Can Installation and Rigging Be Included in Equipment Financing?

The machine invoice rarely tells the full project cost

A manufacturer may buy a machine for one amount and spend a meaningful additional amount getting it through the door and into production.

Freight, cranes, rigging, electrical work, compressed air, foundations, anchoring, calibration and commissioning can all sit outside the base equipment quote.

If those costs are ignored until after the machine is approved, the business may end up financing the asset while paying the rest from working capital.

Some lenders will consider directly related project costs

BDC tells equipment buyers to budget for transportation and installation. Scotiabank publicly describes business lease financing that can include delivery and installation costs.

Those examples show that financing can extend beyond the hard asset in some structures. They do not mean every lender will finance every project cost.

What makes a soft cost easier to finance?

The strongest soft costs are specific, documented and necessary to put the machine into service.

For example, a rigging invoice to unload and position a 20,000-pound machine is directly connected to the equipment. A vague construction allowance for general plant improvements is harder to connect.

Separate each cost on the project budget

Instead of submitting one line that says complete project $600,000, break it down.

• Machine purchase price
• Freight
• Rigging and placement
• Electrical connection
• Compressed air or utilities
• Foundation or pad work
• Installation
• Commissioning

The lender can then determine which parts are eligible rather than rejecting an unclear total.

Who performs the work matters

A professional rigging company with a clear invoice is easier to assess than an internal estimate for miscellaneous labour.

If the equipment vendor is also providing installation, ask for the machine and installation to be itemized. If several contractors are involved, collect their quotes early.

What about electrical and building work?

Some electrical or site work is essential to install a machine. Other work improves the facility more generally.

The closer the cost is to the specific equipment, the easier it is to explain as part of the project. If the work has a life or purpose independent of the machine, the lender may treat it differently.

Do not forget the cash-flow timing

Rigging companies and contractors may want deposits or payment before the equipment lender is ready to fund.

Discuss the payment schedule early. A cost can be financeable in principle and still create a timing problem if it must be paid weeks before the lender’s normal funding point.

Installation risk can affect the lender’s view of the project

A machine that cannot operate until a complex integration is finished carries more execution risk than a standard piece of equipment that can be delivered and turned on.

For automation cells and production lines, explain who is responsible for integration, when acceptance occurs and what happens if commissioning is delayed.

Frequently asked questions

Can freight be included?

Some lenders may include freight when it is directly related to the financed equipment.

Can rigging be included?

Potentially. A formal quote from a rigging company and a clear connection to the equipment make the cost easier to review.

Can electrical work be included?

Possibly, but lender treatment varies. Equipment-specific connection work is easier to explain than a broad plant renovation.

Can the lender reimburse costs already paid?

Sometimes, but that becomes a different timing and documentation question. Ask before paying major project costs if reimbursement matters to the structure.

Finance the project you actually need

Before submitting an equipment request, build the full go-live budget. Raymond Leigh can then determine which costs are likely to fit the financing structure and which may need to be funded separately.

You can send the machine quote and project budget for review.

How much soft cost is too much?

There is no single percentage that applies across every lender. The issue is the relationship between the hard asset and the non-asset costs.

For example, a project with a $900,000 machine and $100,000 of documented freight and installation is different from a $400,000 machine wrapped inside a $900,000 project that contains extensive construction and consulting work.

As soft costs become a larger share of the request, the lender may require more borrower cash or a different financing structure.

Factory installation versus third-party installation

If the OEM installs and commissions the machine, those costs may appear on one vendor contract. If a local electrician, millwright and rigging company perform the work, the lender sees several suppliers and payment schedules.

Neither is automatically better. The multi-supplier project simply needs cleaner coordination.

What if the business owns the building?

Some site work may improve the building as much as the machine. That can blur the line between equipment financing and real-property or leasehold-improvement financing.

Separate building improvements from equipment-specific work so the lender can determine the correct treatment.

What if the business leases the facility?

The buyer should confirm that the landlord permits the installation, especially where machinery is anchored, utilities are modified or structural changes are required.

The lender may also care about whether the equipment can be removed without unreasonable cost.

Installation acceptance can affect final funding

Some vendors require final payment before commissioning. Some lenders prefer to fund when the equipment is delivered and accepted. Those positions can conflict.

Resolve the payment sequence before the machine is sitting on a truck outside the plant.