Securing equipment financing is a critical step for many business owners who want to expand, innovate or simply maintain their operations. However, obtaining that equipment financing can be difficult, especially if you’re a startup or have less-than-perfect credit.
Global Financial & Leasing Services (GFLS) is an alternative lender and our application process takes more than your credit score into account. No matter who you go through for equipment financing, you should always have a well-thought-out application ready that clearly communicates your needs, as well as and the benefits to the lender.
Here are a few pointers to create strong equipment financing proposal, including practical tips, essential elements to add and common pitfalls to avoid.
The Dos and Don’ts of Completing an Equipment Financing Application
The Dos
- Clearly Define Your Objectives: Start by clearly explaining why you need the equipment financing. What equipment are you looking to acquire, and how will it benefit your business? Be specific about how the equipment will contribute to your operations, enhance productivity or generate revenue.
- Provide a Detailed Cost Analysis: Lay out the financial specifics. Include the cost of the equipment, any associated implementation or training costs, and the expected return on investment (ROI). Being transparent about the numbers demonstrates financial literacy and helps build trust with the lender.
- Showcase Your Business’s Strengths: Use the application as an opportunity to highlight the strengths of your business. This could be your market position, your experienced team or your solid track record of revenue generation. Make it clear why your business is a safe and promising investment. Don’t ignore this section, even if you have less-than-perfect credit. Your story matters when working with an alternative lender, like GFLS.
- Demonstrate Repayment Capability: Lenders want to know that you can repay the loan. Provide comprehensive financial statements, cash flow projections and any other relevant financial information to demonstrate your business’s financial stability and repayment capability.
- Develop a Risk Mitigation Plan: Don’t forget to acknowledge potential risks. Do demonstrate that you have a plan to mitigate them. This could be market fluctuations, changes in technology or other industry-specific challenges. Showing that you have considered and planned for potential risks is a sign of a well-managed business.
- Communicate Effectively: Clarity is key. Ensure that your proposal is well-written, concise and free of industry jargon. Use clear headings and bullet points to make the document easy to navigate. Remember, the goal is to make it as easy as possible for the lender to understand your proposal and see the potential benefits.
The Don’ts
- Don’t Overcomplicate: Keep your proposal straightforward and to the point. Avoid the temptation to include unnecessary information that could distract from the main message.
- Don’t Underestimate the Importance of Presentation: First impressions matter. Ensure that your proposal is professionally presented, with no typos or grammatical errors. Use a clean, professional format and high-quality printing if submitting a hard copy.
- Don’t Be Vague: Vagueness can be a red flag for lenders. Be specific about your needs, your plans for the equipment and how you intend to repay the loan.
- Don’t Forget to Follow Up: Once you have submitted your proposal, don’t just wait for a response. Follow up with the lender to express your continued interest and offer to provide any additional information they might need. Keep in mind traditional lenders can take months to review and approve or deny your application. Our team reviews equipment financing applications and makes decisions in days versus weeks or months.
- Avoid Unrealistic Projections: While it’s important to showcase your business’s potential, avoid overly optimistic or unrealistic financial projections. Ensure that all claims are backed up with data and that your projections are based on reality.
- Don’t Neglect the Terms and Conditions: Be sure to thoroughly review and understand the terms and conditions of the financing agreement. Pay attention to the interest rates, repayment terms and any other obligations. Ensure that you are comfortable with the terms before proceeding. Don’t hesitate to ask questions if you’re unsure.
By following these practical tips and best practices, you can build a compelling case that showcases your business’s potential and demonstrates your ability to take on equipment financing.
Remember that preparation, transparency and effective communication are key. With a well-crafted application, you are one step closer to obtaining financing solutions that will support your business’s success. Global Financial & Leasing Services is here to guide you through the process, providing the support and expertise you want to get the equipment financing you need.