About Tractor Financing
Commercial loans can be used for a large range of things in day-to-day business operations. Many companies use commercial lenders to help them finance expensive machinery. Tractor financing is a big item that many construction companies look for. Tractor loans are one of the most popular types of commercial loans in commercial financing for construction companies and farms. Tractor financing falls under equipment financing for all lenders, and will have a varying interest costs, based on your credit, company financials, and history with the lender. Below, we discuss how to apply for tractor loans and tractor financing.
Applying For Tractor Loans
When applying for tractor loans/tractor financing, it’s important to keep a few fundamental criteria in mind, as they will impact how much the tractor loan will cost. You will want to make sure your business has sufficient cash flow to support the monthly payments on the tractor loan. Many commercial lenders look at the debt-to-service-ratio when giving out a tractor loan, which can be calculated by: cash flows divided by monthly loan obligations(payments). You will want to make sure this ratio comes out to at least 1.5, as that is what many lenders look for. However, the higher your DSC ratio, the better financing terms you will be able to secure from the lender, as lenders will be able to feel more secure providing tractor financing. In addition to this, you will want to make sure you have all of your personal and business financial information/records for the past year accurate and ready for review by the lender prior to applying for tractor financing. These include your business’s balance sheet, income statement, and tax returns.
Lenders For Tractor Financing
We have outlined a few companies ideal to get tractor financing from. It is important to work with a reputable lender that has a history of tractor financing and financing other expensive equipment for businesses. Some companies even specialize in working with small to medium sized businesses in providing machinery and tractor loans.
One of the most popular financing for small businesses in America is tractor financing. Tractors are being used for day-to-day operations in a large scope of industries, from farming to manufacturing, to mining. Tractor loans are offered by both banks and direct lenders. However, many small businesses have a hard time getting tractor loans from banks, and have to rely on direct lenders for tractor financing. Even though the rates are higher with direct lenders, the payback period is shorter, meaning there is less accrued interest in the end. Banks are seen to have a smaller annual interest rate, but because the terms are longer, the end interest the business ends up paying is generally just as high. Direct lenders for tractor loans usually offer unsecured financing, which is less risky for the business owner, as there is no collateral backing the loan.