Depending on your business model and cash flow, taking cash out of your business for down payments on new equipment may or may not make sense. Here we will discuss what progress payments are and how you can use them to your business’ benefit.
Progress payment simply means an advance of funds from a lease to fulfill a cash requirement today. It is a very common practice when ordering specialized equipment, a portion of the total price be paid before the equipment will be built. More recently, progress payments are utilized in the new heavy equipment financing world by more sophisticated lending sources to allow this up-front payment.
If you are looking to purchase a new piece of equipment and are looking to lease the equipment you can utilize a progress payment. Most manufacturers require a down payment, sometimes up to 50% of the purchase price. Instead of taking money out of your business to pay cash for a down payment, you can instead draw on the lease to fund the down payment as a progress payment. The one requirement of you to secure this progress payment is you will close the lease at the point, the down payment is made from the lease. Regular payments will then begin at the time of delivery or 30 days after. In this scenario (50% down payment) the other 50% will be paid by the lessor at the time of delivery requiring zero dollars out of pocket besides regular payments.
Trinity Capital can help find the financing you need on heavy equipment. You can give us a call at 833-659-2203 or visit us at mytrinitycapital.com to learn more.