More than 4 in 10 small business owners would prefer NOT to finance equipment with their bank.

While you might jump to conclusions about the reasons businesses look for alternative sources of equipment financing, you might be missing the point—preserving working capital relationships.

Banks are getting pretty beat up these days. While there have been a few bad actors, the overwhelming majority of bankers are still there standing firm for their clients. Sure, relationships are more complicated, but the average bank has had to increase their legal and compliance staff by more than 200% in the last ten years just to keep up with the new “strength” requirements of our government. For many businesses, it’s not that banks can’t help with equipment needs; it’s that adding additional debt might limit or strain the bank’s view of your lines of credit.

Your working capital line of credit is more than a lifeline. It’s your lifeblood at times. Peaks and valleys in operating cash flows can be challenging. Whether ramping up to meet a new customer’s requirements before the revenues come in, seasonality or long receivables cycles—your working capital line of credit allows you to access the funds needed to normalize your cash flows when things are anything but normal. But adding equipment or “term debt” to your relationships can give bankers pause about the overall relationship.

There is only so much debt a single lender can invest in your company. Even if you make all your payments, there is a magic “exposure” limit of risk lenders can’t cross. It puts them out of compliance with a regulation in an encyclopedia-like list of regulations. So, if working capital is so important to the cash flow balance of your business, why would you take a chance on disturbing that delicate lending relationship if there are more and potentially better options for equipment finance?

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The key advantages of an equipment lender are:

  • Deep knowledge of commercial equipment
  • Finance alternatives that lead to lower payments, and improved cash flows
  • Less money required up front so you can preserve your cash for higher returning investments rather than depreciating equipment
  • Some equipment lenders offer MULTIPLE finance options with only one phone call, shielding you from these “lending exposure” issues
  • Speed. Often these lenders can fund your equipment need with more flexibility, faster than the bank can get the opportunity to their credit committee
  • You can preserve your delicate working capital relationship while having access to the financing needed to affordably put revenue producing equipment to work

At SLS, we’ve helped small businesses like your company succeed in uncomplicated finance programs for more than 30 years. While our finance programs are competitive and flexible, what sets us apart is our people. We may have Wall Street caliber financial resources…we’re Main Street kind of people. And maybe that’s why so many small businesses and dealers trust us time and time again.

If you want to know how to establish or grow a finance program for your company…let’s talk.

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Doug Fuller


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