Equipment Line of Credit

Rental companies growing their fleet one unit at a time run into the same bottleneck: each new lift means a new application, new underwriting, new paperwork, and another two weeks waiting on an answer before the unit goes to work. An equipment line of credit solves that. You get a pre-approved funding capacity, draw against it each time you acquire a unit, and the lift goes in service without restarting the clock.

It's a different instrument than a straight equipment loan or a business line of credit, and it's worth understanding the distinction before you assume one structure fits all the ways a yard grows.

A pre-approved equipment line establishes a total credit limit against which individual equipment draws are taken. Each draw is typically structured as a separate sub-loan, collateralized by the specific unit funded on that draw. The line stays open, you take draws as you acquire units, and each sub-loan has its own term and payment schedule.

For a rental yard adding multiple units to the fleet across a single buying season, this structure removes the per-unit application friction. The underwriting happens once at line origination. Individual draws are processed faster, sometimes in a matter of days rather than the full one-to-two week window a new deal requires.

The floor and draw size parameters vary by lender and by the yard's financial profile, but the general range that works for aerial lift operations starts at $50,000 per draw with total line capacity scaled to the fleet's size and revenue. Operators with a demonstrable rental book and clean bank statements tend to qualify for larger lines with fewer restrictions per draw.

The equipment line of credit is primarily a tool for operators who buy more than one or two units per year. Independent rental yards adding scissor lifts and booms through the season, contractors who rotate iron in and out of the fleet as jobs demand, and businesses that pick up used units opportunistically when prices are right, all benefit from having pre-approved capacity standing by.

Electrical contractors, HVAC crews, and roofing operations that sub-rent lifts seasonally often decide at some point that owning makes more sense than renting. The transition from renter to owner typically means acquiring three to five units in the first buying cycle. An equipment line handles that batch without five separate applications. If you're running a crew that works on electrical contracting jobs and finds yourself renting 40-foot scissors every other week, the math on ownership usually closes fast.

Smaller operators buying one lift every couple of years won't see the same efficiency from a standing line. For those buyers, a single application on each unit is straightforward. The line makes the most sense when the cadence of acquisitions justifies keeping pre-approved capacity open.

Does an equipment line of credit show up on my balance sheet the same way an individual equipment loan does?

Each draw on the line is typically structured as a separate sub-loan, secured by the individual unit. Those sub-loans appear as term debt on the balance sheet. The undrawn portion of the line is a contingent liability, usually noted in disclosures but not carried as drawn debt until a draw is taken.

Can I use an equipment line to refinance lifts I already own?

Some line structures allow it, particularly if you're consolidating individually financed units. It depends on the lender and the line parameters. Worth flagging at origination if you're planning to bring existing units into the line over time.

What happens to the line if one of the units collateralizing a draw is totaled or lost?

Each draw is independently collateralized by its specific unit. If that unit is lost, the draw sub-loan is handled through insurance proceeds, the same as any collateralized equipment loan. The rest of the line and its other draws are unaffected.

Is there a fee to keep the line open if I'm not drawing from it?

Most equipment lines have a small annual or commitment fee to keep the capacity standing. That varies by lender and line size. For a yard that's actively buying, the cost typically compares favorably to the time and friction of running a new application for every unit.

How much can I get on an equipment line for a mid-sized rental fleet?

Line capacity is generally sized to your demonstrated revenue and the fleet's asset base. A mid-sized rental yard with a clean book of business and three months of solid bank statements might see a line costing on the order of $500k to $1k, sized to match typical quarterly acquisition volume. We work through the specifics once we see your numbers.