Flexibility in equipment financing

By | September 8, 2010

inance term, rate, down payment options, payoffIn my last blog, I wrote about choosing a new equipment financing partner, and certain things you should look for. One of those things was “flexibility in equipment financing”, and it occurred to me that this is a pretty deep topic, and worthy of a separate post.

When I say flexibility, I am talking about a few things. To most people, the obvious things are “financial” in nature – things like finance term, rate, down payment options, payoff at the end of the equipment lease, etc. A solid equipment financing partner should be able to do almost any kind of (reasonable) finance deal that the buyer wishes – if the buyer wants a five year term, it should happen. If they want a seven year term, that (generally) shouldn’t be an issue.

I say things like “reasonable” and “generally” in the preceding because let’s face it; given the choice, we’d all like zero percent spread out over 20 years! But then Fletch starves (and Mrs. Fletch runs off with the paperboy, who’s making way more than me under that zero percent scenario.)

But anyway, financials aside, “flexibility” means a few other things. Like financing “odd” things, such as software. Believe it or not, there are many equipment financing firms that will not finance (or lease) software. But let’s face it – software increasingly is becoming more and more ingrained into what we do. In fact, many businesses simply cannot be run without it – it’s as every bit as important as a machine. Thus, your equipment financing partner should be able/willing to finance software, and any other reasonable product. Even if you don’t sell software, this type of “proven” flexibility means they will likely be able to help you next year when you roll out “the wonder widget” and are looking to offer financing.

Here’s another thing – how about financing used equipment? Some equipment finance companies will, and some won’t. But in the end, your equipment financing partner should be willing to finance good condition used equipment. Now again, you might be saying “big deal – we don’t offer used equipment”, and that may be true… for now. But could that change? Perhaps. But in the end, it’s better to have a partner who’s willing to do these things NOW than get stuck with someone who won’t play ball when you roll out something new.