Working Capital vs. Equipment Financing

The crew is ready. The job is booked. You need a 60-foot boom on site in ten days and the question on the table is not whether to get it, it's how to pay for it. That distinction, working capital versus dedicated equipment financing, matters more than most operators realize, and it matters differently depending on what the lift will earn and what you need your cash to do between now and the end of the quarter.

Working capital is the money you use to run the business day to day: payroll, fuel, insurance, parts, the float that keeps you from sweating the gap between invoice and payment. Equipment financing is a separate instrument secured by the lift itself. Using the wrong one for the wrong job is one of the most common ways a profitable yard bleeds cash it didn't have to spend.

Dedicated equipment financing covers the acquisition cost of the unit itself: purchase price, delivery, any dealer-installed options. We fund boom lifts, scissor lifts, mast lifts, and the full aerial fleet, new or used, from a $50,000 floor with a core funded range past $100,000. The loan or lease is collateralized by the machine, which means the lender takes the lift as security and your operating cash stays untouched.

That collateral structure is what separates equipment financing from a line of credit. A line of credit is unsecured or secured by receivables; it is designed for short-term cash needs, not for long-life assets that will be depreciating over five to seven years. Putting a $150,000 boom on your line of credit and then drawing that line down for payroll two months later is the fastest way to turn a good piece of iron into a cash-flow problem.

Consider a used 60-foot boom at $120,000. Fund it over 60 months with equipment financing and the monthly payment lands in a range that a single long-term contract can cover. Your working capital stays intact for fuel, maintenance, and payroll. The lift earns the payment and, after month 60, you own a unit that still has years of run rate left.

Pull $120,000 out of operating cash instead and you've stripped the yard's buffer. One unexpected bill, one delayed customer payment, and you're back at the lender anyway, this time for emergency working capital at terms that aren't nearly as clean as an equipment note would have been.

For rental companies and contractors running multiple units, the math compounds. Funding each piece of iron through dedicated equipment financing preserves the working capital line for what it was designed to do, and lets you add units without draining the account that keeps the lights on.

Can I use a working capital loan to buy a lift and then refinance it into equipment financing later?

You can, and we've seen operators do it. But you'll carry the higher-rate working capital cost until the refi closes, and some lenders won't refinance a unit that was purchased with unsecured working capital funds. The cleaner move is to start with equipment financing on the front end.

My business line of credit has room. Why would I still use equipment financing for a $90,000 scissor lift?

Because drawing $90,000 off a revolving line ties up capacity you may need for payroll, fuel, or a supplier deposit. Equipment financing is a separate facility secured by the lift, so the line stays available. You also get a fixed monthly payment rather than a revolving balance with a variable rate.

How does equipment financing affect my working capital line at the bank?

Equipment loans typically show up on the balance sheet as a separate long-term liability, not as a draw against a revolving line. This usually has a smaller impact on your borrowing capacity than most operators expect. Many banks view properly structured equipment debt as neutral to positive because it's secured by a depreciating hard asset.

Do I need to have zero balance on my working capital line to qualify for equipment financing?

No. Equipment financing underwriting looks primarily at the business's cash flow (three months of bank statements) and the value of the collateral. An existing working capital balance doesn't disqualify you; it's one factor among several, not a gating requirement.

Can I structure equipment financing with seasonal payments so it doesn't conflict with my working capital needs in slow months?

Yes. Seasonal payment structures are available, including step-up payments tied to your busy season and deferred starts if you need time before the unit generates revenue. That flexibility is one of the reasons equipment financing often fits a yard's cash flow better than a rigid working capital draw.