Funding Sources For Equipment Lease Brokers: Alternative Lenders
According to the NAELB, eight out of ten U.S. companies lease some or all of their equipment. The widespread — and ancient — practice of equipment leasing is used in all types of commercial businesses, from manufacturing and construction to restaurants and auto repair, and has fostered the rise of a very unique service professional: the equipment leasing broker.
Equipment leasing brokers serve as connectors and consultants, matching up businesses that need equipment for a limited time (or can’t afford to purchase it outright), with manufacturers and retailers that can provide the equipment, and lenders that have the capital to finance the transaction.
Equipment Leasing Brokers Turn To Alternative Funding
The rapid growth of the alternative lending industry has given equipment leasing brokers a lot more options when it comes to financing. No longer limited to traditional lending sources, brokers who work with alternative capital providers can arrange equipment leases with a level of speed and flexibility that wasn’t possible before.
“It’s generally a quicker process because we can approve financing same-day,” says Credibly Founder/Chief Revenue Officer Ryan Rosett. “And depending on the product they sell, the commissions can be more lucrative for the equipment leasing broker than working through a conventional channel to finance the equipment.”
The fact that alternative lenders offer unsecured loans gives them an additional advantage over other lending sources. “We’re not an asset-based lender, so often we can look at the business owner and their cash-flow, and offer a higher dollar amount, more than the actual piece of equipment that they’re trying to finance,” Rosett explains. “That gives the customer the ability to get the equipment that they’re trying to lease, plus everything else to make it work.”
More Advantages of Alternative Funding For Equipment Leasing Brokers
Alternative lending has also opened up a larger market for used equipment, in a way that benefits businesses just as much as equipment sellers and brokers. According to contracting consultant Tony Booth, “Many companies could save a lot of upfront cost by leasing used equipment, but it’s a lot harder to get those leases from traditional lenders because they won’t lend the full value of used equipment. The older the equipment, the harder it is to get a lease.”
“Since not all alternative financing is asset-based, the need for appraisals can be avoided. Equipment leasing brokers can extend their reach by helping clients obtain used equipment as well,” Booth says.
Even when a broker’s clients aren’t looking to lease equipment, they might be in the market for other financing products, such as working capital loans. Partnering with alternative lenders makes equipment leasing brokers even more valuable to the businesses they serve, due to the broad product sets that these lenders offer.
“When you’re working with small business owners, there may be opportunities to finance other aspects of their business,” Rosett says. “Having another arrow in your quiver opens up the window to more opportunities, which increases the lifetime value of the customer.”
Are your customers coming to you for equipment financing? Visit Credibly.com to learn about our partnership opportunities.