What do banks want to know about an excavation company’s heavy equipment loans?

Start with a one-page schedule of all equipment debt. For each machine list the lender, the original purpose, the remaining balance, the payment, the end date and any security held. Add the machine’s age, hours and condition. A bank reading this wants to see what is owed, what is behind it, and whether the payments have always been made on time.

Next, show how the machines earn. Banks look at how often the equipment works, what it brings in and how steady the contracts are. Idle machines with payments attached are a concern, so be ready to explain them. An independent valuation can help support your view of the equipment’s market position.

Finally, connect the debt to the cash flow. Bring recent financial statements and a projection that shows how the payments are covered in slower periods, such as winter. Banks also form a view of how you manage the business, including how you report, how quickly you answer questions and how well you know your numbers. Ask about programs that help small businesses obtain loans, and ask your lender what documents they prefer. Your accountant can help you prepare a package that answers questions before they are asked.

Key takeaways

• Prepare a one-page schedule of every equipment loan and balance.
• Show how busy the machines are and what they earn.
• Prove the payments are covered in the slower periods.
• Ask your lender early which documents they prefer.