How Companies Can Be Bankable to Get Capital Equipment Financing
Most business owners feel like champions once they have seen their first 3-4 years. Through these years, they have to pour in a lot of effort, money and energy to make their companies run and grow. All business owners would agree that the start up phase is the most challenging time. It is in these initial years that creditors and lenders turn their back on you. These are also years when you are in prime need of funds. But the companies offering capital equipment financing have their concerns too. Statistics show that it is very risky to lend money to new ventures. But once you are through the first three years of business, you have stabilized your company and are hopefully making good profits too. Having reached this stable status, you should not have any problems getting adequate capital equipment financing. But this can only happen when you are bankable.
Though most business owners feel they are bankable after the first three years, the views of the commercial lenders vary. Commercial lenders take into consideration many issues such as how you operated your business in the initial years and what funds you currently have in the bank. There are few things that you should keep in mind if you want your capital equipment financing applications to be approved every time.
Look through your sales charts and consider whether the majority of your sales are coming from a selected few customers. If they are, then you should take some precautionary measures. Sales from few key customers would make your company vulnerable and heavily dependent on these customers. Commercial lenders will have concerns for these types of companies. They would know that if some of these customers leave then the business could collapse in a heap. Therefore, you should always try to widen your customer base and offer services to a larger range of customers. This will not only stabilize your sales but reduce chances of sudden collapse.
Another point to consider is whether you are having lots of sales but little profits. As a startup company you would have sold products to your customers at low prices just to promote the goodwill and name of the company. It is a good strategy for a startup company but not so good for a company which is more established. You should begin pricing your products and/or services more strategically to meet the industry specific profit margins. This will give you good profit figures and encourage commercial lenders to approve your capital equipment financing application.
Make sure you choose a capital equipment financing lender based on their specialization. You may meet all of the necessary financial criteria but your application may still get denied if the commercial lender doesn’t have a good understanding of your industry or your equipment needs. So make sure that the lender you choose is experienced with type of financing you need.
If you can keep the above mentioned points in mind, you have a better chance of getting your capital equipment financing application approved when you need funding.
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