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Smarter Finance USA Blog

Spray Foam Equipment Leasing: What are the Rates?

Posted by Rob Misheloff

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If you're a spray foam contractor who needs new equipment, or are looking to get into the spray foam installation business, the biggest question you may have is how much is all this stuff going to cost?

The good news: you don't have to write a big check.

You can get set up with your equipment relatively cheaply, and let the profits you make from the equipment pay for the equipment.

What Equipment Do Spray Foam Contractors Need?

The key equipment you need to be a spray foam contractor is:

  • A proportioning machine
  • Spray Guns
  • Hoses
  • Generators
  • Transfer Pumps
  • (optional) trailer or box truck


To finance your equipment, start here. 


What Does a Complete Spray Foam Equipment Set Cost?

"Turnkey Packages" are sold via dealers in both used and new packages. Prices for a complete package range from $30,000 at the low end to around $100,000 at the top.

If you don't need the trailer or box truck, you can get all the other equipment for around $15,000-$25,000.

Financing Spray Foam Equipment for Small Businesses

You can usually finance the entire equipment package, although it depends on your time in business, your credit, and some other variables.

If you're just starting your business but you have decent credit, you can usually qualify for financing. Rates are higher for a new business than for established businesses, because there is more risk of you going out of business, but if you financed $25,000 in equipment over 5 years plan on your monthly payment being around $850 on a five year loan.

In general, plan on putting 5% down or first and last payment, depending on the lending option you choose.

If you're buying equipment for an established business you can generally finance a much larger purchase price - and if you've got reasonable credit, as much as you need will typically be available.

Financing rates vary, but you can expect to see payments of around $575 a month per $25,000 financed on a 5 year purchase with good credit,  $650 a month for reasonable credit, $750 a month for fair credit, and a little higher than that for bad credit depending on how bad and what your situation is.

Again, in general, plan on putting 5% down or first and last payment, depending on the lending option you choose.

Should I Finance Spray Foam Equipment or Pay Cash?

That depends, but there's a good reason 80% of companies finance some or all of their equipment purchases. The biggest reason, of course, is not having that amount of cash lying around, but even if you do, unless you've really got a lot of free capital it's usually best not to drain your working capital for equipment purchases.

Find out what your monthly payments will be

Secondly, it's less tax-efficient to use cash since you'll be paying with "after-tax" dollars. If you're in the 33% tax bracket, and you buy $50,000 worth of equipment with cash, you need to have earned $75,000 in order to have that $50,000 sitting there.

What Are My Financing Options for Spray Foam Equipment?

The cheapest financing option might be to go to the bank.

If you've got good credit (750 or above) and 2 or more years in business, this might be a better option for you than a private lender, especially if you're buying new equipment.

If your credit isn't stellar, or you've got less than 2 years in business, the bank is likely to say "no" - and they usually don't like to finance used equipment (but it depends on your bank) - and those cases are when an equipment finance company like ours could make sense for you.

If so, you've got two choices, an Equipment Finance Agreement or an Equipment Lease

In an Equipment Finance Agreement:

  • You make payments for a given period of time (typically 2 to 5 years)
  • You own the equipment at the end for $1 (or $100, depending on the contract)
  • You can deduct the cost of the equipment off your taxes this year, up to $25,000.
  • Payments will be about 6-8% higher than with a lease

In an Equipment Lease:

  • You make payments for a given period of time (typically 2 to 5 years)
  • At the end, you can forfeit the equipment, or own it for 10% of the original purchase price (so if you lease $45,000 in equipment, you can own it at the end for a one-time payment of $4,500)
  • You can write off the entire payment as an operating expense
  • Payments will be lower than in an equipment finance agreement

Whether you are doing a loan or a lease, you can generally expect to have to come up with either 5% down, first payment, or sometimes first and last payment depending on which loan options and lenders  are most appropriate to your situation.

Loans for Spray Foam Equipment With Bad Credit

If your credit is below 620, you can still get financed, but your options are fewer and the costs will be higher. Typically lenders need to see some collateral at lower credit scores - so if you have other equipment you can use as collateral that is the best option. For example, you may own your business vehicle and pledge that in order to procure equipment.

Rates vary for bad credit situations, but can be 50% to 100% higher in terms of payments than for the very best rates. With a collateralized deal, you can generally expect to be asked for a 10 to 15% security deposit as well.

If you have no collateral, but can come up with a 50% down payment, 99% of the time you can procure financing.

For more information relative to your situation, or for a customized quote, please give us a call at (866) 631-9996 or click below... 


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Topics: Leasing, equipment leasing rates, construction equipment

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