Construction Equipment Finance and Leasing

After a slowdown of four years, the construction equipment industry in India is seeing a steady revival. Growth figures are expected to reach $5 billion by 2020 from $2.8 billion today, according to ICEMA. The industry’s revenue estimates are touted at $22.7 billion and the sale of construction equipment is expected to increase to approximately 100,000 units by 2020. According to the Equipment Leasing and Finance Association, businesses, governments, and other organizations spent $1.5 trillion on new equipment in 2015.

Infrastructure development is the government’s top priority to improve economic growth. Prime Minister Narendra Modi rolled infrastructure projects worth $60 billion in the last six months. The government plans to launch the National Infrastructure Investment Fund with an initial corpus of $6 billion, while the 12th Five-Year Plan allocated $ 1 trillion to the infrastructure sector, which is expected to create huge demand for construction equipment. Such a scenario provides outstanding opportunities for construction and infrastructure businesses in India to grow and scale new heights.

Construction Equipment Loans and Leasing Solutions
Equipment purchases are the most critical purchases made, markers of continuing growth for capital-intensive businesses. Buying or leasing equipment is not simply looking out for a loan solution to buy machines or trucks. Equipment financing requires attentive planning so that companies can avail all the advantages of new opportunities, tax savings and growth.

The first and foremost questions business should ask when looking for an equipment loan or lease agreement is when and for how long you will need the equipment. If the equipment is a direct contributor to profit-generation for your company, an equipment loan is the best option. If your need is short or mid-term, leasing equipment is preferable. A lease is less expensive and helps keep you asset-light. A loan gives the benefits of tax depreciation, while a lease allows you to expense payments.

The next factor to consider is your company’s working capital and cash-flow situation. In the long-term, your company’s financial and tax figures form an important consideration for your equipment purchases. Companies with a robust history of profitability and a good network of clients will find easy access to equipment loans. On the other hand, companies that are cash strapped will find leasing to be a preferable solution, where no lump sum amount has to be put forward for use of equipment.

Obsolescence is another factor that should be taken into consideration when purchasing equipment. If the equipment you are looking to buy can be replaced by a better, improved model in the near future, leasing becomes a better option. By leasing, the equipment is reverted to the lessor at the end of the lease agreement, giving your company freedom to buy or lease new equipment.

This piece of Expert Advise has been contributed by Zoukloans, which offers customized debt finance solutions to small businesses and professionals.  

ZoukLoans provides innovative construction equipment financing, equipment leasing, business and working capital loans and leaseback solutions to small and medium-sized businesses in the construction, food processing, heavy, industrial and manufacturing industries.

About ZoukLoans
Zouk LoansOur expert team of bankers, credit and risk analysts works on creating innovative loan offerings based on pricing structures, industry focus, due diligence, customer performance, and risk assessment to create SME industry-specific products. Our loan offerings are faster, personalized, more cost-effective and borrower-friendly, driven by superior credit modelling, data analytics and technology-based fulfilment.

Financing Through ZoukLoans
ZoukLoans is India’s first small-business centric online ender offering a one of a kind marketplace where you can explore loan options from 65 + banks, NBFCs and financial institutions in one place. Our lending partners include infrastructure finance giants such as SREI-BNP Paribas, L&T Finance and GE Capital.

ZoukLoans provides a variety of equipment financing options for companies seeking an affordable way to gain access to quality equipment. ZoukLoans typically provides construction equipment loans from Rs 5 lakh to Rs 50 crore at competitive interest rates of 12-14%. We offer leasing solutions at 10-12%. We follow a collateral-specific approach where the equipment serves as collateral and no additional security has to be provided. With ZoukLoans you get the advantage of:
• Loans ranging from 80-100% of the asset value depending on customer profile;
• Loans to all profiles of customers including first-time users and first-time buyers;
• Loan up to 65% based on KYC documents on select assets;
• Pan-India reach and distributional channel helps us cover the length and breadth of the country.
• Best-in-market interest rates and flexibility in EMI payments.
As a finance professional with a focus on small business customers, we are best placed to provide the most valuable and customized solutions for your equipment and working capital needs.