When I look at the growing companies in the Monitor 101+, I see clearly that the entrepreneurial spirit is thriving in the equipment finance business. The fastest growing companies in this group share one important aspect, whether they are bank-owned, captive or independent: all are run by professionals with entrepreneurial spirit. With so much focus lately on technology and automation in the equipment finance world, it is encouraging to hear the high growth stories of these companies.
Liberty Commercial Capital
Leading the 101+ pack in terms of new business volume is Liberty Commercial Finance. Liberty booked more than $300 million in new business volume in 2019, up from $107 million in 2018.
Eric Freeman started Liberty Commercial Finance just three years ago in 2017. He did it in “old school” fashion with a desk, a computer and 17 years of experience in the industry. One day he had a well-paid job; the next he had given it all up to start a company on his own. I started AP Equipment Financing in the same manner more than 20 years ago, so Freeman’s story resonates with me.
Freeman’s background has been entirely in end-user direct sales. He started as an account representative for a small independent leasing company in Southern California in 2003. From there he launched the middle market group at Summit Funding Group in Ohio and grew it to more than a half billion in funding over a four-year period. In 2017, he felt he was ready to be an entrepreneur and launched Liberty.
“For the most part, we’re targeting private equity owned companies. We prospect through private equity firms and through their portfolio companies, and that’s where the vast majority of our deals are done,” Freeman says. “Our structures are pretty much dictated by our lessee. If they want to do a buck-out capital lease, we do that. If they want an off-balance sheet solution, we’ll do that. But we don’t really have a certain product we’re trying to fit our customers into. We kind of go the opposite route and we’ll look for what they need for their balance sheet, for their needs, and we’ll structure the deals that way.”
When asked how he has grown Liberty so quickly in such a small amount of time. Freeman says it’s all about the people. Since inception the focus has been to hire the best, most experienced people across all functions of the business, including sales, credit and operations, and incentivize them well. “When everybody’s pushing the same direction, you get good results,” he says.
Liberty recently received a minority strategic capital investment from Copley Equity Partners, a private investment firm. It took me 20 years to attract a large, professional equity investment. Freeman did it in three years. I think he is doing something right.
SANY Capital USA
Coming in second on the Monitor 101+ volume ranking, and growing from $12 million in 2018 volume to $160 million in 2019, is Sany Capital USA.
Dean Waters, president of Sany Capital USA, has used his entrepreneurial skills to introduce equipment financing to the largest construction and concrete equipment manufacturer in China and around the world, but one that is relatively new and unknown to the U.S. market.
Waters, who started his career as a hog farmer, has been involved in large ticket structured finance jobs with banks, run a hedge fund, and sold equipment finance products for GMAC, Bank of America and Stonebriar. He also has served as the CFO for a publicly traded company. Sany Capital was a great opportunity to bring all his skills together and build an organization from scratch.
“Before I got here, Sany Capital was not utilized on an ongoing basis. It had no employees and was predominantly used when a customer for whatever reason could not find third party financing,” Waters says. “We completely changed our focus and, beginning in 2019, Sany Capital began exclusively providing equipment finance to our SANY dealers. We provide very low cost — in most cases subsidized — financing to our dealers to carry their SANY retail inventory and provide dealer owned rental fleet financing. SANY has invested heavily in software systems and automation, which enabled us to book over $160 million in new business volume last year with only three full-time employees.
“As I mentioned, Sany Capital had [no] employees when I took over in December of 2018. I was literally doing everything from documents, to the accounting, to booking the business and so forth. In today’s environment, particularly in the finance industry, it’s very rare anyone gets the opportunity to see the various different divisions within a finance company. For example, you may start your career in credit and never leave credit administration or credit underwriting.”
Bell Bank Equipment Finance
Bell Bank Equipment Finance grew from $15 million in new business volume in 2018 to $75 million in 2019 and will significantly exceed that number in 2020. Eric Zehr has a similar story to Waters, in his case with a bank. Zehr started with Bell Bank in February of 2018 and Bell Bank Equipment Finance went live with its operations in September of the same year.
“I started at that time with an empty desk and blank whiteboard, and through the next six to seven months it was going through the set-up process. That included hiring key functions for the business and creating policy,” Zehr says. “The largest task at hand was vetting and then implementing a new lease accounting system. That we knew was our key hurdle and that’s usually the part that takes the longest for a bank-owned equipment finance company to start operating on its own platform. We chose LTi’s Aspire and they did a great job helping us navigate and get up and running as quickly as we did.”
Zehr is a 25-year veteran of Farm Credit Leasing, GE Capital and Merchants Bank. “I had exposure cross-functionally with most facets of the equipment finance business,” Zehr says. “Originations, capital markets and credit were the core functions for which I possessed significant roles. I found that working for smaller companies provided broader visibility of the business as compared to large companies, which tend to be more siloed. I think my last role in a smaller company was key for me to make me feel that, yeah, I can do this.”
In creating the business, Zehr focused on the delivery of great service to his customers. “We have the same products, we have the same paper, we cover a lot of the same companies. But I felt it was important as we got started to ask the question, ‘Where can we be different?’” Zehr says, “And I think that’s really focusing on the delivery to the customer. We surveyed new dealers, customers and prospects on what is important to them and then how can we align to support that need? The consistent theme that we hear is that speed of delivery typically is at the top of the list, No. 2 being flexible and easy to work with. Pricing comes up, of course. And then it’s providing customers with likable and helpful employees. It’s not a secret formula, but I think that these are key to winning, and more importantly, retaining good customers.”
Bell Bank has been recognized by Forbes on the World’s Best Bank list as well as on Fortune’s Best Workplaces list. In addition, in 2019, it was recognized by the Star Tribune in Minnesota as the top workplace for large employers. Zehr and his team have aligned the bank’s approach to treating employees well and focusing on their satisfaction and wellness, and has seen how customers of the leasing company respond to employees who are happy.
“The culture part is a big part of our business, and we want not only customers to look at Bell Bank Equipment Finance and say, ‘Hey, that’s a great company to align with,’ but we also want our employees and somebody that comes in as a prospective employee to realize the same thing. This looks like a pretty cool place to work.”
It is great to see new leaders emerge and see companies grow quickly in the equipment finance space. It warms my heart to hear entrepreneurs tell their success stories. •