There are three main types of business equipment finance providers you can turn to: brokers, captive leasing agents, or independent lenders.
BROKER – Much like an insurance broker or mortgage broker, an equipment finance broker acts as an intermediary. The broker will take your credit application to the specific lenders and equity groups most likely to finance your asset. The key to success for the broker is to present your financial package in as positive a light as possible while emphasizing your strengths. The second key is to take your application to the right lender, which deals with your specific type of equipment. This is an area where experience is invaluable.
CAPTIVE LEASING AGENT – As a subsidiary leasing arm of a manufacturer or dealer, a captive leasing agent’s main purpose is to provide leasing to its parent company and/or dealer networks. Typically, you will only meet them when you are getting a lease directly from a dealer. Captives normally do not market themselves to the open public. Using a captive lease option is convenient when buying that specific item but may not always offer the most competitive rate; ask the dealer if you can get a second rate opinion or proposal. Also, captives are limited in that they cannot put multiple pieces of different equipment on one contract.
INDEPENDENT LENDER – Independent lenders are funding sources that finance directly to businesses. These can include banks, credit unions, and more diversified financial companies but the most common these days are local banks. Your local bank is a good source if you have an established relationship with them, have two to three years in business and meet their various guidelines. However, banks, particularly now, are likely to be on the conservative side and many applicants can be rejected.
Often, the type of leasing provider you should turn to will depend on your situation. If you have a local lender that knows you and is familiar with your business, you may want to start with them. A manufacturer’s captive leasing company is worth investigating if you have already decided exactly what equipment you are going to buy but you should still get a second lease proposal. In general, if you are not that familiar with equipment financing nor with the product you need to lease or need several items, equipment finance brokers are the best at providing multiple options and helping you get the business financing you need.