Soft Costs: What Can Actually Be Financed

Define the full project cost

Businesses often finance the machine and then pay several thousand dollars in cash for freight, rigging, and training in the same month the equipment arrives. That is avoidable.

Build the project cost first — every line, hardware and non-hardware — then discuss the structure once.

Typical soft-cost categories

• Freight, delivery, and rigging
• Installation, setup, and commissioning
• Operator or maintenance training
• Tooling, fixtures, and starter consumables
• Software, licensing, and controls
• Extended warranty or service coverage
• Sales tax, depending on state and structure

Why there are limits

Collateral value is what supports an equipment structure. A training session cannot be repossessed and resold, so soft costs increase exposure without increasing recoverable value.

That is why the soft-cost share of a structure is generally capped, and why the cap is set during review rather than published in advance.

How to present soft costs

Ask the vendor for one itemized quote that lists hardware and soft costs as separate lines. Items on the vendor's quote are far easier to include than costs billed later by unrelated parties.

• One itemized vendor quote covering the whole project
• Separate line items with clear descriptions
• Installation scope documented if a third party performs it