The seek for financing by startup contractors for construction equipment seems to have increased this year, as mentioned by First Capital Business Finance president, Dustin Doi. Many of these startups are rejected by banks, because with less than two years in the business, they are usually considered as “high risk” which leaves them without many financing possibilities.
Even with the pandemic, this year has been busier when compared to years before for First Capital Business Finance. Popular items have been dump trucks, bucket trucks, utility body trucks, compact excavators and soil compactors. First Capital Business Finance offers an average construction equipment loan of about $48,000 at 48 months. The loan terms will be determined by the purchaser’s income level and by his credit stand.
Negative credit is not a limitation in order to access financing as First Capital Business Finance offers a lot of challenging credit. As even Doi himself says “if you have really bad credit, we still have programs for that, too. You just have to either have equity in the deal, meaning a larger down payment, or you have to have some stronger income.”
Positive Year: Increase in Financing Demand Compared to 2020 | First Capital Business Finance
Equipment Finance Agreements
Instead of an interest rate, these agreements use a “factor rate” that can range from 5,5% to the high-20s and are especially designed to bring accessible financing options to these high risk borrowers that in many cases are turned down by the banks. These EFA require a monthly payment for the length of the agreement term and cannot be early paid by the borrower. “We definitely like to see the specs on it,” Dustin Doi says. “And if the guy has banged up credit, let’s say, but he has some good bank statements, we ask them to send a couple months’ bank statements to support the income.” Business income is one of the most important factors in considering a loan or EFA, Doi says. That’s why First Capital Business Finance uses an advanced algorithm that makes sure there are no liens in the business or any other issue by performing a credit check that will help filter the applications. Doi also mentioned that the deals range from $53,000 to $75,000 and that at least 75% of those are for used equipment. To access these deals a one-page application is required. Also, an invoice bill of date of the equipment or a web link to the equipment is needed in order to successfully apply.
Positive Year: Increase in Financing Demand Compared to 2020 | First Capital Business Finance 
