Solidscape & Prodways Director of Sales, Owen Burke, and CIT Business Capital’s Vice President, Greg Bourdon, had a recent conversation about the benefits of equipment financing. In this question and answer session, they explore how financing provides business owners with a flexible alternative to cash and what to look for when choosing a lender.
Owen: Why should customers finance their purchase rather than pay cash?
Greg: Now more than ever, cash reserves are important. Financing preserves working capital to be used for other needs that cannot be financed. It makes great business sense to finance equipment that will deliver a positive return on investment. The cash flow generated allows the equipment to pay for itself over time. In many cases, the value of conserving and having ready access to your cash can be much more significant than whatever finance charge is associated with borrowing.
Owen: What should be considered when choosing a lender?
Greg: Know the company you are working with and do your research. You’ll want to work with a company that is going to be there for your business both now and in the future. Consider a lender that is familiar with your specific needs and is open to structuring a financing option that works with your cash-flow situation. Industry knowledge also can be important to ensuring a smooth financing. As an example, the 3D printer manufactured by Solidscape is a type of equipment that CIT finances regularly. But if you look to your local bank to finance this type of asset, it may be the first one they have ever financed and that could lead to extra work or delays.
Owen: When it comes to financing, what constitutes a “good deal”?
Greg: This will vary based on a business owner’s personal preferences and the business’ current needs. Financing should always be something that’s affordable for your business. The monthly payment should be something you are comfortable with being able to make on time, every time.
It’s important to consider your top priority for the transaction. Is it the lowest payment? Lowest rate? Fastest approval? It can be difficult to get all of these from any one lender or any one finance agreement. By ranking what is most important to you, you can confidently look for financing that meets your needs.
When comparing quotes from different companies, be sure to compare apples to apples. There are terms that can be confusing for those outside of the financing industry, and they sometimes appear differently depending on the lender. Make sure that the figures you’re comparing match up correctly by asking your lenders thorough questions.
Owen: What do customers need to know before they apply?
Greg: Be aware of what your credit profile looks like before you apply for financing. Most lenders look at key factors like how long you have been in business, whether you’ve ever had a delinquency on obligations and, if so, how long ago. They will also review how much of your existing credit capacity is being utilized.
It may surprise you that most equipment lenders will review your personal credit as the owner of the business. However, depending on the lender’s risk preference, you may only see an inquiry reported on your personal credit report. This means you can use your personal credit to support your business credit without hurting your personal FICO Score.
Owen: Where can our customers learn more about business financing?
Greg: More information can be found on the Solidscape website. These guides will provide more detail to the topics we just discussed. If you have questions about your specific situation, don’t hesitate to visit CIT.com, give us a call or drop us an email. We’re here to help grow your business.
To download the Guide to Credit and Solutions for Small Business Success eBook, please click here.