Refinancing a Skid Steer or Track Loader Loan: Using Built-Up Equity to Fund the Next Machine

A lot of contractors sign their first skid steer financing agreement, file it away, and never look at it again until the note is paid off. That's usually fine. But there are real, common situations where refinancing an existing skid steer or track loader loan -- well before it's paid off -- puts a business in a meaningfully better position, either by freeing up monthly cash flow or by unlocking equity that's sitting idle in a machine like a Bobcat T66-2 or Kubota SVL97-3 that's already working every day.

Why Skid Steer Financing Is Worth Revisiting Mid-Term

Three things change over the life of a skid steer loan that can make the original terms worth revisiting: your credit profile, the broader rate environment, and how much the machine itself is actually worth relative to what's still owed on it. A contractor who financed their first Bobcat or Kubota compact track loader as a brand-new, thin-file business is often a meaningfully stronger credit by year two or three, with a real payment history, stronger cash flow, and an established relationship with their bank. None of that strength shows up automatically in the original loan -- it only shows up if the contractor goes back and asks a lender to re-underwrite the deal.

The Equity Side: Why Skid Steers Build It Faster Than You'd Expect

Skid steers and compact track loaders are workhorse machines with strong resale demand, and a well-maintained unit with moderate hours can hold value well enough that the loan balance drops faster than the machine's market value does, especially once a few years of payments have gone by. That gap -- what the machine is actually worth versus what's still owed on it -- is real equity, and it's one of the more underused assets on a growing contractor's balance sheet. Refinancing can let a business tap that equity directly, either by extending the loan against the machine's current value to free up cash, or by using the equity as leverage toward financing a second machine without needing a separate, larger deposit.

When Refinancing Actually Makes Sense

Refinancing a skid steer loan tends to make the most sense in a handful of specific situations: your credit profile has improved meaningfully since the original loan closed, broader lending rates have shifted favorably since you signed, your monthly payment has become tight relative to current cash flow and a longer remaining term would ease that pressure, or you need to pull equity out of an existing machine to fund a down payment on a new one rather than draining cash reserves. None of these require the original loan to be a mistake -- they're simply reasons the deal that made sense at signing may no longer be the best deal available now that the business and the machine have both changed.

What Refinancing Doesn't Fix

It's worth being honest about what refinancing a skid steer or track loader loan can't solve. If a machine's hours or condition have declined faster than expected, refinancing against an assumed equity position that isn't actually there can leave a business in a worse spot than before, not a better one -- a lender is still going to want a current, honest valuation of the Kubota SVL97-3 or Bobcat T66-2 before extending new terms against it, not the value it had when new. Refinancing is a tool for using genuine, verified equity or a genuinely improved credit file to a business's advantage -- it isn't a way to manufacture cash flow out of a machine that's depreciated faster than the loan has paid down.

Refinancing vs. Simply Financing a Second Machine

It's worth being clear about the difference between refinancing an existing skid steer loan and simply applying for new financing on a second machine while leaving the first loan untouched, because contractors sometimes conflate the two. Refinancing replaces the existing loan on the same machine with new terms -- same collateral, new deal. Financing a second machine, by contrast, leaves the first loan exactly as it is and adds a separate, new obligation secured by the new unit. Both can draw on the same underlying equity story: a contractor might refinance the T66-2 to free up monthly cash, then separately finance a Kubota SVL97-3 as fleet growth, or they might skip the refinance entirely and simply use the equity narrative -- a strong payment history on a well-maintained machine -- to support a stronger application on the new unit without touching the original loan at all. Which path makes sense depends mostly on whether the original loan's rate and term are still competitive on their own merits.

A refinance application on an existing skid steer or track loader loan generally gets reviewed similarly to a new equipment financing application, with one added layer: the lender also needs a current valuation of the machine itself, since that value is what's securing the new loan. In practice, that usually means the business's recent payment history on the existing loan (on-time payments are a strong, straightforward signal), updated financials or bank statements reflecting the business's current cash flow, and either a dealer appraisal, an online valuation guide reference, or in some cases an in-person inspection of the Bobcat T66-2 or Kubota SVL97-3 being refinanced. A machine that's been run hard with deferred maintenance is going to appraise lower than one with a clean service record, which is one more reason routine upkeep pays off well beyond simply keeping the machine running.

• Recent payment history on the existing skid steer or track loader loan -- consistent on-time payments strengthen a refinance application significantly.

• Updated business financials or bank statements reflecting current cash flow, not the figures from when the original loan closed.

• A current valuation of the specific machine -- dealer appraisal, documented comparable sales, or inspection -- supporting the equity claim.

• A clear statement of the goal: lower payment, cash-out for a second machine, or extended term -- the structure of the new deal follows from the goal.

A Practical Example: Using Equity From One Machine Toward the Next

Consider a contractor two years into a loan on a Bobcat T66-2, who's since added a second crew and wants a Kubota SVL97-3 to run a second site simultaneously rather than shuttling one machine between jobs. Rather than scraping together a full deposit for the new SVL97-3 from cash reserves, the contractor can bring the T66-2's loan to a lender for review: strong payment history, a current valuation showing real equity above the remaining balance, and a request to either refinance the T66-2 to free up a lump sum toward the new machine's deposit, or to use the documented equity position as supporting strength on the new application without touching the first loan at all. Either path turns a machine that's already earning money into leverage for the next one, instead of treating each piece of equipment as a financing decision made in isolation from the rest of the growing fleet.

Tax Considerations When Refinancing Equipment

Refinancing can touch depreciation schedules, interest deductibility, and how a transaction is treated for Section 179 or bonus depreciation purposes, particularly if a cash-out refinance is structured in a way that resembles a sale-leaseback or changes how the asset is classified on the books. None of that is something to guess at -- confirm with your tax professional how a specific refinance structure would be treated before committing to it, since the right call can depend on details specific to your business's broader tax position for the year.

How the UCC-1 and Payoff Process Actually Works on a Refinance

Mechanically, refinancing a skid steer loan means the new lender pays off the original loan balance directly, the original lender releases its UCC-1 filing against the machine, and the new lender files a fresh UCC-1 to secure the new loan terms. There's typically a short gap between payoff and the new filing recording, during which the machine's lien status is in transition -- not a practical problem for day-to-day operation, but worth knowing about if you're also in the middle of a sale, trade, or a separate financing application that asks about existing liens on the machine. Timing a refinance so it isn't colliding with another transaction on the same equipment avoids unnecessary paperwork confusion.

The Bottom Line on Refinancing Skid Steer Financing

Refinancing an existing skid steer or track loader loan is a legitimate way to put an improved credit profile or built-up machine equity to work, whether that means lowering a monthly payment, freeing up cash, or funding a second machine without draining reserves. For the lien side of the picture, our breakdown of UCC-1 liens and blanket liens on excavators and skid steers is worth a read alongside this one, and our contractor's guide to when and how to refinance an equipment loan covers the broader mechanics across equipment types. For the rest of the skid steer and track loader lineup we finance nationwide, see our skid steer and track loader financing page.

Thinking about refinancing an existing skid steer loan or financing your next machine? Visit our home page to learn more about BFC, apply through our equipment financing application, browse our equipment for sale and buy/sell marketplace if you're sourcing your next unit, or subscribe to our blog for more financing-strategy breakdowns.