Who Finances??

The last entry was about helping community bankers retain their business clients who they cannot approve for loans. So are the only ones that finance those that aren't 'bankable'?? In a word, No. In fact, the average financed deal is in the B to B+ paper range, the range that just borders on what banks will finance for some of their better customers. Many deals are also in the A paper range for firms that prefer to lease or just dont want the hassle that goes with providing all the financials a bank will require, since most of our deals require a credit app and credit check only.

An extensive study was done with 2006 numbers and reported in The Monitor , the equipment finance industry's top trade mag and some interesting things came out aside from the credit range info above. By company size, the most likely companies to finance, in order, are:

1) 100-1000 employees
2) 50-100 employees
3) 1-50 employees
4) >1000 employees

The surprising piece in here to me was that 1-50 employees wasn't higher. Why not? Turns out that those in this range either believe they cannot get financing or are too new (meaning at the startup stage) that think or know they cannot get financed. Financing a startup is possible, although it is more difficult to do for us than if the business is past the 2 year mark. The end result is that companies in this range often will scrounge up the funds to buy their equipment outright, a severe waste of their operating capital.

The most common equipment types to be financed are : construction and related equipment, farm equipment, transportation and industrial equipment. The fastest growing sector year over year though is technology, specifically computers and software, which are now being financed more than ever before.