So there you are, contemplating financing a new (or even used) piece of equipment. You’re financing this equipment because like many companies, you’d rather keep your cash liquid. Which makes sense – everyone likes more cash on hand.

You walk in to your friendly neighborhood bank, and sit down with the loan officer. After exchanging pleasantries and a brief conversation about the weather (“been hot lately, huh?… “I’ll say”), you get down to business. You have a piece of equipment that will cost $50,000 – let’s work out a deal.

The bank officer looks things over, and finally says “ok, here’s a check for $40,000”.

Huh? 40k? But… but the equipment is 50k.

“Indeed” says the bank officer “but we only finance 80% of it. You have to come up with the rest.”

You stand firm… “But wait a second. The only reason we want to finance this is to keep cash liquid – you’re telling me that we have to take out a loan, but STILL need to put a lot of cash into the deal? I thought we had a better relationship than that?”

“No, we don’t” says the bank officer*

*full disclosure – this part is fictional. Instead of saying this, the bank office will comment on the weather again. But this is what he or she means.
And thus ends the trip to the bank. You didn’t even get to ask the loan officer about financing the soft costs, like tax, shipping, and installation (which would have resulted in more weather talk.)

Now let’s see what happens when you talk to an equipment financing company:

You: “We would like to finance a 50k piece of equipment. We want the entire cost to be financed, plus the tax, shipping, and installation.”

Equipment Financing Company: “Ok.”

You (puzzled): “Err… that’s it? Umm… it’s hot out, isn’t it?”

And yes, that’s really it. Reason #2 the equipment financing company is better than the bank is a lower upfront cost to you, because we’ll finance 100% of your equipment, including the “soft costs” like delivery, installation, etc.

And if you like, we’ll even talk about the weather.

SIMPLICITY!

This is reason one of my ten-part series “why an equipment financing company beats the bank if you are looking to finance or lease equipment.” The fact of the matter is this – the simplicity of working with an equipment financing company trumps the painfully thick paperwork file the bank will want you to sort through.

C’mon, let’s go to the bank and ask them for a loan. First, we have to wait while sweet Mrs. Swanson picks out her new checks (I see she went with poodles this year.) Now we sit with the loan officer…. And he has us fill out a loan application (3 pages). Then he wants our tax returns for the last 4 years. I think they’re in the back of the storeroom, behind those old copiers that don’t work but we’re saving because… ok, we don’t know why we’re saving them. Then he wants our financial statements. This means going to the accountant, who is always incredibly busy and lets us know this intrusion is really not appreciated. Oh, let’s not forget to list all of our collateral… we did bring a list, right? With proof it’s worth what we say it’s worth (otherwise, we may need an independent assessment). And HOW much is the minimum balance we plan to keep in the bank?

Ok, we get it all together, and wait… a week. Or two. They’ll get back to us.

The above is fairly typical. And a lot less fun than it sounds (and it doesn’t sound all that much fun, either.) Maybe the only saving grace is the bank might give you a lollipop.

Now let’s go to my equipment financing company to get the same loan.

We go to an online form from the comfort of your office (boy, you have a nice office!) We fill it out – took maybe five minutes. We get an answer in a day. A big fat YES!!!

Errr, that’s it? Really?

Yes, really, that’s it. An equipment financing company is so much easier to work with, it almost boggles the mind. We don’t like paperwork, and we don’t like waiting around. Sure, we don’t have poodle checks and lollipops, but you’re ok with that, right?

That’s just one reason an equipment financing company is better than a bank. There are nine more to come.