Financing equipment in all markets is always a slightly moving target˳ Hard credit rules are constantly changing because underwriters and credit teams are pressured to make the right decision; their jobs depend on it˳ The squeeze on one end for lenders is to minimize bad debt by avoiding financing clients which end up in default˳ On the other end, lenders and investors need to make a profit and federal regulations require they approve a certain number of loans˳ The scenario is frustrating for both the customer and finance agent but we can confirm that investors are still lending and approvals are much higher than last year˳
What are some common approval guidelines?
Complete financial disclosure is best for getting a quick decision˳ Knowing what your credit, assets, liabilities look like and how your company is performing will provide the underwriter a complete picture thus allowing them to offer the best terms possible˳ Hiding bad debt almost always comes out and simply delays or terminates the evaluation process so put all your cards on the table˳ Explain specific losses or why certain bills went unpaid˳
Check your own credit score or Dun & Bradstreet report; if something negative pops up then work to correct or repair it before you fill out an application; there are many agencies which help correct or fix credit quickly˳ Rectify the issue and have proof that it has been cleared; this step will show the underwriter that your credit is being managed properly˳
If you’re a smaller business, be prepared to PG (personally guarantee) your finance˳ It’s a blanket guarantee with your assets as a pledge that you will make your payments˳ If you don’t, then like any creditor, they will leverage or take your assets to repay the debt˳ Years ago, small businesses were not regularly asked to PG but now, they are˳ Lenders feel if you don’t “believe” in your business and prepared to stand behind it, then why should they˳ Side note; often high net worth individuals with poor cash flow feel they should get approved based on how much they are worth˳ This is often not the case, lenders are not in the business of filing lawsuits and chasing after assets for repayment which often results in a loss to them anyways˳ They want to lend to businesses which have a high probably of paying them back through their normal business operations˳
Finally, write a brief summary of yourself, your business and why the finance request will benefit your company˳ Whether you are the vendor or the borrower, putting a human touch to the finance application goes a lot further than many people realize˳ Describe length of time in business, who the owners are with brief background, what products you sell and areas or markets you serve and describe the opportunities˳ It’s how you would describe the business in a two minute introduction to a stranger˳
This market requires awareness and flexibility on both sides of the transaction; it’s not what lending was five years ago but in the long run it will be much better for all of us˳ Remember, you’re asking to borrow money from a stranger who has to be comfortable with your ability and willingness to pay them back˳
Source by https://ezinearticles˳com/?A-Finance-Approval-Can-Be-a-Moving-Target&id=9321740
