Starting or expanding a landscaping business comes with a significant capital requirement. To provide high-quality services, companies need to invest in a range of specialized equipment.
The most common tools include mowers, tillers, aerators, edgers, chainsaws, and leaf blowers — and that’s just for regular maintenance jobs. For larger projects, machinery such as skid steers, stump grinders, or tree spades might be necessary. Additionally, transport vehicles and trailers are required to move the equipment around.
Each piece of equipment varies in price, with smaller hand tools starting as low as a few hundred dollars and larger machinery potentially costing upwards of tens of thousands of dollars. An initial investment in all the necessary equipment can, therefore, easily climb into six-figure territory. This presents a significant financial challenge for many business owners, particularly those just starting out or looking to expand.
Common Landscaping Equipment Costs
Given the high upfront costs of purchasing landscaping equipment outright, many business owners turn to financing to spread these costs over a manageable timeframe. Financing enables you to obtain the equipment you need immediately while paying for it over a period, typically ranging from one to five years.
The total cost of financing landscaping equipment depends on several factors, including the type and cost of the equipment, the length of the financing term, and the interest rate. For instance, a $10,000 mower financed over five years at a 6% interest rate would end up costing around $11,600 in total, spread across 60 monthly payments.
To give you an idea of what to expect when financing landscaping equipment, here are the average costs for some popular pieces of machinery:
- Lawn Mower: $6,000-$15,000
- Tiller: $2,500-$5,000
- Aerator: $2,500-$7,000
- Skid Steer Loader: $15,000-$50,000
- Stump Grinder: $10,000-$30,000
- Tree Spade: $20,000-$50,000
These are just some of the most common landscape equipment and their associated costs. Prices can range even higher for specialized machines or new models with additional features.
Financing vs. Buying Outright: Why Financing Makes Sense
While financing does add an interest expense, it offers several key advantages over buying outright.
- Preservation of Cash Flow: Spreading the cost of equipment over time allows businesses to maintain their cash flow, ensuring that they have funds available for other critical expenses like payroll, marketing, or unexpected costs.
- Up-to-date Equipment: Landscaping equipment can become outdated or worn out over time. Financing allows you to upgrade equipment at the end of your term, ensuring you always have access to the latest technology and most efficient tools.
- Tax Advantages: In many jurisdictions, equipment financing payments can be written off as a business expense, potentially providing significant tax advantages. In Arizona, for example, equipment financing payments are exempt from sales tax.
For those reasons, financing is an ideal solution for business owners looking to expand their operations without tying up a significant amount of capital upfront.
Navigating Your Options: Getting the Right Financing Deal
When considering financing, it’s crucial to shop around and find the best deal. Different lenders offer different rates and terms, so it pays to do your research.
For instance, a finance term of five years might be more expensive than four in terms of total cost but could provide you with lower monthly payments. This allows you to invest in larger pieces of equipment without draining your cash flow too quickly. Alternatively, if you’re looking for a shorter-term solution, a three-year term could be the right move.
It is also important to factor in any additional fees and closing costs associated with financing, as these can add up quickly. Make sure you understand your obligations should you ever need to make an early repayment or alter the terms of your agreement.
Finally, explore different financing options and consider seeking out lenders who have experience in the landscaping industry. Such lenders might have more flexible terms or options, which could help you get the most bang for your buck.
FAQs About Landscape Equipment Financing Costs
Here are some of the most commonly asked questions about landscape equipment financing costs:
How much should I expect to pay in interest?
The amount of interest you will be required to pay depends on the lender, the length of your finance term, and other factors. Generally, the longer your finance term is, the higher your total cost. Usually, rates range from 4-10%.
How long does landscaping equipment last?
The longevity of landscaping equipment depends on the type and quality of the machine, as well as how often it’s used and maintained. Generally, hand tools such as mowers and tillers should last anywhere from 5-10 years, while larger machinery like skid steers or tree spades can last 10-15 years or more.
Is financing the cheapest option for acquiring landscaping equipment?
Although financing does add an interest expense, it is usually the most cost-effective option when compared to buying equipment outright. Not only does it allow you to spread the cost of expensive machinery over several years, but it also enables you to upgrade regularly and take advantage of limited-time financing offers.
What are the alternatives to financing landscaping equipment?
The primary alternative is purchasing equipment outright, either with cash or a lump sum loan. While this might be suitable for small purchases, it’s often difficult to justify such large upfront costs when it comes to more expensive landscaping tools and machinery. Another option is renting equipment by the hour or day, but this can add up quickly and isn’t always the most cost-effective solution.
What happens if my financed equipment breaks down or needs replacement?
Generally, the terms of your financing agreement will still require you to make regular payments even if the equipment breaks down or becomes unusable. However, many lenders will offer options to protect you, such as equipment insurance or warranties. These can cover repairs or replacement costs in the event of equipment failure. It’s also worth noting that regularly maintaining your equipment can increase its lifespan and reduce the likelihood of unexpected breakdowns. Always consider these factors when comparing financing options and costs.
Seize Landscape Financing Opportunities with Confidence
Given the high costs of landscaping equipment, financing provides a manageable way to equip your business for success. With smart planning and the right financial partner, you can navigate the costs and reap the benefits of financing: preserving your cash flow, keeping your equipment up to date, and enjoying potential tax advantages.
Ready to embark on your journey to a more equipped and financially flexible landscaping business? Reach out to our experienced financial brokers at Charter Capital. We’re dedicated to helping you explore your options and secure the best financing deal for your landscaping needs.
We’ve been in this industry for over 40 years, so you can trust that we understand the unique needs of landscaping businesses and have your best interests at heart.
Whether you’re looking to purchase new equipment or upgrade existing machinery, let us help you get the most out of your business investments. Reach out to our Charter Capital representatives today for more information on financing options tailored specifically for your landscaping company.