The Equipment Financing Question: Will Your Business Qualify?

Edward and Robert dive deep into the world of equipment financing, showing you the secrets to unlock capital 💰 for your business like a pro.

But... buckle up, folks, because this episode is jam-packed with actionable tips, insider knowledge, and real-life examples.

So, if you're eager to level up your business game, stick around and let's get ready to qualify for that equipment financing you've been dreaming of!🏆💼 Let the journey begin! 🎧🌟

To find out if you qualify to finance equipment visit https://www.smarterfinanceusa.com/.

As mentioned - the biggest hurdles to overcome if you need to finance equipment:

• Repossessions
• Open Bankruptcy
• Open child support

Transcript

Edward 00;00;05;18 - 00;00;18;27

Hey, everybody. Welcome to the Smarter Business Finance podcast. This is episode number ten. My name is Edward. I've been with the company for almost three years now. And we got Robert Jackson here as well.

RJ 00;00;19;07 - 00;00;19;20

Hello.

Edward 00;00;20;10 - 00;00;46;04

Yeah, I wanted to talk to you guys about different strategies. Who can who can't get financed. And I'll just tell you, just a little bit more about my background and Jackson's background and you know, what's going to be the best way for anyone to get financed smarter. So, Jackson, who do you think would qualify for for like financing?

Edward 00;00;46;04 - 00;00;50;16

You know, when they give us a call, you know, who would qualify for for good financing options?

RJ 00;00;50;28 - 00;01;14;02

Well, technically speaking, we could help everybody. Okay. It's just more or less a circumstance and everything is a case by case basis. We can service everything from an A to a D. Yeah. Portfolio. But generally, there's some key features or ingredients that we look for when or when we're assessing whether we can help, because that's honest. We don't even know if we can help, right?

RJ 00;01;14;02 - 00;01;39;14

That's what we want to find out. We just want to find out if we can help and we'll tell you if we can or not. Okay. If you're doing your due diligence and you got a competing offer, but there's there's a lot to be said because of the depth of financing that we have. Mm hmm. But what we look for in a transaction is we look for someone that's got more of an established business.

RJ 00;01;39;14 - 00;01;41;01

We can still do startups as well.

Edward 00;01;41;02 - 00;01;41;12

Okay.

RJ 00;01;41;28 - 00;02;10;06

They're just a little more restrictive and we don't have as many options to present to somebody that's got less than two years of operational history, whether it be Self-employment, LLC or company filing. We can even use professional licenses like contractors license or a doctor's license or a medical license to prove time in business. So if you've got a someone that's opening a new practice, for example, a doctor that had a med school, we can actually use his medical degree, his certificate, as.

Edward 00;02;10;06 - 00;02;10;21

Nice as.

RJ 00;02;10;21 - 00;02;17;18

A proof of of time in business. I did it for a for a doctor. It was opened up a new practice in Washington last year was pretty interesting.

Edward 00;02;18;04 - 00;02;24;29

Well, it sounds like you've got a lot of experience. Talk to me about, you know, how long you've been in the industry. How long have you been here at Smart Equipment?

RJ 00;02;25;04 - 00;02;45;01

It's been in smart equipment finance for almost five years. I was hired in May of 2018. Mm hmm. The company is, as has grown and I've grown with it. And it's been. It's been a wonderful relationship. Mm hmm. But, like. Like everything in life, you know, the only thing that's constant is change.

Edward 00;02;45;02 - 00;02;45;14

Right?

RJ 00;02;45;15 - 00;03;08;14

You kind of adapt and overcome and strategize a little differently. And there's a clearly some shifts in the industry that people have seen. Mm hmm. There have been some of our competitors that have no longer are operational or have completely paused their equipment financing program to give you a personal story. And I've been given permission to do this from the owners.

RJ 00;03;08;21 - 00;03;30;00

Okay. But for the longest time, they as we were growing as a company, we moved to a separate office. And the company had been around for five years smarter, smarter equipment finance. And over five years it was it was making it was growing tremendously. We had grown from from a couple of a handful of reps to a dozen.

RJ 00;03;30;00 - 00;03;48;29

And then we got two doors and it was it was it was wonderful. And as we moved to new office, they went to a local bank here. I won't tell you who, but they went to a local bank. They had all of their money in this account for years and years. So they've seen you know, they see that they could write a check for it and be fine with it.

RJ 00;03;49;04 - 00;04;03;25

But that wasn't what they wanted. They wanted to build business credit. They wanted to find out how easy it is or how hard it is to get financed at your local bank. Okay. And the Pg's had like 800 credit scores. And what.

Edward 00;04;03;25 - 00;04;04;29

PG is, when you say people.

RJ 00;04;04;29 - 00;04;15;21

Use a personal guarantor, sometimes we can do a corp only transaction for well-established and strong businesses that have a credit, a commercial credit profile that's that's that has some depth and some purchasing power.

Edward 00;04;15;21 - 00;04;15;28

Yeah.

RJ 00;04;16;17 - 00;04;39;19

But typically, most of our deals require a personal guarantee. It doesn't go on your personal credit. It's a it's a it's a commercial transaction. So it's treated differently than a consumer or or a loan. There's a lot of benefits that you can get in these types of transactions. Mm hmm. But back to the back to the story, the the local bank said, no, they they wouldn't do it.

Edward 00;04;39;23 - 00;04;40;03

Okay.

RJ 00;04;40;24 - 00;04;42;13

They just I guess they just didn't like the.

Edward 00;04;42;16 - 00;04;44;12

Why do you think that is? Why do you think the local banks.

RJ 00;04;44;26 - 00;04;57;27

I didn't think they like the collateral weren't honestly, because there would be nothing else that I could see that would be a reason. So the owners of our company called one of the underwriters that we used, and we had an approval in 2 hours.

Edward 00;04;57;28 - 00;04;58;26

Nice. Okay.

RJ 00;04;58;27 - 00;05;11;25

And it was and it's exactly what they wanted. It was a they needed a trade reference on pay net. Mm hmm. And they got it. So we can finance anything. Right. And finance furniture for an office.

Edward 00;05;11;26 - 00;05;12;04

Yeah.

RJ 00;05;13;03 - 00;05;21;03

That's. It's pretty safe to say that we can pretty much finance everything is anything. As long as it's not illegal or doesn't fly or flow. That's mantra I usually say. Right.

Edward 00;05;21;05 - 00;05;21;15

Right.

RJ 00;05;21;23 - 00;05;24;00

Because it's just not where our our specialty is.

Edward 00;05;24;03 - 00;05;47;15

Okay. Once they. Awesome. Yeah. That was just a lot of good information. No, when I first started with the company about three years ago and we were in a lot smaller office, you know, your voice is one of the voices that I heard and it giving a lot of verbal judo phrases on the phone, especially when someone didn't qualify.

Edward 00;05;47;24 - 00;06;01;05

You know, Talk to me about that. You know, what are some examples of people that don't qualify for for finance and who, you know, when you call in, you talk to them for maybe 5 minutes. It's going to be a hard no. Mm hmm. You're talking about that.

RJ 00;06;02;11 - 00;06;23;15

A hard know within 5 minutes is pretty easy to assess. But the key things we look for is repossessions, especially more recent, because anything that's more recent on your credit report is more damaging. Yeah. Someone that's had a bankruptcy dismissed is a red flag. Any child support arrearages isn't.

Edward 00;06;23;17 - 00;06;25;12

Why child support? Why do you think that is?

RJ 00;06;25;12 - 00;06;36;10

Because your your your taxes and your and your your wages can be levied from IRS. They can level your bank account. Right, right, right. And if in many of these transactions are set up is a.c.h.

Edward 00;06;36;14 - 00;06;36;25

Okay.

RJ 00;06;36;27 - 00;06;37;07

You know.

Edward 00;06;37;19 - 00;06;42;28

So if the account is like levied or compromised and they can't make their credit correct.

RJ 00;06;43;10 - 00;07;02;25

It's just protecting their investment, just anybody would go. But those are some immediate red flags. Mm hmm. If the bankruptcy is discharged, you're not dismissed. There's a difference. Chapter 13 or chapter seven. That's a we can only use the credit profile from after the discharge date. We can't use anything prior.

Edward 00;07;02;29 - 00;07;03;17

Understood.

RJ 00;07;03;17 - 00;07;26;14

And those we can work with in certain parameters. They're not as damaging, quite frankly, as the others, which is odd. But those are. Those are the things that you're going to know. It's just a hard. No. Right. A startup with a startup with a sub 600 credit score or sub 650 for that matter, is going to be rather difficult on any level.

RJ 00;07;26;21 - 00;07;36;03

Right? There are options that we could present, but they're going to rely heavily on cash flow and bank account balances.

Edward 00;07;36;07 - 00;07;58;26

Okay. So Will, when you first get a, you know, an app from from a relationship that you've built with a dealer or vendor, you know, and you're talking to the client, you know, what are some of the first lenders that you think about, you know, taking the client to, you know, if it's going to be a good deal?

RJ 00;07;59;29 - 00;08;09;10

Well, most of our financing that we have for for qualified people, we can do with zero down to less than 5%.

Edward 00;08;09;13 - 00;08;09;22

Okay.

RJ 00;08;10;16 - 00;08;30;21

And typically, the typically the 5% is just an advance payment or two. Mm hmm. To show you've got some skin in the game, really, all it is you're paying for the use of the equipment immediately. Mm hmm. And it's credited to the term. So it's it's it's it's. It's going towards the equipment, and it's showing that you're. You're committed, you're ready, You're.

RJ 00;08;30;21 - 00;08;31;20

You're. You're in it.

Edward 00;08;31;25 - 00;08;32;05

Okay.

RJ 00;08;32;26 - 00;08;47;08

To do that sort of thing, there's with respect to interest rates and payments, it's difficult to say, but we can I've seen rates somewhere in the range of about 7 to 20%, you know.

Edward 00;08;47;20 - 00;08;50;05

Based on what we what would determine that interest rate.

RJ 00;08;51;01 - 00;09;19;24

Oh. The time in business, the because the operational history of a business is because the credibility factor. It's a huge, huge indication because the longer someone is around, they're clearly running their business. Well, it's not always the case. Lehman Brothers was an example of that. Arthur Andersen. But so it's you know, there's no guarantee in life that that that it will be.

RJ 00;09;19;24 - 00;09;21;04

But you just do your best.

Edward 00;09;21;04 - 00;09;21;11

Okay.

RJ 00;09;23;13 - 00;09;35;17

But we would look for someone that's got a long operational history, a credit score, 650, 700 above. You'd qualify for some of our best financing, often zero down up to 250 300,000 on the app only.

Edward 00;09;35;26 - 00;09;56;13

Okay. What's like a 30,000 foot view of the process? Say that you're able to start moving forward with someone. They've got a good FICO score, they've got a good credit profile and they've got time in business. You know what your average like a turnaround time. You know, to to get an approval, What does that look like?

RJ 00;09;57;16 - 00;10;15;05

In some instances, we can get approval in a matter of hours. Okay. Some may take as long as 24 hours to from turnaround, from application to term sheet. If it's approved, if it's declined, we'll know a lot sooner and we'll share that information with you as well. So you're constantly updated on where you stand, whether it's good or bad news, you need to know.

Edward 00;10;15;08 - 00;10;15;18

Yeah.

RJ 00;10;17;29 - 00;10;33;01

But when we get the term sheet in the in the terms agreeable, depending on the equipment and the position that it's in, if it's a titled piece of equipment or if it's a non-tribal piece of equipment, those are two different factors on how quickly it can close. If it's a non-title deal, it can close in 24 to 48 hours.

RJ 00;10;33;05 - 00;10;37;29

Mm hmm. I've done them in same day where the dogs are out in the morning and closed at that that afternoon.

Edward 00;10;38;00 - 00;10;43;21

Okay. How are you able to get, you know, what's the difference between something that's titled and non-Title? What is the.

RJ 00;10;43;21 - 00;10;56;21

Difference? Well, the title has to be reassigned to the new owner. Okay, So there's a bit of a process that goes on with our funding department. So our company is compartmentalized into sales, credit and funding. And we do that because it creates a better workflow for everybody.

Edward 00;10;56;22 - 00;10;57;13

Like an assembly?

RJ 00;10;57;15 - 00;11;05;04

Correct? Correct. So it allows each department to focus on their specialty and not be distracted with other things that they don't have to worry about.

Edward 00;11;05;05 - 00;11;05;17

Got it.

RJ 00;11;06;00 - 00;11;33;09

Sales is focused on attracting new business creditors and attracted to getting the deals approved at the best possible option we can. Yeah. And then our funny department is wrapping up on the back end. They're getting insurance. They're doing title reassignments, which can take a few days. There's got to be power of attorney signed because you've you've your notarize an official documentation that your business is taking ownership of this new piece of equipment whereas with a non tiler piece of equipment we just need the serial number for a UCC filing.

Edward 00;11;33;17 - 00;11;50;10

Okay. Understood. Understood. What do you think are some of the like best moments that you've had here at Smarter Finance? You know, whether it was closing a deal or closing out a year strong, you know, give me some examples of that.

RJ 00;11;50;18 - 00;12;12;07

I had a customer I don't know if I can mention his name, but he was in Texas and he was purchasing something called a kill truck was a real kill truck. And what it is, is when an oil well is depleted, they have to bring in these trucks that have a hard clay silica compound thing that just that closes the hole hundreds and hundreds of feet down.

RJ 00;12;12;07 - 00;12;16;00

And he charges immense amounts of money for this service. Hmm.

Edward 00;12;16;07 - 00;12;16;17

Okay.

RJ 00;12;17;05 - 00;12;22;18

He had excellent personal credit, but he was a he was technically a startup. So you only had a year and a half time in business.

Edward 00;12;22;19 - 00;12;23;00

Okay.

RJ 00;12;24;05 - 00;12;31;14

And it was a $269,000 piece of machinery. But his business was doing about a half a million a month.

Edward 00;12;31;20 - 00;12;32;01

Nice.

RJ 00;12;32;15 - 00;12;41;04

From his from his trucks that he had. I don't know how he'd purchased somebody. He had some trucks already. Right. So and I was able I was able to get the deal approved.

Edward 00;12;41;06 - 00;12;41;13

Okay.

RJ 00;12;42;09 - 00;12;59;29

And it was at the it was towards the end of the year. It was in a December. And he wanted to do it for the tax deduction. So he was he was pushing to really, really get it done. But it was it was it was really we developed he came back and we did a couple of other deals, incidentally.

RJ 00;12;59;29 - 00;13;26;07

Enough. Mm hmm. But it was such a it was one of my biggest transactions I had ever done with the company. I mean, up to that point, I think it was it was my largest deal. But, you know, it it it allowed me to hit a certain milestone the year they have the their company has an event they call President's Club, and they'll take you and your spouse on a vacation somewhere.

RJ 00;13;26;07 - 00;13;34;27

Yeah, my daughter went to Florida, so it was pretty fun. Mm hmm. But that allowed me to get that bonus for that year. So it was pretty. It was pretty cool.

Edward 00;13;34;29 - 00;13;35;12

Nice.

RJ 00;13;35;20 - 00;13;39;04

And yeah, that's what I think is probably the biggest one.

Edward 00;13;39;11 - 00;13;41;15

Okay.

RJ 00;13;41;22 - 00;13;42;18

What about you, Edward?

Edward 00;13;42;19 - 00;13;44;08

So, I mean, what would you like the. What would you like?

RJ 00;13;44;17 - 00;13;50;18

Oh, let's see. Ask to tell me a little bit more about the high down payment lenders.

Edward 00;13;50;23 - 00;14;18;10

Yeah, we've got a few of them. Less than a handful where they're going to require, you know, 30 to 40%. Mm hmm. And the reason being is because it's going to be a high risk type of a transaction where they're either new to the industry, new in business, their FICO score credit profile isn't where it should be. And to overcome that risk, there needs to be just more, more capital put down so we reduce the overall financed amount.

Edward 00;14;19;23 - 00;14;44;09

I've got one or two of those approved. I've only been able to complete one because it takes a nice chunk of change, you know, out of their bank account and, you know, it's it's a little tough for people to come up with 30 to 40% down just is what it is. But for the most part, people that do get approved, they'll move forward with that type of a transaction because they're out of options.

Edward 00;14;44;09 - 00;14;46;08

That's it. You know, there's nowhere else for them to go.

RJ 00;14;46;09 - 00;14;51;25

I think that you could probably say that that program is more like a starter, like a starter, like a Kickstarter program. Kind of.

Edward 00;14;51;25 - 00;15;18;08

Kind of. Yeah, yeah, yeah. And you know, if they're able to get approved, it'll give their business the adrenaline shot that they need to be able to, you know, get all the, the things that they want in life were there for the family. So it just is what it is. And that's what I talked to them about, you know, is not just the equipment, but once you get the equipment, what is it going to do for your family once you start to pull on their heartstrings and remember their why, you talk to them about that.

Edward 00;15;18;16 - 00;15;22;25

You're just a little bit more incentivizes the transaction, right?

RJ 00;15;23;04 - 00;15;27;05

Yeah. And that would lead into credit based lenders. What do you know about them?

Edward 00;15;28;15 - 00;15;47;11

So a lot of the the programs that we have, you know, where they're looking at not just the time in business, but they look at the credit profile and they don't just look at the FICO score, which is what a lot of clients, you know, when they call me, they say, oh, they've got an 800 FICO score, but they've only got three credit cards.

Edward 00;15;47;11 - 00;16;13;18

I'm from Victoria Secret or The Gap or something like that. But we do it a little bit more of an in-depth look at the strengths and weaknesses of, you know, each individual trade line. And we look at there's a certain amount of time and what we look at is an average pay cycle of 24 months. That's the tier level that we look at to qualify that client for, you know, that credit based lender.

Edward 00;16;13;26 - 00;16;19;09

And we're looking at the installment lines, you know, not the the revolving lines of credit. So much so, yeah.

RJ 00;16;19;15 - 00;16;26;18

Edward, what is the difference between an installment and a revolving and which of those is the best?

Edward 00;16;26;20 - 00;16;53;21

Good, Good question. So revolving are revolving lines of credit are going to be credit cards, installment lines are going to be vehicles that you've purchased and you're actively making payments on them. Sometimes you can get a home equity, you know, in, say, installment or and be a recreational vehicle and say an installment. What we look at to get deals approved are installment lines of credit.

Edward 00;16;54;05 - 00;17;17;03

Yeah. And it has to be, you know, consistent payments of at least 12 months. Some lenders, they require 24 months just depends on, you know, after talking to the client, you know, what's going to fit best for their type of a scenario. Yeah. We take into consideration, you know, if they want to do a larger down payment or if they want to do something where they're keeping most of their cash in their pocket.

Edward 00;17;17;03 - 00;17;50;10

So, you know, just keeping in mind the transaction in your head. Yeah. Jackson, it was nice talking to you, you know, just giving me a, you know, a 30,000 foot view of, you know, financing options and programs. You know, there are a ton of different programs that are out there. But we're here to help educate, you know, that clients and vendors, anyone that wants to get financed smarter, only real way that you're going to be able to see what you qualify for is for you to give us a call at eight, six, 66319996.

Edward 00;17;50;24 - 00;17;56;22

Love for everyone to give us a call so we can get you financed smarter.

Rob 00;18;02;00 - 00;18;31;28

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