Equipment financing: bank or broker?

Some may say this is a time versus money equation but in reality it is not!

If you can obtain the same interest rates (or better) on Equipment Financing through a broker then the answer is simple, use a broker!!!

Time spent

Your broker should handle the entire Equipment Financing process from start to finish with minimal input from you, which represents a significant amount of time saved compared to dealing with the banks.

Convenience

Your Equipment Finance Broker should always be available on mobile after hours (including weekends) and come to you when and where you need them.

Relationship

Your Equipment Finance Broker typically owns their own business as you do and they will be there year after year for decades to come. They will know your business and be able to easily represent your Equipment Loan requirements to the market. There’s no having to re-educate a revolving door of brand new account or bank managers every two years or so.

Spreading your debt

Your Equipment Finance Broker should be placing your business across a broad base of finance underwriters which will provide a strong foundation of supporting financiers going forward who will compete for your Equipment Loans as you grow.

It is an interesting view that banks have in that they are concerned if you have a concentration risk with a particular client or industry, however conveniently ignore this as they push to have all of your finance with them.

Keeping the powder dry

Understanding that banks have documents which tie all securities to all debt, company owners often unwittingly bootstrap their Equipment Finance to their property debts.

This can often lead to reduced borrowing capacity in the eyes of the bank when clients are looking to obtain more working capital against what they see is clear equity in their properties.

Arranging your Equipment Loans away from your existing bank negates this issue.

Getting the right approval

Any Equipment Finance Broker worth their salt will understand what a good Equipment Financing approval looks like and ensure they negotiate those terms with the broad base of the competing finance underwriters available to them and these approvals are so often superior to what is available through the clients own bank.

What is the market saying?

The statistics state over 50% of business owners use brokers for the majority of their equipment financing needs and this percentage is increasing every year.

Just as company owners use an insurance broker to ensure they have the right insurance cover for the business, an increasing majority now take the same view for the equipment financing needs.

In a world where service providers are judged on what their community (clients) say about them as opposed to what they say about themselves, it is little wonder the banks continue to lose ground in this area.

– Mark O’Donoghue is the Founder and CEO of Finlease.