesses can qualify for equipment financing.
A startup may have limited business credit or financial history, so lenders may consider other factors, such as:
- Owner credit history
- Industry experience
- Available capital
- Business plan
- Existing contracts
- Expected revenue
- Down payment
- Equipment value
A well-prepared application should clearly explain how the skid steer will be used and how the business expects to generate revenue to support the financing payments.
What Documents Are Needed for Skid Steer Financing?
Documentation varies between lenders, but you may be asked for:
- Business registration information
- Government-issued identification
- Equipment purchase quote
- Equipment specifications
- Business bank statements
- Financial statements
- Business tax returns
- Personal tax returns
- Credit information
- Proof of insurance
- Personal guarantee documentation, if required
Some lenders offer streamlined applications for smaller equipment purchases, while larger transactions may require more extensive underwriting.
How to Improve Your Chances of Approval
Before applying for skid steer financing, prepare your financial information and equipment details.
Consider these steps:
- Review your credit reports.
- Organize recent business financial statements.
- Gather bank statements.
- Prepare tax returns if required.
- Obtain a detailed equipment quote.
- Determine how much you can comfortably afford each month.
- Calculate your expected equipment-related revenue.
- Compare financing offers from multiple providers.
- Review all fees and conditions before accepting an offer.
Good preparation can make the financing process smoother and help you understand your options.
What Should You Consider When Comparing Skid Steer Loans?
The lowest monthly payment isn't necessarily the lowest-cost financing option.
Interest Rate
Compare the interest rate offered by each lender. A lower rate can reduce borrowing costs when other terms are comparable.
Loan Term
A longer term can reduce monthly payments, but it can also increase the total amount of interest paid.
Down Payment
Determine how much cash you'll need upfront and how that affects your working capital.
Fees
Ask about application, origination, documentation, administrative, and other potential fees.
Prepayment Terms
Find out whether the lender allows early repayment and whether prepayment penalties apply.
Collateral and Guarantees
Understand whether the equipment serves as collateral and whether a personal guarantee is required.
Total Repayment Amount
Calculate the total amount you'll pay over the entire financing period rather than evaluating the monthly payment alone.
Financing a Skid Steer for Construction Businesses
Skid steers are commonly used for a wide variety of construction applications, including:
- Site preparation
- Grading
- Excavation
- Demolition
- Landscaping
- Material handling
- Snow removal
- Road construction
- Utility work
- Residential construction
Attachments can significantly expand a skid steer's capabilities. Depending on the machine, businesses may use buckets, augers, trenchers, grapples, breakers, brush cutters, forks, and other attachments.
When financing a skid steer, consider whether the equipment and attachments will allow your business to take on additional work.
Skid Steer Financing for Landscaping Businesses
Landscaping companies can use skid steers for grading, soil movement, material handling, excavation, clearing, and other tasks.
For seasonal landscaping businesses, cash-flow planning is particularly important.
Before financing equipment, consider:
- Seasonal revenue fluctuations
- Expected annual equipment usage
- Maintenance expenses
- Insurance
- Storage
- Fuel
- Operator costs
- Existing equipment payments
A financing payment should fit within the company's overall operating budget, including slower business periods.
Is Skid Steer Financing Tax Deductible?
The tax treatment of financed equipment depends on your business structure, jurisdiction, equipment use, financing arrangement, and applicable tax rules.
Depending on the circumstances, businesses may be able to claim deductions or depreciation associated with qualifying equipment.
Tax regulations can be complicated and change over time, so consult a qualified tax professional before relying on potential tax benefits when choosing a financing structure.
Frequently Asked Questions About Skid Steer Financing
What credit score is needed to finance a skid steer?
There is no universal credit-score requirement. Each lender establishes its own underwriting criteria, which may include credit history, revenue, time in business, equipment value, and other financial factors.
Can I finance a used skid steer?
Yes. Many equipment-financing providers offer financing for used machinery. The equipment's age, condition, hours, value, and expected useful life can affect available terms.
Can I finance a skid steer with no money down?
Some lenders may offer financing with little or no down payment to qualified borrowers. Requirements vary based on the lender, equipment, and applicant.
How long can you finance a skid steer?
Financing terms vary. The available term may depend on the equipment's age, purchase price, useful life, lender policies, and borrower qualifications.
Can a new business get skid steer financing?
Potentially. Startups may qualify for equipment financing, although lenders may place greater emphasis on owner credit, industry experience, available capital, projected revenue, guarantees, or down payment.
Can I finance skid steer attachments?
Depending on the lender and financing program, attachments may potentially be included in an equipment financing transaction. Ask the lender how attachments are treated before finalizing your purchase.
Final Thoughts on Skid Steer Financing
Skid steer financing can give contractors, landscapers, construction companies, and other businesses a way to acquire productive equipment while spreading the cost over time.
Before choosing a financing option, compare more than the monthly payment. Look at the interest rate, repayment term, fees, down payment, total repayment amount, ownership structure, collateral requirements, and prepayment conditions.
It's also important to make sure the equipment fits your business's actual workload and cash flow.
By comparing multiple financing options and understanding the full cost of the transaction, you can make a more informed decision about financing your next skid steer.