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Untitled Document

TimberWest January/February 2011

July/August 2011

Finding Success by Building Trust
Kevin Black Logging builds generations of trust
in Douglas County

Celebrating Forest Management and Cooperation
Getting 26 forest landowners to agree
presents unusual scenario

Financing Your Equipment

Woody Biomass Power —
Now What’s the Holdup?

How to Build a Web Development Team for the Timber Industry


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Financing Your Equipment

The recession and the lack of construction have hit the timber industry hard. Money is tight and financing is more difficult than ever.

John Hughes, area manager for FCC (a subsidiary of Caterpillar Financial) said in Construction Business Magazine, “Many contractors whose credit was historically sound with a strong balance sheet have seen erosion in their financial conditions. Finance companies are relying more on work under contract and less on historical data than in years past.”

Although businesses are finding it harder to finance equipment, the financing hasn’t dried up. In the following charts provided by EDA, we can see which institutions are providing financing and how much equipment has been financed.

Probably not a surprise to many of you is that companies like Caterpillar and John Deere are the top financiers out there. But others — like GHL and Wells Fargo — may be less expected.

And although every state has a different story to tell, they all have a surprising similar tail to tell when it comes to the number of machines financed (used and new) from 2006 to 2011.

A slow recovery seems to be underway, and the demand from China, Japan, and India is keeping people in the woods. In June there were some serious signs that the housing market is improving. In the Washington Post, Brian Wesbury, chief economist at First Trust in Illinois, said the June surge in housing starts was extremely important because it was the first month since January 2006 that saw an increase in the total number of homes under construction, meaning more new homes were being started than being completed.

Even if the industry and the housing market are making strides in the right direction, it will take time to recover, and the business model is likely to look different at the end of the tunnel. One thing is a constant — financing. To date there are no signs of financing drying up. It may be more difficult to obtain, but it’s still there.

Secured Party FInancing by State

Top 50 Secured Parties