As Canadian equipment financing specialists, our role is to help small and medium sized businesses in both Canada and the U.S. locate and secure an equipment financing source of capital that will meet their business requirements.
We provide two different forms of equipment financing in the form of equipment loans and equipment leases.
An equipment loan is typically provided by a bank or institutional lender whereas an equipment lease is provided by an equipment leasing company or an equipment leasing division of an institutional lender.
We cover off a wide array of business equipment financing situations including startups and lease hold improvements.
Our team works with a broad cross section of lenders and leasing companies that collectively cover the full spectrum of credit requirements in the market, or as close to full coverage as is possible.
If your business is looking to secure equipment financing for one or most pieces of equipment, then the first step would be to give us a call so we can quickly go over all the details with you on the phone and outline to you the potential financing solutions that may be available to you.
If any of the options we present are of interest to you, then we will work with you to complete an application package that will be sent to targeted lenders.
We only approach one lender at a time to conserve on credit inquiries.
In most cases, an approval or credit decision can be reached in 24 to 48 hours with larger deals taking 5 business days on average to be processed.
Once an approval is secured, the deal can immediately be funded provided all the lender commitment requirements have been met.
As equipment financing specialist, we are in a position parts of the market that are only serviced through broker networks as well as the rest of the market at large, providing you with greater overall access to financing options than what you would be able to locate on your own.
Getting a deal done quickly that meets your requirements can very important to the business as the longer it takes to figure out proper financing, the longer it will before the equipment can be put in place to start earning money.
We also work hard at making sure that the type of deal that you enter into is a good fit for your requirements and not something that provides the capital today but is difficult to deal with in the future due to your projected future repayment requirements.
One of the main roles of a financing specialist is to stay in the middle of the deal and help manage all administrative requirements of the lender or leasing company in order to get the deal approved and funded. Too often documentation and paper work issues and delay and even jeopardize equipment financing solutions which solidly puts the devil in the details and provides us with an opportunity to add considerable value to the transaction that many times is overlooked…until there is a problem.
If you have an equipment financing requirement for your business, I suggest that you give us a call so we can quickly assess your situation and provide relevant equipment financing solutions for your immediate consideration.
And there can be periods of time when there is a need to restructure short term debt by terming it out into longer term debt with a structured repayment schedule.
Down turns in business operations can see cash flow take a beating and short term liabilities such as accounts payable and government remittances go up.
In order for the business to continue into the future, there is going to need to be a plan to pay up these short term accounts so that trade creditors or government agencies don’t take collection actions against the business.
One of the most effective ways to do this is through equipment financing or equipment refinancing.
The challenge with this type of approach, however, is to get access to the potential borrowing power that exists in your equipment equity.
One of the problems that can arise with debt restructuring is that your senior lender has security over all your assets or most of the assets including the equipment. And while they may be very well secured with the build up of equity in assets held for security over time, they may not be willing to either lend you more money to consolidate short term debt, or are not prepared to release any of their security.
When this is the case, it may be necessary move to one or more different lenders to generate the incremental capital you’re looking for.
This may mean looking for an operating lender that can take accounts receivable and inventory for collateral and a term lender that can provide equipment financing against the equipment you own outright.
The reason you potentially look to more than one lender is to generate greater asset leverage.
Many times operating lenders will provide great leverage on accounts receivable and some leverage on inventory, but not sufficient leverage on equipment.
The result is that you are not extracting enough debt financing out of the equity you have invested in these assets.
So to get the amount of financing you require, you may have to get more focused in on lenders that finance certain types of assets and provide higher levels of leverage due to their comfort level in having the assets as security.
Typically higher leverage providers will require a sale and leaseback transaction to take place in order to further protect themselves against the risk of loss.
They can also be higher cost lenders than what you were previously dealing with.
But when you consider the cost of government arrears, or being cut off from trade credit and having to work from a cash basis, a slightly higher cost of financing on equipment related debt can be small in comparison.
The goal is to get the balance sheet in order so that the cash flow of the business can meet all obligations and keep the business credit profile in tact so that credit is not lost or withdrawn from an extended period of short term financing arrears.
If you have equipment that does not have any liens registered against it, or has sufficient equity to support paying out the existing loan or lease and providing additional the additional capital your business requires, then it can be possible to arrange equipment refinancing, or a sale and lease back transaction, provided that you can meet all the lender or leasing company requirements.
The first thing that is going to be important is the type of equipment, its condition, and the current assessment of value by the equipment financing source.
The more the equipment represents what we call commodity assets with significant remaining useful life, the better the chances are of getting the equipment refinanced.
The security and lending value attached to the equipment will typically be done under a forced liquidation appraisal, providing a very conservative value of what the equipment would be worth if sold at auction.
A financing company willing to consider an equipment refinancing request, tends to consider a financing amounts at no greater than 60% of the forced liquidation appraised value.
Most equipment refinancing scenarios are required to inject more working capital into the business.
If the business is on solid footing or in the process of getting back on track, then there is a good chance that equipment refinancing can be available.
However, if the business is already in financial distress and its hard to tell if the incremental capital that a potential equipment refinancing will provide will stabilize the financial position, then only the higher priced liquidation lenders are going to be interested in the deal.
Each equipment financing source that will entertain these types of deals will have their own minimum and maximum lending amounts that they will consider.
In general terms, the minimum request for funding needs to be at least $100,000 with some minimum funding amounts of $250,000 or higher.
Smaller amounts are harder to get someone interested in due to the amount of work required to qualify the deal and get funding in place.
If you’d like to discuss an equipment refinancing scenario, please give us a call and we’ll get all your questions answered right away.
An equipment financing specialist is part broker and part financing consultant and has the primary objective of helping you find the equipment financing you’re looking for as quickly as possible.
In order to accomplish this, a financing specialist needs to have a certain amount of experience to be able to quickly qualify your requirements against the available lending sources in the market place, and then help work with you to put an application package together that will properly represent the financing and credit profile for your business.
The key is making sure that once your information has been conveyed and reviewed, that only relevant equipment lending and leasing companies are contacted, otherwise the process can get bogged down with too many applications that may or may not even be able to deliver against your requirements.
This is where time and money can become significant.
In many cases, the business needs to close on a transaction quickly, either from a successful bid at an auction, or a great deal that a seller will not hold for very long until they can get paid.
In either case, a fast turnaround time with the right type of financing terms and conditions is going to be important to complete the transaction.
This is where the higher level of customer service from an equipment financing specialist can pay big dividends by getting things done in the time period required without taking on a financing commitment that is at the higher price range in the market.
With any type of business financing transaction, the devil is in the details, so its very important to make sure that an lending situation is fully qualified and properly documented to make sure that the process can progress as seamlessly as possible.
And if there are any snags along the way, the focus is to iron them out as quickly as possible and staying on top of all parties involved to complete a funding transaction.
If you lose out on a great opportunity because equipment financing could not be arranged fast enough, or was insufficient for your requirements, a true equipment financing specialist understands that may cost you money in terms of business you may have to turn down, or other costs you were trying to eliminate.
As as result, they work in a very diligent manner to try and achieve the desired result in the least amount of time.
It all starts with the definition of bad credit.
Most equipment financing companies have credit score minimums that they need to adhere to in order to provide your business with financing.
These minimums can range from a beacon score of 650 to 600 and anywhere in between on the personal side and the scoring equivalents on the business side of the credit picture.
So even if your business has good credit, but your own personal credit is only fair to poor, you can get pushed in to the bad credit financing category.
Bad credit equipment financing is provided by equipment financing sources that have a direct or indirect connection to the equipment liquidation market.
Because bad credit scenarios can lead to payment and loan or lease default a higher percentage of the time than good credit, the equipment loan and lease companies that provide bad credit financing will lend on a forced liquidation value.
What that means is that they are equity lenders and they determine the available equity for financing from what the market value for a given asset would be if it had to be sold within a 30 day period.
If you have good equity in equipment that there is a resale market for, then there is a good chance you can qualify for a bad credit equipment financing facility.
The cost of financing is going to be considerably higher for bad credit than for higher levels of credit.
Also, the loan to value lending amounts will tend to be lower and the repayment terms shorter in order to protect the lender against the risk of loss.
Even though the financing costs are higher, for small financing amounts the actual dollar cost of financing can still be manageable and the shorter amortization periods also reduce the amount of interest that will need to be paid over the life of the equipment loan or lease.
The key determinant as to whether the rate is too high or not is the amount of margin you’re going to be generating from the equipment being financed. If the margin is not sufficient to cover the cost of financing and cash flow repayment, then a bad credit equipment financing solution may not fit your requirements.