Fairleaf Commercial Capital, a small-business funding broker in Spartanburg, SC, explains soft costs in equipment financing for Spartanburg County contractors: delivery, installation, training, software, warranties and taxes, how they differ from the hard cost of the machine, and whether lending partners include them in the financed amount. Fairleaf is a broker, not a lender.
Hard costs and soft costs
What is equipment finance? It is funding where the equipment being bought secures the deal, so a partner can recover it if payments stop. That works cleanly for the machine itself, the hard cost. Soft costs in equipment financing, then, are the costs of getting the machine into service that cannot be repossessed and resold: delivery, installation, setup, training, software licenses, extended warranties and, in some cases, taxes.
Because soft costs have no resale value, partners treat them differently from the machine.
Why this matters for Spartanburg County, SC contractors
Spartanburg County had 692 construction employer establishments in 2023, including 487 specialty trade contractors, and most were small: 63.9% of the specialty trades had fewer than five employees (U.S. Census Bureau, County Business Patterns 2023). Another 2,587 specialty trade contractors worked with no paid employees in 2024 (U.S. Census Bureau, Nonemployer Statistics 2024). For a crew that size, an unplanned delivery and setup bill on a new machine comes straight out of the operating account.
Some equipment carries large soft costs. A compact track loader may need little beyond delivery, but a CNC router, a laser level system with software, or a truck-mounted unit may need installation, calibration and training before it earns anything.
Common soft costs, item by item
| Soft cost | What it covers | How partners often treat it |
|---|---|---|
| Delivery and freight | Getting the machine to your yard | Often included if on the vendor's invoice |
| Installation and setup | Mounting, wiring, calibration | Sometimes included, sometimes capped |
| Training | Operator instruction from the vendor | Varies by partner |
| Software and licenses | Programs that run the equipment | Varies; subscriptions are often excluded |
| Extended warranty or service plan | Coverage beyond the standard warranty | Sometimes included |
| Sales tax | Tax on the purchase, where it applies | Varies by partner |
Getting soft costs into the deal
- Ask the vendor for one itemized quote that lists every soft cost separately.
- Ask each partner what share of the total it will finance beyond the hard cost.
- Decide what you will pay in cash and what you will finance.
- Compare the total of all payments across offers, not just the monthly figure.
A vendor quote that lumps soft costs into one line makes a partner's review harder. A clean quote helps. The equipment financing page covers loans, leases and EFAs, and the contractor financing page covers how equipment fits with working capital.
Watch the advance offers
Some vendors and funders offer to cover soft costs with an advance against your future receipts. A merchant cash advance is not a loan, and its daily collection runs on top of the equipment payment. Before accepting one, run it through the merchant cash advance calculator to see the total collected and the cost. That calculator handles advances only; it does not compute the equipment payment, which is worked out from the partner's quote.
A checklist before you sign
- An itemized vendor quote showing hard and soft costs.
- The partner's statement of what the financed amount includes.
- Who owns the equipment at the end of the term.
- Any end-of-term amount and the prepayment terms.
County construction figures are on the Spartanburg, SC page, and more articles on the Fairleaf blog.
By Fairleaf Commercial Capital ยท Updated