The Balloon Payment (or Residual) is the final payment needed to finalise an equipment or…
Business equipment finance has evolved considerably over the past decade.
A few years ago, if you were seeking equipment finance, most businesses would simply go to the Bank.
Whilst the majors still have an important role to play, there are now many options available for business owners.
In my experience, many are not aware of the change or are hesitant to explore the alternatives that are now available.
Business Equipment Finance and Vitamins?
It is not unlike the vitamin industry. A couple of decades ago you had a choice of Vitamin B, C & D from a relatively small number of suppliers.
Now, if you enter a Chemist outlet, you are confronted with a wall of choice! With many different suppliers targeting specific conditions and niches in the market.
Whilst the business Equipment Finance industry as yet hasn’t fragmented to this degree, the options available to business owners seeking Finance have certainly increased.
What has driven this change?
What does this mean?
Today we have many financiers that have chosen to target different niches or industries for example:
Fitout – Offices
Fitout – Restaurants and Cafes
2nd Hand Equipment
Greater Expertise - Less Hassle!
The benefit for the business owner is that through specialisation, the financiers build their expertise. Their policies and processes are more aligned to the segment.
The benefit for the customer is a more streamlined process, less hassle and frustration.
This greater level of expertise also tends to mean they are more flexible with structuring of finance packages as they have a better appreciation of the risks involved than a generalist financier.
More Choice - Increased Negotiating Power!
Another benefit of choice tends to be more negotiating power for the customer.
The maths are simple – if you have a choice of one or two, your options are limited. Your negotiating power is less.
However, if you have more choice, then you’re negotiating power increases!
Choosing the Right Lender
Whilst segmentation has delivered greater choice, to enjoy the benefits of this, you still need to match your need with the Lender that has the right appetite and policies.
The appetite to lend and the policies applied can vary widely. Some Lenders may be in “growth mode”, whilst others are looking to consolidate. Some will have a preference for particular industries and seek to avoid others.
Helping clients match their needs with the right Lender is a key part of my role as an Equipment Finance specialist.
If you have a business equipment finance need and would like to learn more, don’t hesitate to give me a call