In my previous blog post, I discussed the two general ways equipment financing is applied for: Application–Only and Financial Disclosure. I then went over the details of Application-Only, and noted how it is fast and easy, requiring one simple form.
But today we’re going to discuss Financial Disclosure Equipment Financing. This is where the lender needs more information to make a credit decision. In the case of Crest Capital, it’s typically because the loan amount is greater than $250k – once the amount borrowed exceeds that, we will need more information.
(note, as I went over last time, that $250k threshold is ours. Some lenders, like many banks, may require Financial Disclosure for any amount.) So let’s go over what is typically needed with Financial Disclosure Equipment Financing.
Financial Disclosure Equipment Financing
For financing larger amounts, lenders will need more information, particularly on the operations and financial health of the business itself.
Financial Disclosure will involve all the information in an Application-Only deal, plus details like tax returns for both the company and the main principals, financial statements, details on revenues, debt, assets, other liabilities, cash flow, shareholder equity, and more.
The information checked will also increase. The same instances from Application-Only will be used (credit reporting bureaus, D&B, etc.), but will also involve an analysis of the preceding financial reports.
In addition, depending on what is being financed and what information is already gleaned from the statements, other factors could be checked if deemed necessary. These could include an analysis of the industry, the current and future market, outside factors that could affect profitability, industry competitor performance comparisons, and more. These don’t happen every time – it depends on the unique details of the company and the applied-for financing.
Financial Disclosure sounds like a lot of steps, but it can still all happen quite quickly – Financial Disclosure equipment financing can usually be completed in a matter of days. But for companies that are borrowing, they do understand that these larger deals will take more time.
So now you know what Financial Disclosure Equipment Financing means – a call to your accountant (or a trip to the basement) for statements and tax returns. But it’s all for a good cause – getting you the funds you need for that major equipment purchase!