How do you choose equipment financing companies? This can be very tough given that the number of equipment leasing companies is increasing by the day.
Did you know that approximately 8 out of 10 businesses loans are rejected by banks? This is because banks have stringent loan approval processes. Not only that, but the application process is lengthy and includes a lot of paperwork. Leasing makes it a lot easier for businesses to acquire equipment. Obtaining a loan and equipment financing are two very different concepts. Leasing does not require you to obtain a financial statement in order for you to obtain equipment.
Leasing has certainly grown into one of the most popular forms of equipment financing in the U.S. Each year, more than 30% of business equipment acquisitions are through leasing. Many companies face the challenge of sourcing funds to acquire new equipment and most of the companies approach the lease sourcing process.
Securing a low rate is one of the main aims of opting to lease equipment but this should not be the only criteria to use for choosing a leasing company. Choosing the right leasing companies to bid will help you avoid blunders and obtain attractive lease proposals. Choosing the wrong lessor can lead to slow approval, hidden fees, inability of the lessor to deliver or worse, substandard lease terms. You must do your homework if you hope to secure the best lease arrangement.
How Do You Choose Equipment Financing companies
Get enough information about your lessors before deciding that you will include them in the bidding process. If possible, ask for financial information from the lessors so as to evaluate their financial situation. You can also obtain a report from Dunn and Bradstreet. These reports usually include poor financial performance, payment delinquencies, judgments and any lawsuits filed against the lessors. All these issues can significantly affect the performance of the leasing company on a new lease transaction.
Is an independently owned leasing company better than a large financial firm? The answer to this question depends on your needs and expectations. Many small business owners are worried that their accounts might be treated like a number when they approach a large firm with their financing needs. On the other hand, small independently owned leasing companies might not instill as much confidence in business owners because they lack resources and manpower to handle their business. The best idea is to approach a medium sized company that will provide you with personalized support and service.
The process of leasing would be much easier if your lessor was familiar with the type of business you specialize in and the type of equipment and technology you require. If they are familiar with the type of business you do, they will be able to share with you some of their knowledge and even update you on the current trends in the industry. Leasing companies that have a lot of experience afford businesses the experience they want and deserve. As a result, they can come up with sound advice and solutions for your business’ needs.
Leasing companies differ in a number of ways. There are those that specialize in specific industries, others specialize in the size of the transaction, equipment types or lease types. For instance, some leasing companies specialize in a single industry such as the music, farming, transport or construction industry. Others prefer to deal with lease types. They may only prefer to issue operating leases on equipment with high residual values. The leasing companies that focus on the size of the leasing transaction may prefer to lease equipment that costs under $100, 000 or more. It is therefore crucial that you understand the specialization of the leasing company before you start bidding on your lease transaction. This way, you will get the most attractive deal.
Professional and Personal Referrals
How do you choose equipment financing companies? You can ask professionals who are in the same industry as you are and have experience leasing their equipment. Try as much as possible to network with other people who are in your area of specialization. You can check with your bank contacts, accountant or attorney for colleagues who are in the same industry as you are. You can also ask your friends who use leasing to help you out and recommend credible leasing companies to you.
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