IRVINE, CA—Last week, GlobeSt.com spoke with Eric Freeman, VP of Summit Funding Group here, about how commercial builders can finance the heavy equipment they need for their construction operations while maintaining financial stability in an age of rising construction costs. Here, we continue our interview with Eric Freeman to discuss how commercial buildings can remain competitive as construction volume ramps up next year.

GlobeSt.com: Forecasts show that construction volume is set to increase in 2015. With so many companies in the market for financing, how can construction companies remain competitive when seeking equipment financing?

Freeman: When it comes to competing for the best rates and terms, construction companies need an expert. Engaging with a traditional banking institution and hoping they understand your business is simply not a realistic approach. Instead, construction companies should work with someone who is not only a finance expert, but also specializes in equipment finance. Having someone who understands the value of a business and the specialized equipment that a company is seeking is really the key to securing the most competitive financing.

GlobeSt.com: The potential rise in interest rates has been a hot topic across all sectors. What rates are currently available for both short- and long-term equipment financing, and do you see these rates increasing in 2015?

Freeman: For those companies with excellent credit ratings, current rates for construction equipment for the short term can be as low as the 3% range, while long-term rates can be as low as the 4% range. Of course, borrowers must keep in mind that rates are always tied directly to a company's credit rating, and the better the credit rating, the better that rate.

That said, the Fed has already started the process of increasing rates by ceasing bond purchasing this year. We anticipate rates will now increase 50 to 100 basis points in 2015. That means, even for those with exceptional credit, interest rates may reach closer to 5% in 2015.

Of course, interest rates are also directly connected to the state of the economy. If construction volume does increase and the economy remains steady, then interest rates are sure to rise. However, if the economy hits a speed bump, rates are much more likely to remain consistent, as they have in 2014.

GlobeSt.com: The demand and use of software and technology equipment is expected to continue to rise. How can companies finance this highly specialized equipment?

Freeman: The issue with software and technology equipment is finding lenders who understand its value. As a result, working with an equipment lending company vs. a traditional bank is really the only way to finance such specialized equipment. Banks are collateral-based lenders, and as such, they focus on the value of the equipment the company is trying to finance. For specialized software and technology equipment, banks do not see the resale value and are therefore unwilling to take on the risk of being stuck with this type of equipment if a loan or lease defaults. On the other hand, equipment lending companies do not focus on the collateral value of the equipment. Instead, these specialized lenders focus on cash flow, determining if the company itself is worthy of the loan. As a result, a company with strong fundamentals should have no issue securing the leas they need when working with these specialized lenders.