In the construction, material handling, transportation and manufacturing industries, there are only a few ways to get heavy equipment: buy it, rent it or lease it.
Right now, equipment purchase prices are high. Material shortages, supply chain snafus and inflation threaten to push them higher still. That means bigger down payments and less cash on hand. At the same time, recent interest rate hikes have made financing those purchases more expensive.
All of which explains why many borrowers are leasing the equipment they need. We’re all familiar with the advantages of leasing — clear agreement terms, flexibility over purchasing, liquidity for other business expenses, lack of maintenance requirements, no need to sell the equipment when it’s no longer useful, potential tax benefits, and so on.
While the benefits of leasing are clear, standing out as a lender in a crowded leasing space isn’t so straightforward. Even well-capitalized firms, with deep experience in equipment leasing and strong relationships with dealers and manufacturers, could benefit from looking in the mirror and asking themselves one simple question: Do borrowers find me attractive?
Based on more than 30 years of cultivating lasting client relationships in the equipment leasing space, here are five of the most common attributes I’ve seen borrowers seek in a leasing partner:
- Supportive and selfless. Borrowers want a leasing partner that believes in them and puts them first. Before agreeing to a lease-long commitment, borrowers will look at the makeup of their lender team to ensure they check all the boxes. They’ll want experienced, knowledgeable equipment finance professionals with a deep understanding of sales, originations and asset management, and they’ll take comfort in knowing that their leasing partner genuinely cares about their business, is familiar with their industry and is willing to take time to learn about their business hopes and dreams.
- A proven track record. An attractive leasing firm has a long history and a proven track record — two qualities that are especially important today when supply chain issues make it hard for smaller, less capitalized dealers to get product. Borrowers are looking for firms that have been around long enough to have built a faster and more efficient equipment financing process — from providing quotes and receiving documents to delivering credit decisions, returning documents and funding the deal.
- Influence. Borrowers know that firms with a larger footprint better understand the nuances of regional business environments. Larger firms also have greater influence and can cultivate stronger dealer and OEM relationships, resulting in an increased ability to negotiate leases, provide inventory and subsidize financing with manufacturers.
- Financial stability. The best leasing partner is one that has the scale and financial strength to grow with its clients. Borrowers will be looking for a firm that can help clients of all sizes, so they know they’re in good hands as their own business develops. Another positive of a financially stable firm is the ability to provide customized financing solutions that other firms cannot.
- A good reputation. Borrowers will be doing a lot of research and asking a lot of questions before they commit — for good reason. Many financial institutions advertise low rates, but that doesn’t always make them the right fit. Borrowers want a reputable firm that will help them understand every part of the lease — how interest is calculated, any required fees, what happens if they can’t pay on time or need to end the lease — because they want to be sure that their leasing partner has their back.
While these attributes only represent some of what borrowers want, they’re a helpful reminder to consistently put your best foot forward to stand out as an equipment finance lender — especially as leasing rises in popularity due to higher rates and the increased cost of ownership of product.
At the end of the day, borrowers want to do business with a company that will be a partner through the leasing process, listen to their concerns and goals and support their business as if it were their own.