Head of Vendor Equipment Finance
EverBank
When volatility becomes the norm, manufacturers and distributors need financing strategies that will help them compete. Justin Tabone explores the challenges of today’s macroeconomic environment and tools and terms that can help vendors navigate uncertainty.
Equipment finance companies can be strong partners in support of manufacturers and distributors, navigating periods of economic uncertainty.
Consider the current market forces affecting vendors: a mix of pressures from new tariff policies, pricing changes, manufacturing reshoring efforts, supply chain issues, heightened interest rates, geopolitical developments and overall economic conditions. Uncertainty is disrupting everyone’s planning processes. Yet major challenges for one vendor might be manageable concerns for another or even a competitive advantage depending on the equipment, customers and suppliers involved. In this dynamic environment, supporting equipment sales requires flexible, customized financing approaches built on a deep understanding of the vendor and industry-specific needs.
Recent efforts to support vendors also highlight the value of strategies already in the equipment finance playbook, including subsidy programs, deferrals and fair market value (FMV) leases. Equipment finance partners should consider leaning into these options, when appropriate, to ease equipment acquisition for vendor customers and incentivize sales. Subsidies are useful for reducing financing rates, while deferrals enable customers to delay or step up payments based on their budgetary needs. FMVs remain attractive options for customers who are shopping for new equipment financing with the lowest monthly payments and want to mitigate the risk of obsolescence.
A Brief Look at Impacts
The title of the 2022 film Everything Everywhere All at Once aptly describes today’s market environment. Equipment vendors and finance partners must contend with a range of external forces simultaneously.
The Federal Reserve’s May 2025 Beige Book reported heightened levels of economic and policy uncertainty, leading to hesitancy and caution for decision makers. They noted moderate price increases since the previous month’s reporting, but their contacts were anticipating prices to rise at a faster clip moving forward. “Contacts that plan to pass along tariff-related costs expect to do so within three months,” the report said.
Meanwhile, the National Association of Manufacturers’ Q2 2025 Outlook Survey noted sentiment had dropped nearly 15 percentage points from Q1, to 55.4%, “the lowest level since the height of the COVID-19 pandemic in Q2 of 2020.”
However, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index was rosier in June: 58.2, “a return to historically more positive levels after dramatic lows in April and May.” One survey participant predicted a release in pent-up demand as the impact of tariffs becomes clearer, and for leasing volumes to rise as equipment buyers look for financing options that preserve cash.
Useful Financing Tools
In any economy, but especially in an evolving one, customization is key. A one-size-fits-all approach doesn’t serve vendors equally. Finance partners must adapt tools and terms based on each vendor’s needs and the sectors served. Three financing strategies have proven to be especially helpful tools during fluid market conditions in the past and in the current cycle we are experiencing.
1. Subsidies
The first of these are subsidies. In subsidy programs, the vendor takes a percentage of the discount or margin that they have available and shares it with the finance company. The finance company, in turn, lowers the rate for the customer. Typically, the vendor also offers a price reduction on the equipment itself. Subsidies can help vendors stand out from the competition by offering a total solution, including price and rate benefits. These programs also produce higher lease penetration rates and equipment sales, and finance partners should be able to provide their vendors with measurable evidence of this through their reporting mechanisms. To succeed, a subsidy program needs the vendor’s key decision makers to align with the financing process. Vendors most likely to benefit from subsidy programs are those with rate-sensitive customers seeking the lowest overall acquisition costs—typically smaller businesses lacking access to low-cost capital. However, some vendors also use subsidies to stabilize rates for large institutional clients, leveraging them as a strategic tool to control customer acquisition and create long-term opportunities.
2. Deferrals
Deferrals are another useful financing tool for encouraging equipment sales during times of uncertainty. They take different forms but are often designed as full deferrals where payments are delayed for a period, or as step-up deferrals where payments increase over time. This financing option offers several benefits to incentivize product sales. The financing partner can schedule payments to begin with the customer’s next budget cycle or an anticipated improvement in business conditions, for example. In other cases, deferrals allow customers to have the product installed, work through the learning curve of using it, and start generating revenue with the equipment before full payments begin. Again, this financing option tends to be most attractive to vendor customers with smaller companies. They have strong business metrics but less capital than larger enterprises, requiring more time to manage payment obligations.
3. FMV Leases
Another mainstay of equipment finance that can drive product sales for manufacturers and distributors in this environment are FMV leases. Demand for FMVs increased as interest rates rose. While the loan-to-lease ratio is normalizing as rates remain steady, interest in FMVs is still strong. They appeal to customers who are less focused on depreciation benefits and are more focused on financing new equipment at the lowest monthly payment. Many asset types are conducive to FMV leases, but this is less true for products that have a long useful life, or equipment that a particular customer wants to hold onto for an extended period. The flexibility of FMV leases is an additional draw, especially end-of-term options for customers who want to upgrade the equipment as technology changes or their business builds revenue. In many cases, customers do decide to upgrade, and FMVs become a pipeline for future equipment sales. Financing partners can work with vendors to provide an efficient pathway for replacing or upgrading equipment within a certain period. Creative FMV structures can offer additional benefits through early buy-out options, caps on residuals and other features, too. What’s more, tax incentives for FMVs and equipment financing increased significantly this year since lawmakers permanently restored 100% bonus depreciation with the federal budget bill.
Managing Change
Lessons from past periods of market fluidity are helping equipment finance teams guide vendors through today’s changes and prepare for the future. A creative, customized financing approach is essential for supporting manufacturers and distributors in uncertain markets. Financing partners can apply proven strategies, draw on sector-specific experience, and use technology reporting capabilities to deliver portfolio insights — actively managing vendor customer accounts to uncover new sales opportunities. •
Justin Tabone is head of vendor equipment finance for EverBank and can be reached at justin.tabone@everbank.com. His team has more than 20 years’ experience serving equipment manufacturers, distributors and their customers.
