The basic premise of these programs is to provide readily available capital to individuals or businesses that want to purchase hard or tangible goods. The financing is pre-qualified by the funding source for the intended purpose and the only thing to figure out when granting financing is if the applicant is credit worthy or not. For requests under $50,000, most loan and lease financing is approved on credit scores and credit history making for a virtually instant approval or decline. For larger amounts, support information can be required to further support the credit decision.
Equipment financing programs are basically divided into consumer or B to C programs, and business or B to B programs.
The consumer related programs tend to be either driven in house by the manufacturer or distribution network, or through large financing companies that specialize in consumer lending.
On the business financing side, there are typically a wider variety of available programs being offered to the business public than in the case of the consumer, even though the overall dollars tend to be lower on the business financing side.
An effective equipment funding program can be a challenging thing to get into place due to its need to not only fit into the sales process of the vendor, but also be able to qualify most of the customers that will be looking for financing. When the customer population is very homogenous, the challenge of getting a vendor financing program is not nearly as challenging as when your customer mix is very broad based from a credit and financial viability point of view.
Put another way, when the average customers have very similar credit profiles, then its not too hard to match up a funding program that can generate a high level of approvals. But when there is a wide range of potential customer credit to consider, its basically impossible to find any one program that will provide a high approval rate.
In diverse credit situations, the equipment financing program may have to utilize several different credit sources to effectively serve the needs of the vendor’s or dealer’s customers. In these situations, the financing solutions tend to be administered by a broker or other form of financial intermediary that has both the skill to quickly assess credit and the access of different source of capital that can accommodate the majority of customer requests that are likely to be forthcoming.
Credit aside, a successful equipment finance program will also have to seamlessly fit into the sales process as well. When this is not the case, the financing process will likely end up losing the business sales which will result in lost profits. In the end, all equipment funding programs require a certain amount of customization to fit into the sales process of the dealer or vendor. Virtually no to sales processes are exactly alike, largely because of the differences in the personalities that administer them as well as the unique selling features inherent with different types of equipment and different types of customers.
The continued effort to customize and improve the sales to financing process is critical to maximizing sales and growing as a business where customer credit availability is important to completing the sales process. The path to the best results typically comes from working with an experienced fiance professional that has effectively set up and managed equipment financing programs that were able to provide a higher percentage of not only approvals and sales closures as well.
If you’d like to find out more about equipment financing for your business customers, either with respect to setting up a new program, or improving upon what you already have in place then I suggest that you give us as call for a free initial assessment of your situation and a discussion of options available to you to consider.