Equipment Finance Process – Avoiding Frustration and Delays

  • 12 October, 2020
  • Sharon Piening

For many business owners, the equipment finance process can seem a bit overwhelming and frustrating.

This has been compounded further by COVID-19. Lenders are cautious, seeking additional information, and timelines can be protracted.

Equipment Finance Process – It’s Not All Bad News!

However, the good news is, despite all the pessimism, there are still Lenders open for business – you just need to:

  • Know which Lenders to approach for particular types of transactions (I can help you)
  • Provide all the information they require upfront (Again I can help you)
  • Ensure there is nothing adverse that Lenders will uncover as they go through their due diligence process

Equipment Finance Process – Existing Bank

The equipment finance process is a lot easier if you are looking to obtain Equipment Finance via existing Bank.

In this situation you only need to provide:

Whilst obtaining finance from your existing Bank requires less information, as a Finance Broker, I can help ensure the rate and structure are truly market competitive. (If not – I will negotiate on your behalf to achieve the right outcome)

I will also ensure the right product is chosen so ownership and taxation benefits can be maximised.

Equipment Finance Process - New Lenders

Whilst the equipment finance process through Lenders other than your existing Bank requires provision of more information, it is often worthwhile:

  • Spread your risk and not have all your financing with one Lender
  • To build a relationship with a different Lender so you have a potential fallback position should your Bank ever say no!
  • Avoid having security you may have provided for other lending cross collateralised

The information you will need to provide for new Lenders includes:

  • Answers to questions about how COVID-19 has impacted your business and your plans for recovery
  • Current financials
  • Management Accounts (Interims)
  • Group Structure (If applicable)
  • Directors personal Asset & Liabilities
  • Current ATO Portals
  • Most recent loan, credit card & transactional Bank statements

Providing current financials is important. The reason for this, financials are the lens through which Lenders view and understand a business.

If the financials are dated, finance will be much harder to obtain!

Be Upfront - No Surprises!

When seeking finance, be it from your existing Bank or a new Lender, it is wise to adopt a “no surprises” policy.

That is to disclose to the Lender(s) upfront any factors which may influence their assessment of your application.

For example:

  • If you have any arrangements in place with the ATO (why was it necessary, what has been agreed & how will a repetition be avoided)
  • If due to COVID you have needed to defer loan repayments (What has been agreed, when will repayments recommence, can you afford to make the payments)
  • Anything negative that may be revealed via a simple Google search

Larger Equipment Finance Requests - Know Where You Stand

In cases where clients have a larger finance request or a complex group, we strongly recommend completing one of our Loan and Bankability Assessments before approaching the market.

This is a powerful and robust process we have developed to help deliver better outcomes for our clients.

Entering finance negotiations without knowing where you stand is a poor negotiating strategy!

Treat Finance Information Requests like a Tennis Match!

First impressions count, whether it be with your existing Bank or a new Lender!

The Lenders all require information to allow them to consider your finance request.

Think of it like a tennis match. When they request information the quicker and more professionally you can “hit the ball back over the net” – the more likely you will enjoy the outcome you are seeking.

If you would like to learn more about the Equipment Finance process and the information you need to provide, give me a call.

I can also provide you a great quote from our panel of Lenders, which includes the major Banks!