“Just fill in the simple form and in anywhere from an hour to a day we’ll hand you $150,000 for commercial equipment.” The increasingly technology-driven world of small business credit decisions is a wonderful thing. Right?
Well, it can be. It can also be riddled with problems. As you look to “application only” lending for your commercial equipment, here are some important items to consider:
Easy vs. Right. Easily getting your hands on the money feels good, but the devil is in the details. Just because you are approved, doesn’t mean it’s a good deal for you and your business.
All that glitters. What are the end of term provisions? How much money up front? Are their blanket liens placed on your business? We could go on and on. The equipment finance business is full lenders that seem to offer wonderful terms, but upon review, the details the finance structure can be harmful or at least not as good as it could be.
Seduction by Interest Rate. Finance geeks are great at “hiding” the interest rate. They may advertise 4% financing, but it’s hidden in an equipment sale package where the equipment price is increased to cover the low rate. Or they ask for more payments up front as a way to massage the faux interest rate down. Other parties may get you in the door with a low rate offer that virtually no one can actually get. The old bait and switch is always waiting for the low rate shopper.
Dealers are not finance people. Commercial equipment dealers leveraging financing to help sell their equipment…and rightly so. The problem is they are not finance experts and many small business owners leave success or failure in the hands of people that turn wrenches or write code. Not a consistent path to success.
You don’t know, what you don’t know. This biggest problem with application only lending is that most business owners simply don’t know what to look for, questions to ask and if the finance deal in front of them is actually a good deal.
At SLS, we help manufacturers, dealers and vendors grow sales with competitive finance programs that make things downright uncomplicated. If you need an expert with decades of experience guiding business owners through the process, contact us today.