Almost every business today relies on having some form of equipment to keep it running and moving forward.
Here’s some tips from us here at Yakka for ways on getting a YES from the bank for your all your equipment finance needs.
1. Is the equipment going to help generate revenue for your business?
One of the most important thing for banks & lenders to understand is that the equipment you are purchasing will help provide additional revenue to your business. If the equipment does generate revenue for the business this then gives the bank comfort that you can service their loan repayments. It’s also important to always have a plan and a story on what you’ll be using the equipment for and make sure when you do explain the story it’s believable and real to the bank. It’s never a good idea to walk in to a bank and say “I’ve got this idea and I’d like to go and buy a truck, can you approve me?”. So for most cases its always good to have a story behind the need for this equipment purchase.
2. It’s important to have some track record
Now this can be in your existing business or within the industry you specialise in. It’s important to demonstrate to the bank you have expertise in your industry and know what you’ll be doing with the equipment. Ideally, to the banks it’s also beneficial if your business has been trading for a one to two years. This can be really important when being assessed for equipment finance. However, as a broker we do have lenders that have an appetite for new business ventures outside the major banks for clients who have industry experience and want to start their own business journey.
3. Look after your credit file
If you’ve borrowed money before and are applying for equipment finance with the bank there is a good chance they will check up on you and see how your repayment history has been with that lender and how your credit file looks. That’s why it’s always important to behave with any other banks you have dealt with. Even be careful with any other organisations you have dealt such as telco companies as they can affect your credit file as well if you decide not to pay their bills. The good news for people with defaults on their credit file is that there are lenders that understand you may have had issues in the past. If there’s a good explanation for a default and its on a payment plan or has been paid in full the lender can sometimes be happy to proceed with giving you an approval. But its always best to look after your credit file first!
4. Have some backing
Most banks really like to know you are a either a property owner, have some working capital behind you, or have a 20% to 30% deposit to put towards the equipment you are financing. Having any of these offerings behind you showcases to the bank that you have a little bit of your own “skin in the game” on your application and that you are serious in applying for finance. This also gives your customer profile strength and encourages the bank to give an approval on your equipment purchase.
Thanks for reading. If you ever want to have a conversation around your next equipment purchase and want to feel the Yakka Difference please feel free to contact us. We can look at a variety of options for your business from a wide spread of lenders.