A recourse agreement between equipment dealer or reseller and an equipment financing company can that little extra something required to get an approval for financing in situations where an approval would not otherwise be forthcoming.
In basic terms, a recourse agreement provides the equipment financing company some comfort or recourse to protect themselves from loss in the event of borrower or lessee default. In the manner we are describing, the agreed to recourse is being provided by the equipment dealer or reseller.
Especially for larger ticket items where credit can be tight, a form of recourse can be an effective way for an equipment seller to move more product into the market.
If done properly, recourse agreements can benefit lender, dealer, and borrower.
From the borrower’s or lessee’s point of view, a recourse agreement is going to allow them to acquire the asset they seek. If the benefit of acquisition is significant enough to the borrower or lessee, they may even be prepared to pay a premium for the asset.
For the equipment financing company, recourse agreements are all about reducing their risk against loss while still allowing them to be in a position to add loans or leases to their portfolio which makes them money.
The dealer has the potential to benefit from a recourse agreement in a number of different ways.
As already mentioned above, the buyer may be prepared to pay a premium or at least a non discounted price in order to be able to take advantage of a recourse offer to a lender. This can result in higher average margins to the dealer or equipment reseller.
The dealer can also close more sales which will lead to additional profits as well.
The third potential benefit to an equipment dealer is that a properly structured recourse agreement can provide access to used equipment at or below market price that can be added into inventory and resold.
To provide a better picture of what we’re talking about, lets go through a simple example of recourse where by the dealer agrees to repurchase the asset from the borrower or financing company in the event of default, at 50% of the original purchase price.
In order for this to be acceptable to a lender or leasing company, they are likely going to want to see a substantial down payment by the buyer, perhaps in the 15% to 25% range.
With the dealer recourse added into the down payment, the financing company’s risk is greatly reduced. If the offered financing terms is no more than three years, the risk of loss is very low.
If the dealer is confident that the equipment’s market value will be at least 50% or higher at the end of the financing term, the risk of loss to the dealer is low as well.
Assuming the assessment for providing recourse is adequate, then the risk of loss per loan or lease where recourse can be applied should be low and offset by all the profit margin collectively earned from the incremental sales that occurred because recourse was offered to the equipment financing company.
For more information on recourse agreements and how they can be used to increase customer sales, give us a call and we’ll get all your questions answered right away.
An equipment financing broker is someone helps business owners locate and secure relevant sources of equipment financing from banks, institutional lenders, and leasing companies.
In order to be effective in providing this type of service, the equipment financing broker must have pre-existing relationships with different sources of equipment loans and equipment leases as well as significant experience qualifying borrower requests so that inquiries for financing can be directed to the most relevant sources of financing.
Further, an equipment finance broker should also have direct access to a diversity of lending and leasing sources so that he or she can cover off a broader spectrum of credit and financial requirements of potential borrowers.
The first key benefit is saving the time it would take to figure out equipment financing on your own as well as the management of the application and administration process applicable to any given lender.
From an individual business owner’s point of view, where the need for financing is not a regular occurrence, assistance from a equipment financing professional can not only save you time, but will more likely provide you access to the most relevant sources of financing for your financial profile and credit requirements compared to what you may be able to locate on your own.
From a vendor point of view, an equipment financing broker can be an essential resource to provide your customers with financing choices at the time of sale, helping you make the sale and increase your profitability at the same time.
Financial brokering is all about providing you with relevant choices that can meet your financial needs and fit your credit and financial profile.
Applying directly to an equipment financing company only gives you exposure to one program with no market comparison available.
Like any other financial services market, the equipment financing industry is very competitive with considerable differences at times between offerings from one company to another.
The services of an equipment financing broker will allow you to better take advantage of the best available offer through there unbiased approach to comparing different options for you.
If you have an equipment financing requirement that you would like to discuss, please give us a call so we can quickly assess your needs and provide relevant equipment financing options for your immediate consideration
Burlington equipment financing is available from a large number of our bank and lease company financing sources that provide Canadian equipment financing solutions to area businesses
On of the great things about having a business in the Burlington, Ontario area is that many of the major leasing companies in Canada have either a head office or regional office right in your back yard or in the near by surrounding area. This provides plenty of access to equipment financing of all types and credit profiles.
In addition, we have equipment financing and leasing companies from other areas of the country as well that would consider financing requests from southern Ontario as well.
For us, its all about getting the best deal and the best fit for our customers regardless of where the financing company may be located.
Burlington equipment financing can be sourced for both new and used equipment with procurement coming from both licensed resellers and private resellers.
Equipment financing is available in the form of a bank loan, which is typically available to “A” credit profiles only, or through an equipment leasing program. One of the benefits of equipment leasing as a whole is that the collective group of leasing companies that provide lease financing in Canada cover a very wide range of credit and financial profiles compared to banks and other institutional lenders.
Get Burlington Equipment Financing That Meets Your Business Needs
There are also different levels of financing available according to how much funding you’re looking for. Most leasing companies work on a small ticket basis where the financing amount is under $50,000. As the amounts increase, there are going to be less companies and programs to choose from, but still a significant number of financing choices overall.
Leasing companies will also specialize to some degree according to equipment type and as the amount of financing increases, the more specialized the financing companies tend to become.
In order to focus in on the source of financing that’s the best fit for you and your business, we suggest that you work with an equipment financing specialist such as ourselves so that we can quickly assess your requirements and provide equipment financing options for your consideration. This has proven over and over again to be a time and money saver for our clients.
Ontario equipment financing can be obtained from a number of our leasing partners located both in Ontario and other parts of Canada and the U.S.
Because of the large size of the Ontario market, and its close proximity to the U.S. market, there are lots of equipment financing companies providing loans and leases to area customers.
The diversity of the market also lends to a high degree of specialization where every loan and leasing company tries to provide a slightly different service offering in the market. This is great for the business owner in one way in that all levels of credit, industry, and asset type tend to have several different equipment financing options. On the other hand, it can be difficult to determine at times which Ontario equipment financing companies are going to be the most relevant to you at any point in time.
For instance, for business owners with a strong lending profile, it can be easy to secure an equipment financing commitment, but is it the best, or near the best deal available to you in the market?
For companies with weaker credit profiles, you can easily spend too much time trying to locate and secure equipment loans and leases that you will not be able to qualify for due to your business financing profile.
The best way to approach the Ontario equipment financing and equipment leasing market is through an experienced equipment leasing specialist. This provides a number of benefits to you including the following:
First, because leasing specialists are working in the market every day, they will have a better sense of where the market is at for any given point of time, what lenders are being more aggressive, and which ones are taking a more conservative approach. This inside information can be extremely valuable for zeroing in on the best equipment financing opportunities.
Second, many equipment leasing companies only access the market through broker networks, so if you’re not utilizing the services of an equipment financing specialist, you could be missing out on some of the stronger options available for your particular needs and requirements.
Third, a financing specialist will help you put together a solid application package and presentation that will increase the probability of equipment financing success through more clear and concise information exchange in terms the lenders or leasing companies want to see.
Toronto equipment financing is available through a wide variety of equipment lending and equipment leasing companies located both in Toronto and outside of the Greater Toronto Area.
Because of the population and commercial business concentration in the GTA, we are fortunate to be able to provide our clients with a number of equipment financing and leasing options.
Equipment financing companies tend to focus on particular areas of the market defined by asset type, loan or lease size, and credit profile of the applicant.
Our role is to quickly assess your equipment financing requirement and then match you up with the most relevant Toronto equipment financing or equipment leasing sources in order to get the best available deal in the least amount of time.
The great thing about having your business located in Toronto is that there are equipment lenders servicing just about every potential segment of the equipment financing market and all degrees of credit.
This is both a good and bad thing in that its easy to end up with 1) a more expensive deal than is available to you if you don’t know how to qualify the market versus your requirements, or 2) no deal at all if you’re focusing on Toronto equipment financing sources that will not be interested in your financing request.
The key is to work with an equipment financing specialist who can make an accurate assessment of your requirements, discuss relevant equipment financing or leasing options with you, and then get the funding in place in the time you have to work with if at all possible.
And there are many different ways to approach an equipment financing need. For instance, you can first apply for a pre-approval before you even start actively offering or bidding on the equipment you wish to acquire.
You can consider operating and capital equipment leasing to best fit your cash flow and tax planning requirements.
Or even if you’ve already purchased equipment for cash, we can still arrange to get equipment financing in place after the fact, up to 6 months after the initial purchase was completed.
Regardless of your requirements or where you are in the buying and financing process, please give us a call today for immediate assistance.