Some scenarios or questions come up on a weekly basis and this is a good opportunity to share them with you here. If you think of others, please let me know.
GQAF – How fast can my finance move because we’re in a big hurry.
Answer – Usually the pacing item is the ability of the client to provide ALL the necessary financials to complete a credit review. Underwriters can’t get a “feel” for your credit with only one year of taxes because a trend can’t be established. With everything complete an approval can be obtained within 1-5 working days.
GQAF – I have great credit but my partner’s credit is so-so; he had a tough divorce.
Answer: A partnership of any type is a legally binding business relationship; one member with poor credit will reflect on the whole group and lower the overall credit rating. It is best to eliminate that partner until their credit has been restored otherwise you will suffer with higher rates or declines from lenders. There is no way around this.
GQAF – Business is great now but I have liens against me from a previous contractor.
Answer: We understand that the past is the past but if someone has filed a lien against you, whether you agree with it or not; you have to take care of it and get it resolved. Either dispute it, pay it off or get on a payment schedule but keep a record of how it was resolved. Few, if any, lenders will approve a business with open liens unless you have proof that something is being done about it.
GQAF – 6 months ago I bought a business which is 40 years old; can I get good financing?
Answer: This comes up often; it’s great that you bought an established proven business. But you will be evaluated as a new owner or start-up business. Lenders figure that new leadership may not ensure future success so you will pay higher rates. One exception to this rule; if the previous owner is still working side by side with you in the business and also will personally guarantee then you may qualify for lower rates – this is the only case in this scenario which will lower the finance rate otherwise be prepared for start-up rates.
GQAF – How can I get a lease with the lowest payments? My cash flow is tight.
Answer: Go for the longest term which is normally 5 or 7 years and select an Operating Lease structure in which you will have a 20% fair market value payoff at the end of the term. If you keep your business steady and make your payments on time then you can refinance that 20% payoff and extend it another 1-3 years. But we always warn that whatever the equipment or system it is you’re financing, it still has to make sense to your monthly cash flow and either save you money or add value to your operation.