How to Finance an NTM Portable Rollforming Machine

You’ve had your eye on an NTM portable rollformer for some time. You’re working with an NTM account manager and now have a quote that includes the machine, accessories, and other costs such as freight. You’re ready to have your machine manufactured and delivered to expand your business.

Until you hit a wall: How to cover the cost. This is where financing comes in.

A New Tech Machinery (NTM) portable rollforming machine can be a valuable investment for contractors and business owners in the metal roofing and gutter industries. Whether you’re exploring loans, leases, or alternative financing options, understanding the process can make a significant difference in terms of cost.

We’ve all heard the saying, “Cash is king.” Who wouldn’t want to pay everything in cash and avoid interest payments? However, paying cash is not always an option, and if it is, it may not be the best option.

In this article, you’ll learn about financing programs, types of loans, and the key factors borrowers should consider.

Available Financing Options

NTM does not provide in-house financing but collaborates with third-party financial institutions and banks to support buyers. The most common financing options available are loans and leasing.

Loans

Loans allow you to maintain your cash flow while making payments on the machine. Remember, you’ll need accessories with the machine, as well as associated costs, such as a trailer, a truck, a forklift, etc. So, you may want to keep that cash on hand. A loan could cover extended warranties, supplies and materials, and even maintenance fees.

Business Loans

You can secure a business loan from your bank for the purchase of rollforming equipment. This type of loan typically offers competitive interest rates, especially for borrowers with strong creditworthiness and steady revenue streams. Also, the loan is not restricted by the price of the machine.

Equipment Loans

These loans are specific to the purchase of machinery and may require a quote from NTM detailing the exact cost of the machine.

Personal Loans

Typically, personal loans can be applied for business purposes. You may find lower interest rates on personal loans, depending on the bank and your credit history. Also, you can usually skip documentation requirements like business records, quotes, bank statements, etc., thus streamlining the process.

Leases

Benefits of Leasing

One important advantage to leasing is that it doesn’t impact your credit score, leaving available other lines of credit. According to First National Bank (FNB), NTM’s preferred lender, “Today, as many as eight out of ten companies choose leasing to acquire new and used equipment. That’s because leasing is a practical, cost-effective way to finance expenditures while keeping credit lines open for working capital.”

Leasing also frees your cash flow, giving you more operating capital.

Also, leasing gives you the option at the end of the leasing term to purchase the machine for the remaining amount due.

Downsides to Leasing

With leasing, you pay for the machine without owning it at the end of the financing term. If you want to keep it at the end of the term, you’ll have to pay the percentage the lender determines, which may depend on the machine’s used value, its usage over the term, etc.

To reiterate, at the end of a lease term, you will not own the machine. At the end of a loan term, you will.

This is perhaps the most significant difference. For example, if you take out a five-year loan for a portable rollformer, it’s yours at the end of the term of the loan. For as long as you own that machine, and NTM machines can last decades with the proper care, you won’t have payments. The monthly payment amount now rolls back into your business.

If you’re leasing, at the end of the term, you either purchase the machine or lease a newer model. If you keep leasing machines, you’ll never stop making payments, and you won’t build equity as with ownership. However, you’ll regularly upgrade your machine to a newer model, which may offer advantages to your operation.

Standard Lease

This is ideal for short-term needs but may not offer ownership of the equipment at the end of the term.

Lease-to-own

This arrangement allows buyers to eventually own the machine after fulfilling the lease obligations. These agreements often have lower payments than traditional loans.

Alternative Financing Options

For those with limited credit or other financial hurdles, alternative financing methods like collateral-based or cash-flow-based loans may be an option. These loans often come with higher interest rates but are not based on credit scores. Therefore, they can be a convenient solution for quick access to capital.

Some financing institutions may offer seasonal or other flexible payment programs. For example, Crest Capital offers lower payments during slow periods, like winter in snowy regions, then raises payment amounts during warmer months when business picks up.

“There has to be a good reason. Like if you live in Wisconsin installing gutters or roofs, you may need that break during the winter months,” says Crest Capital’s National Account Manager Gary Evonsion. “But if you live in Arizona, that’s probably not the case, so the payments would remain the same.”

Key Considerations for Financing

It’s essential to be well-prepared when exploring financing options. Here are some critical factors to keep in mind.

Credit Score

A strong credit score typically translates to better loan terms. It may impact your interest rate, and you’ll need to have a credit rating of at least 650 to qualify for a loan with most lenders, like FNB.

Documentation Requirements

Most financing companies will not proceed without detailed documentation, including:

• A quote from NTM for the specific machine being financed.
• Financial records such as bank statements or tax returns.
• Proof of steady revenue flow.

Timeline Considerations

Financing takes time, both at the start and end of the process. Be prepared for potential delays when working with lenders or finance companies. If you’re on a tight timeline for delivery, ensure all paperwork is completed as early as possible.

Costs and Interest Rates

Financing is a convenient way to conserve cash flow, but it comes at a cost. Interest rates on equipment financing vary depending on the terms of the loan. For example, a loan at FNB for less than $100k is currently just over 7%, while a loan from $100k to $500k will be just under 7%, depending on the lender, the length of the loan, and your credit profile. Other lenders have their interest rates set from 8% to 11%.

Restrictions

Interest rates vary according to the lending institutions. However, a lower interest rate is not always the best deal. Many lenders who offer low interest do so by leveraging restrictions. According to the Crest Capital blog article Rates and Restrictions – With One Comes the Other, “[Loan restrictions] are there to protect the lender, and allows them to offer a lower rate than a lender that doesn’t have restrictions.”

Restrictions may include blanket liens, minimum bank balances, and annual loan requalification. Blanket liens allow the lender to sell off any and all assets if the loan defaults. By agreeing to a blanket lien, you’re essentially giving your business assets over to the lending institution should something go wrong.

Balance out the savings of a lower interest rate with the restrictions of the loan. It may be that you’re better served paying higher interest with more flexibility and fewer restrictions. Crest Capital’s interest rates may be slightly higher than its competitors, but it doesn’t impose these types of restrictions.

Hidden Costs

Some financing arrangements, like deferred payment leases, may appear appealing but accrue interest during the deferral period. This includes “first 90 days no payment” plans. Always review the fine print of your contract to understand the total cost of the financing.

Low Credit Score Options

For individuals or companies with lower credit scores, proving reliable cash flow with proper documentation may serve as a substitute. Ensure all invoices and receipts are tied to your business account for verification.

Not all lenders offer programs for those with low credit ratings. Arlington Partners, Inc. offers loans to those with credit scores as low as 500 and provides competitive rates for those with scores of 625 and above.

No downpayment is required for those with higher credit scores. However, those with credit scores between 500 and 600 will have to put down anywhere from 10% to 40%, and interest rates will be higher.

Other factors that may impact your ability to get a loan include previous bankruptcy, tax liens, late payments, and a high amount of outstanding debt.

What Borrowers Need to Know

• Understand Your Terms: Whether it’s a loan or lease, ensure you are fully aware of payment schedules, interest rates, and any associated fees.
• Seek Expert Advice: Consult with a financing expert or lender to determine the best options for your business. NTM can provide contact information for preferred financing partners. Check out our Financing page here.
• Plan Ahead: Financing may seem like a simple process, but unexpected hurdles can delay machine delivery or increase costs if not managed proactively.

Why Financing May Be Right for You

Financing a rollforming machine offers several advantages:

• Improved Cash Flow: Keeps working capital available for other business expenses.
• Scalability: Allows you to invest in high-quality equipment without upfront costs.
• Builds Credit: Financing with a record of timely payments can improve your business’s creditworthiness for future borrowing.
• Tax Deductions: Section 179 tax deductions apply to NTM equipment.

How Do I Begin the Financing Process?

The good news is that a lending agent will help you through the loan application process and answer any questions you might have. Applications can be completed online or even over the phone. You can get approval in as soon as a couple of hours.

Financing an NTM portable rollforming machine requires careful planning, documentation, and understanding of your financial standing. Whether you opt for a loan, lease, or alternative financing, knowing your options and responsibilities is critical to making the right decision for your business.

New Tech Machinery is committed to supporting buyers by providing resources and recommended finance companies but does not take responsibility for financing agreements. It’s up to you to ensure you fully understand the terms and conditions before signing any contract. With the right preparation, financing can be a strategic way to grow your business and stay competitive in the metal roofing and gutter industries.

If you have further questions or need a quote for financing, don’t hesitate to contact an expert NTM account manager. For more information on financing an NTM machine, contact one of our recommended financing partners.