Equipment Financing

April 22, 2024

by an investor in New York, NY, USA

Looking at a potential acquisition with a fleet of trucks that account for about $20mm of appraised value. Wondering how to think about equipment financing for the fleet?

What type of ballpark Loan To Value / terms could you expect for a non-recourse equipment loan of this size? Are there any particularly aggressive lenders that come to mind?

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Reply by a searcher
in Lehighton, PA 18235, USA

My experience probably isn't completely relevant, but here goes: As I've done loans for various tuck-ins to our existing printing company, the bank has typically been most interested in my equipment as it's a tangible asset that they can lien or collect in the case of default. The downside in my case has been that my borrowing has been limited to a percentage of equipment value. It's worked well for me as a means of extracting value from my current business to fund additional acquisitions, but it may present a challenge if you're looking for a higher LTV ratio.

I haven't ever gone the SBA route as in my deals I haven't had the time in my deals or the willingness to jump through the hoops required. It's possible that if a bank will lend on the value of the cash-flowing business, simply considering the trucks to be part of the package that comes along with the purchase, that this may present your most favorable terms.

Reply by a searcher
from University of World Economy and Diplomacy in Chicago, IL, USA

Thanks for the tag. I'm not sure about the ballpark Loan To Value / terms, but in the current state of trucking market, I would expect to assign a healthy discount to used fleet of trucks. It is hard to know also given the existing condition, mileage, maintenance records, existing warranties of the fleet. In terms of lenders, it might be good to check with non-traditional financing entities like TopMark Funding. Best of luck.

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