If you’re considering adding an overhead crane to your facility, then you already know that having the right equipment in place can be the difference between maintaining the status quo and struggling to make ends meet, or continuing to grow and improve your business. However, paying the full amount of money upfront for an overhead crane can be a significant investment that may seem out of reach for many small to mid-sized business owners. Financing an overhead crane might be the solution you need to add the equipment you need now, and provide stable payment options down the road.
An overhead crane can be a critical piece of equipment for a business’ manufacturing or material handling operations. Some of the most popular reasons for using an overhead crane include:
- Loading or unloading materials from a truck
- Moving materials around a facility more efficiently than a tow motor or manpower can
- Flipping or pulling dies in and out of stamping machines at a manufacturing facility
- Feeding raw material into a machine at a manufacturing facility
- Moving pieces or parts down an assembly line in a controlled fashion
- Moving containers around a shipyard or railyard
A crane also works 2-3 times faster and more efficiently than a tow motor or group of workers can. With an overhead crane, you’re expediting the lifting, maneuvering, and unloading of materials for companies that operate out of mills, warehouses, and production facilities.
Overhead cranes are also a safer option, as they can work in extreme environments and handle hazardous materials like hot metals, chemicals, and heavy loads. Workstation cranes and jib cranes offer ergonomic lifting solutions for workers to cut down on repetitive motion injuries and can reduce workplace accidents and workers’ compensation claims.
As you can see, investing in an overhead crane system can be one of the most useful and utilized pieces of equipment you can add to your business to increase production, workflows, and bring in more profit. However, paying the full amount of money upfront for an overhead crane can be a significant investment that may seem out of reach for many small to mid-sized business owners.
At Mazzella, we engineer and build custom overhead crane solutions ranging from light-duty economical cranes to large-capacity, high-duty cycle cranes. One of the concerns that many of our customers have is how to pay for the crane equipment that they know will increase their productivity and save them money in the long run.
In this article, we’re only going to discuss securing a loan from a lender to purchase a new overhead crane system. Typically, an overhead crane would not be a piece of equipment that would be leased because the installation of an overhead crane is a semi-permanent to permanent operation tied into the structure of the building. Removing and replacing the crane every couple of years would not be a feasible option for most businesses.
Top 10 Reasons to Finance an Overhead Crane
1. Improve Cash Flow
When you finance an overhead crane system, you don’t have a significant amount of cash tied up in your equipment. You’re free to use your available cash for other investments that will help to grow or improve your business, produce revenue and income, and ensure that the crane system that you purchase improves your efficiency and earns more profit.
2. Include “Soft Costs” in Your Financing
Many lenders will allow you to roll in and include 100% financing for other “soft costs” associated with the cost of an overhead crane, including things like:
- User or operator training
- Freight and delivery
- Any modifications or additions to building structure
- Installation costs
- Equipment maintenance or service agreements
By rolling in allotments for these added expenses, you can ensure that you’ll have the money to cover them, and their associated costs won’t disrupt your cash flow.
3. Preserve Other Lines of Credit
Financing your overhead crane system leaves other credit options available from your bank or other sources to take advantage of future opportunities to invest in the growth and development of your business.
4. Flexible Financing
A business’ income tends to see ups and downs over the course of a year. Some lenders will customize a lending plan unique for their customer’s business that’s built around their needs and sets them up for success.
This can include a combination of options including varying monthly payments to match seasonal ebbs and flows in revenue, as well as varying payments based on accounting and tax schedules.
5. Stabilize Your Monthly Expenditures
By setting a fixed or variable monthly payment, you set yourself up for more accurate budgets and forecasts because you know exactly how much you’ll be paying towards your overhead crane loan each month.
This also gives you a better understanding of what you can and cannot afford when it comes to growing your business, including:
- Payroll and hiring decisions
- Overhead and operating expenses
- Inventory and material costs
- Acquiring or upgrading additional equipment
- Marketing and sales support
6. More Equipment Options Available to You
Because you aren’t absorbing the full cost of the overhead crane system upfront, financing allows you to truly select the right crane for your business.
Instead of making cost-based decisions like going with a lower capacity crane, or selecting a crane design that’s not ideal for your facility, you can select the right type of crane for your business needs.
Because the monthly payment is a small portion of the total cost of the equipment, financing allows a greater amount of equipment for a given dollar allocation. This means you may be able to plan more for the future and select a higher-end crane system that allows room for your business to grow into its full capabilities and capacities.
7. Benefit from Inflation
If your business does well due to inflation and you begin to see an increase in profits and revenue, you can actually benefit from inflation. For a fixed-term payment, if you already owed the money before inflation occurred, the inflation actually benefits the borrower. Because you now have more money available to you, and your payment is still the same, this can result in less interest for the lender if you use the extra money to pay off the loan early.
8. Upgrade or Modernize Crane Equipment You Own
While leasing allows you to temporarily use a piece of heavy-duty equipment, leasing an overhead crane doesn’t make as much sense because you’re installing a fairly permanent piece of equipment into the actual support structure of your facility.
An advantage to owning an overhead crane system is that you can always upgrade or modernize the components of your crane to extend the investment in the equipment, should your production or material handling needs change down the road.
Older cranes can be improved to a higher level of productivity and safety through a modernization upgrade and refurbishment program, including upgrades to:
- New and more efficient hoists and drives
- Increased capacity
- Add or upgrade speed and motion controls
- Cab to pendant conversions
- Infrared and radio remote controls
- Electrification systems
- Major mechanical components
9. Shop Lenders for Competitive Rates
Most lenders will require you to get multiple quotes before providing a loan for an overhead crane or another piece of heavy-duty equipment. The reason for this is that it provides a more complete price range for the project and also identifies any outliers.
However, you can also do your due diligence and solicit multiple offers from different lenders to find the best loan for your business. By contacting multiple lenders, you can select a lender to partner with based on the following criteria:
- Most competitive interest rates
- Terms
- Willingness to provide flexible or varying payments
- What other “soft costs” can be included in the loan
10. Pay Off Your Crane Equipment Yearly Without Penalties
By financing your crane equipment through a loan, you receive ownership of the crane from the start and pay back the cost to the lender each month. The nice thing about financing is that most banks loan out the money without prepayment penalties.
So, if you’re able to pay off the loan before the agreed-upon terms, it won’t cost you anything extra and will save you a significant amount of money in interest payments. In comparison, leases are for a fixed period of time and are set up so that you owe payment during the entire course of the lease terms.
Wrapping it Up
Installing an overhead crane in your facility is a big monetary investment. However, it’s also an investment in your employees’ safety, as well as an investment in improving the efficiency of your production and workflow processes.
If you’ve been researching the right type of crane for your business, then you know that the cost of an overhead crane can add up quickly based on the span, capacity, and any other specialized engineering or custom specifications required for your lifting needs.
While we don’t provide in-house financing, the good news is that with a quick Google search, you can see that there are hundreds of companies who specialize in financing heavy-duty equipment and machinery for all sizes and types of businesses.
By acquiring a loan for the cost of your overhead crane system, you can add the technology that you need today without dropping a large sum of cash and potentially jeopardizing your business’ future earnings and investment opportunities. Instead, you’ll have a predictable monthly payment that will allow you to accurately budget and forecast. This gives you the freedom to make other investments that will grow your business, produce revenue and income, and ensure future profits.
At Mazzella, we have over 50 years of experience in the overhead crane industry and can build custom solutions ranging from light-duty economical cranes to large-capacity, high-duty cycle cranes. Our expert team of Engineers, Estimators, and Project Managers can help you design and specify a cost-effective crane system for your facility, production or budgetary needs. If you’re considering an overhead crane for your facility, we welcome the opportunity to address your overhead material handling needs—if you’d like to schedule a consultation on your next project, contact us today to speak with a Crane Specialist.
Copyright 2017. Mazzella Companies.