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Here is what we know!

Updating excavation equipment is favorable when wishing to increase the efficiency and quality of your fleet. 

From a lending perspective, earthworks equipment represents an outstanding collateral value because of their long life and strong resale value.

Summary: Underwriting for excavation equipment and earth work equipment should be relatively easy to finance with good credit.

Let’s unpack the different lending options, structures, and rates, available for various credit composites when adding to a fleet.

About Your Author; Doug Fuller | 816.423.8021 |

President of SLS Financial, an accountant, former Board Member of one of the safest banks in America, and owner of multiple businesses.   

For more than 30 years he has assisted buyers and sellers of equipment with competitive finance and commercial lending programs.

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Preferred Financial Services Programs

Your Bank may provide financing for excavation equipment (however, not usually lease financing). A bank may also (but not always) require a larger down payment, albeit sometimes with lower interest rates, than Commercial Equipment Lenders.

Wells Fargo has a robust equipment financing division ~ we know because they, in part, underwrite us (SLS) and we offer their programs along with our own.

Next, Dealers often will provide financing options from lenders that have been vetted by them. These are usually reliable options.

Other commercial lenders ~ However, I do not recommend choosing a random online lender as often – you simply don’t know what you don’t know. 

At the end of the day … you may wish to contact us ( SLS Financial Services for lending, guidance, and direction.  

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For research into what pieces of equipment are the right choices to update, or add to your fleet, check out:

Financing Structures for Excavation Equipment

First ~ Let’s start with the typical and popular structures!

A 60-month term is very common and may be structured as a lease with a 20% TRAC Lease (simple language definition: a lease with a 20% of original cost end of term commitment) or a 60-month loan with a 20% balloon. The math (payment) on both is usually similar although the impact of depreciation might adjust the lease payment.

Lease and Loan terms can be as long as 84 months in some cases. 

Most commercial lenders provide terms from 24 – 60 months for both Leases and Loans.

Leases may be found in the following forms:

            Finance Lease – examples of which are a $1.00 purchase option (or some other bargain purchase option) and are treated as a loan for federal income tax and accounting purposes.

            True Leases – do not contain a bargain purchase option ~ yet may still contain a purchase option. 

            TRAC Lease – Terminal Residual Adjustment Clause. An IRS provision for some titled vehicles that allow for the expensing of payments when properly structured.

Is a loan or lease preferable? The answer is usually easy to conclude if we have the proper company financial variables. Financial information, like taxable income, liquidity, and the total of other equipment acquisitions in the year of acquisition are each an important part of the analysis. 

IRS Code Section 179 is a very important consideration in this analysis.

Next, let’s discuss credit quality.  

Here is how most business lenders will underwrite a commercial credit application. 



The credit evaluation process

Business credit providers have been well grounded in the 5 C’s of Credit for decades. And that foundational approach to credit remains today. The Infographic on the left gives a basic explanation of the key components that go into the underwriting process.

Think of the credit process as a big sliding scale. If a business has strong equity in the asset to be financed, more consideration can be given to personal credit challenges. If there is a long time-in-business and strong personal credit, more consideration can be given to equipment that has poor secondary market value or has little money invested up front. Each lender evaluates all of these criteria and determines their own requirements, exceptions and limitations.

At SLS, we take the entire credit picture in account when underwriting story credit transactions. Furthermore, we’ve never forgotten the owner behind the application and believe in a simple, transparent process. Should you have questions about our approach, we’d welcome a conversation any time.


Rates ~

Percent and Dollar

Please know that there are usually compelling rate options for A, B & C credits when acquiring this equipment class. 

As a general rule … the lower the risk perceived by the lender the lower the rate. 

  • For A Credit rates will usually range from 3.9% to 7.9%
  • For B Credits rates will usually range from 8% – 12.5%
  • And rates for the C Credit composite will usually be higher than these yields of course.

Also, it is noteworthy that Pre-Owned Drywall Cranes may also be readily financed. Rates for pre-owned cranes may be slightly higher … all else being equal.


Credit information needed / Underwriting

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Depending on the lender and, of course, the amount (dollars) involved, there are generally two approaches to underwriting financing for Excavation Equipment.

Application with financial disclosure (common)

  • Credit Application
  • Personal Financial Statement
  • Your most recent company financial statement. (balance sheet / profit & loss)
  • Last two years’ personal and business tax returns. 
  • Last two years’ end-business financial statements.
  • Equipment proposal or invoice.

Application only ~ or limited financial information disclosure.

  • Credit Application
  • Bank Statements
  • Equipment Proposal or Invoice
  • Other ~

Need More Information? Call: (816) 423-8021


Would you like to apply online? Click below!


Since 1986 SLS Financial has provided uncomplicated lending solutions for all types of assets. 

Contact us anytime to begin building a professional relationship with an industry leader.

Doug 816.423.8021

30th Anniversary


  • Thanks for explaining that it should be pretty easy to find financing for excavation equipment if we have good credit. My husband and I just bought some land that we need to excavate before we can start building on it. I’m glad I read your article because now I feel a lot better about finding excavation equipment to use.

  • I liked that you explained that it is important to have good credit when you are looking to finance or lease construction equipment. I would imagine that having good credit will alert the bank that you are good at keeping track of your finances and that they would then be more willing to work with you. I will be sure to always have good credit so that I will have options when it comes to financing or leasing.

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