1. Small and medium sized businesses prefer leasing (with an option to buy) to purchasing construction equipment, because it provides an effective way to manage company's resources.
2. Manufacturers often offer their clients the possibility to lease (with an option to buy) construction equipment directly from them, but because the equipment is brand new, the leasing price is up to 5 times higher than for second-hand equipment.
3. This forces businesses to rent construction equipment, in such a way overpaying for it 20% - 30%.
4. The Borrower buys second-hand equipment and leases it (with an option to buy) to its clients under the following terms:
5. Businesses prefer leasing (with an option to buy) to renting construction equipment, because it is cheaper and means they can become owners of the equipment at the end of the lease term.
6. Benefits for the Borrower include:
The company is currently looking to buy a backhoe loader, and for this purpose, they need to raise €32,000, with a minimum target of €38,000. For the trust and support of the potential investors, they are offering an annual interest rate of 24.4%, to be paid out monthly throughout the loan term of 8 months.
Interest rate payments start calculating from the day you make your investment!
The following pledges secure the loan:
KHL has named the top construction equipment manufacturers in the world as Caterpillar, Komatsu, John Deere, XCMG, Sany, Volvo CE and Hitachi. The quality of their machinery is undoubtedly outstanding, but as often is the case with superior quality products, they come at a higher price. In addition to the fact that one often needs not just one, but various kinds of equipment for any given construction job, even large construction conglomerates opt to lease the necessary equipment. This is an effective way to manage any company's resources, as well as dramatically reduces the impact of unexpected financial downturns.
Manufacturers often offer their clients the possibility to lease the equipment directly from them, providing the option for the client to buy the equipment after a certain period. Leasing is an appealing deal for companies, but in many cases, it is still unattainable for the smaller construction companies, as the lease prices of new equipment are very high. These companies then turn to search for that same equipment on the secondary market.
The secondary market is relatively small, and knowledgeable experts are required to determine the condition of the equipment on sale.
Because of the shortage of suitable equipment on the secondary market, owners of quality equipment in good condition can cherry-pick their buyers. They usually conclude deals with the highest cash bidder because waiting for banks to secure financing would be too burdensome and lengthy of a process. Companies, which are unable to purchase the equipment outright in this manner look for possibilities to lease the second-hand equipment.
The Borrower has the experience, expertise and knowledge of the second-hand construction equipment, and they are continuously searching for the equipment that commands the highest rental demand on the market. With the upcoming Rail Baltica project demand in Latvia is skyrocketing, they have therefore decided to turn to the investors in TFGcrowd to raise finance for their next purchase.
Report Linker reveals that the global construction equipment rental market has experienced positive growth over the period from 2017 to 2019. This growth has been facilitated by hefty investments made in the smart residential and commercial buildings sector, as well as government policies promoting the manufacturing industry.
Like many other sectors, the construction industry was thrust into a temporary lockdown during the first half of 2020 because of the Covid-19 outbreak across the world. But, as governments across the globe were fighting to keep their economies alive, critical government construction projects continued working, albeit at a slower pace, to minimise the spread of the deadly virus.
The industry, therefore, suffered a much lower impact from the virus than many other sectors across the economy.
Mordor Intelligence expects that there will be a fall in the construction equipment rental market value of around 30% during 2020. But, as construction companies resume working, pushing ahead with delayed projects, it is forecast that the industry will experience fast recovery and in the period between 2020 to 2025 will register a CAGR of about 4.78%.
In 2010 Finland, Estonia, Latvia, Lithuania and Poland agreed to construct a fast railway line linking the countries with a European standard gauge rail line and providing an effective and efficient passenger and freight service between them, as well as improving the rail connections between Northern and Central Europe. The works are currently approaching their active phase and are scheduled to be completed by 2026. A large construction project, such as Rail Baltica will increase demand for construction equipment available on lease in Latvia, where the company operates, in the foreseeable future.