Being in the finance industry is not all fun and games. You may think, a business asks for money and we give it to them. You’re right in a way, but there’s a lot that happens behind the scenes. Believe it or not, there are A LOT of things that can go wrong.
Bad Credit
Credit plays a huge role in equipment financing. Most people who come to us for help have low credit and it’s tough to get them funding (and they know it). Sometimes it’s not their fault. Some people don’t know that your credit is pulled every time you apply for any kind of funding.
Equipment Type
There is nothing more frustrating than a client asking for a piece of equipment and it’s not eligible to be financed. We want to help, but it’s difficult, especially when they are set on that specific piece. Lenders are especially picky about older equipment. They want equipment to last as long as it’s being financed and that it will be valuable after it’s paid off.
Time in Business
The length a client has been in business is what lenders look at to see if they are dependable, or worth investing in. Any business that has a time in business of less than 2 years is considered a start-up. The restaurant industry is especially difficult because they have the highest failure rate.
Stipulations/Documentation
Stipulations are documents needed to fund a deal. In equipment financing, there are a lot of time-consuming stipulations that can hold back funding. For example, a power of attorney needs to be notarized. Meaning the client has to physically go out and get a piece of paper
notarized before moving forward. Sometimes paperwork
comes in wrong, meaning more time to get it fixed etc.
So there you have it! I hope you learned a little more about the process behind equipment financing. All struggles aside, if all the cards are right, the process is smooth sailing. If you’d like to learn more, you can check out Equipment Broker School. Have you experienced any of these struggles? Tell us your story in the comments below!
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