The right forestry equipment can make all the difference to your logging company. Without the right equipment, it can be a challenge to collect and transport forestry resources efficiently. The catch is that forestry equipment can be expensive. If you don’t have the cash on hand, a forestry equipment loan might be the right solution.
Key Points:
- Get the equipment you need without shelling out tens of thousands of dollars.
- The right equipment can streamline your forestry operations.
- Move your logging business forward.
About Forestry Equipment Loans
Forestry equipment loans give logging companies an opportunity to acquire the required equipment without paying in cash. Instead, business owners can buy the equipment they need with the help of a loan. At the end of the loan repayment, you’ll own the equipment outright.
- Get the right equipment with the help of a loan.
- Forestry equipment loan opportunities vary based on the lender.
How Do Forestry Equipment Loans Work?
The basic mechanics of forestry equipment loans are similar to other types of equipment loans. Here’s a closer look at what to expect:
- Rates: Interest rates vary based on the market conditions, your unique credit situation, and the lender. Shop around to find the best rate options.
- Terms: The exact term options vary based on the lender. But you can typically find term lengths that range from one to seven years.
- Repayment: While some forestry loans require fixed monthly payments, others offer a seasonal payment schedule. Seasonal payments allow you to vary your payment based on the season, which likely means lower payments in slower months.
- Approval times: The lender you work with has a big impact on the approval timeline. Depending on the situation, you might find same-day approval or wait several weeks.
- Down payment: Some lenders require a down payment. Others offer to finance the total cost of the equipment.
“Far and away the best prize that life offers is the chance to work hard at work worth doing.” – Theodore Roosevelt
What Kinds of Logging Equipment Do Loans Cover?
The type of logging equipment covered by these loans varies based on the lender. But you can often find a financing option for the following logging equipment:
- Backhoes
- Bulldozers
- Cable pullers
- Chippers
- Composting equipment
- Cranes
- Debarkers
- Delimbers
- Earthmovers
- Excavators
- Feller bunchers
- Forestry equipment
- Forklifts
- Forwarders
- Grapple skidders
- Harvesters
- Helicopters
- Horizontal grinders
- Land clearing equipment
- Loaders
- Log loaders
- Log trucks
- Log trailers
- Lumberyard equipment
- Milling equipment
- Processing equipment
- Road graders
- Rough terrain forklifts
- Shaving mills
- Skidders
- Yarders
- Stump grinders
- Timber equipment
- Walking forest Mach
- Woodworking equipment
Are Loans Available for New and Used Forestry Equipment?
Yes, loans are available for new and used forestry equipment. However, most lenders tend to specialize in either new or used forestry equipment loans.
- New: Loans for new equipment might require a bigger down payment or better credit.
- Used: Loans for used equipment might call for an inspection of the machinery.
Is Collateral Needed for Forestry Equipment Loans?
Collateral is a pledged asset that the lender can seize if you don’t keep up with your payments. Not all lenders require collateral for forestry equipment. But some do.
- Benefits of collateral: Putting up collateral for a loan might lead to lower interest rates or other perks due to the lower risk for the lender.
- Disadvantages of collateral: If you cannot keep up with the loan payments, you stand to lose your collateral.
What Are the Benefits of Forestry Equipment Loans?
Taking out a loan for forestry equipment is a big deal. Here are some of the advantages:
- Plentiful financing options: A big selection of lenders in the space gives you many different financing options. With that, you can find the best fit for your situation.
- Locked-in costs: You can map out your equipment costs for years into the future.
- Get started without thousands of dollars upfront: You can continue logging without shelling out too much money upfront.
How Many Years Can You Finance Logging Equipment?
Term options vary based on the lender you work with. However, it’s common to find terms ranging from less than a year to over a decade. Longer terms might be available for extensive equipment purchases.
Who Offers Forestry Equipment Loans?
Many lenders offer forestry equipment loans. Here’s a look at some of the lenders in this space:
- Dealer financing
- Government Programs
- SLR Equipment Finance
- Balboa Capital
- Envision Capital Group
- Viking Equipment Finance
- Newtek
- Midland States Bank
How Much or How Little Can Be Financed Through a Forestry Equipment Loan?
The amount you can finance varies based on the lender and your unique financial situation.
- Low end: You may be able to finance as little as $50,000.
- High end: Some lenders allow you to finance millions of dollars worth of equipment. For example, you can finance up to $5 million with Midland States Bank.
How to Qualify for Forestry Equipment Loans
Like other types of loans, you’ll need to meet the lender’s qualifications for a forestry equipment loan. If you want to qualify, here’s what you need to know about forestry equipment financing.
Who Can Take Out Forestry Equipment Loans?
Forestry equipment loans are available to businesses of all sizes. But you’ll need to meet the lender’s requirements.
- Business entity: You must have an official business entity set up or have a DBA for your sole proprietorship.
- Licenses: If your location requires a business license for forestry, you must have the appropriate credentials.
- Time in business: Lenders may require new business owners to sign a personal guarantee for the loans. Additionally, new business owners may need to have a credit score of 600 or better. Established businesses on solid financial footing may be able to access financing without a personal guarantee.
- Financial overview: You may need to map out your plan for generating a profit with the equipment.
“Always look for the fool in the deal. If you don’t find one, it’s you.” — Mark Cuban, entrepreneur
Can You Qualify for a Forestry Equipment Loan with Bad Credit?
It’s possible to qualify for a forestry equipment loan if you have bad credit.
- Business credit: If you own an established business with a healthy financial picture, the business might qualify for the loan without any digging into your personal credit history.
- Collateral: If you are willing to put up collateral, the lender may agree to provide a loan even if you have bad credit.
Are Forestry Equipment Loans Available to Startups?
Forestry equipment loans are available to some startups. The owner of the business must meet the financial and credit score requirements of the lender to move forward. If your business if brand new, be prepared to sign a personal guarantee.
What to Expect When You Apply for a Forestry Equipment Loan
If you want to apply for a forestry equipment loan, here’s what to expect:
- Decide what you need: The right equipment can make all the difference. Do your research about the machines you need before applying for a loan.
- Shop around: Many lenders offer forestry equipment loans. Find a lender offering competitive rates for the equipment you want.
- Gather documents: When you find a lender, gather the documents you’ll need for an application. A few common required documents include business bank statements, equipment quotes, driver’s licenses, and credit information.
- Fill out an application: Many lenders offer an online application to streamline the process.
- Finalize the loan: If offered a loan, you’ll need to finalize the details with the lender. You have the option to back out until the contract is signed.
- Receive your equipment: When everything is finalized, you can receive your equipment and start using it immediately.
- Repayment: Many lenders expect a monthly payment. The amount due may change based on the season.
Alternative Financing Options for Forestry Equipment
A forestry equipment loan isn’t the only way to get your hands on the equipment you need. Here are some other options:
- Leases: You can lease forestry equipment. Many equipment dealers offer leasing options.
- Line of credit: A line of credit for your business can be used to purchase the necessary equipment.
- Asset-based lending: If your business has valuable assets, you can use these as collateral for an equipment loan.
“Money is like gasoline during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations.” — Tim O’Reilly, founder of O’Reilly Media
Final Word
Forestry equipment loans offer an opportunity to access the equipment you need for your logging business. As you consider your options, shopping around for the best equipment and the right lender matters. A little bit of shopping around can help you find the lender offering the best rates.
