Ashley Whyman, President at NFS Leasing talks about financing options and the benefits that a vendor or manufacturer can receive in partnering with financing sources to serve the sub-investment grade credit customer.
For many businesses, getting the financing they need for essential use equipment can be tough if they hit a rough patch. As a vendor or manufacturer of the equipment, it can be a challenge trying to obtain capital equipment financing for their customers’ with less than perfect credit. These types of credits, also known as C, D or storied credits, do have options available to them.
Watch Ashley’s full podcast interview on Vimeo.
Podcast (Excerpt)
Featuring Ashley Whyman – President, NFS Leasing
Rita Garwood:
For many businesses, getting the financing they need for essential use equipment can be tough if they hit a rough patch and end up being categorized by lenders as a sub-investment grade credit customer.
As a vendor or manufacturer of the equipment, it can be a challenge trying to obtain capital equipment financing for their customers with less than perfect credit. Nevermind with loss of revenue. These types of credits, also known as C, D, or storied credits do have options available to them.
We are going to talk about those options and the benefits that a vendor or manufacturer can receive when partnering with financing sources to serve the sub-investment grade credit customer.
In today’s podcast, before we get started, I would like to thank today’s podcast sponsor. NFS Leasing. NFS leasing is a privately held equipment finance company that provides equipment leases and loans to sub-investment grade businesses including C, D and storied credits.
The NFS team looks beyond the balance sheet to understand the business opportunity. Their expertise in business, finance, credit, underwriting, and creative deal structuring expand well outside the box and across almost every industry and asset class.
NFS leasing partners with vendors and manufacturers to deliver customized capital equipment financing programs, to help their vendor partners increase sales in competitive market places. NFS’s senior finance experts work to create programs that speed selling cycles, remove obstacles, and grow the business, all while taking the time to carefully consider the strategic goals of the end customer.
NFS leasing provides flexible custom tailored lease and loan solutions for transactions between twenty five thousand dollars and up to fifteen million. Since its inception, NFS leasing has exceeded one billion in originations through supporting businesses and business owners with less than perfect credit and bit ideas.
I am Rita Garwood, editor and chief of Monitor, joining me today on the podcast is Ashley Whyman. Ashley is president of NFS Leasing. Ashley, I am excited to talk with you today.
Ashley Whyman:
Hi Rita, thank you so much for having me.
Rita Garwood:
So, actually, the first question I have for you is what types of vendors or manufacturers may need a financial partner for sub-investment grade customers?
Ashley Whyman:
Sure, really any vendor or manufacturer that is losing business due to a prospective customer’s inability to obtain financing for the equipment acquisition, which happens fairly frequently. Generally, the customer targets a vendor manufacturer for equipment needs. Some customers may pay cash, in which case obviously you don’t need financing.
Others secure financing for the acquisition through their bank or other sources that are available to them and others, particularly those with more challenged credits, often don’t have the cash available and when they can’t secure the traditional financing, they either move on to a competitor who does have financing partners in place, either a leasing service or an external partner or they simply don’t buy. Obviously, this is not a good thing for the manufacturer or the vendor who wants to make the sale. NFS offers financing solutions to sub-investment grade credits and partners with vendors and manufacturers to help drive sales and customer retention.
Rita Garwood:
So, when you are looking at asset classes, are there specific industries or asset classes that see more C, D or storied credit customers than others?
Ashley Whyman:
The short answer is no, we really see storied credit across all industries and equipment types. If you think about it this way, there are companies across the industries that are not considered investment grade credits for one reason or the other and those reasons can vary. Maybe they are a start-up company or they are pre revenue. It could be a private company or a public company that has generated substantial revenue, but it is not yet profitable. It could be a company that historically has been profitable, but has seen a decline due to increased capital expenses or other foreseen or unforeseen circumstances.
This credit class spans in spectrum and generally has difficulty finding financing for equipment acquisition that will drive revenue for the business to help them grow. Here at NFS Leasing, we finance all types of equipment across the sub-investment grade credit, for manufacturing, IT, medical, scientific construction, transportation, recreation, and others.
Rita Garwood:
That is great, so could you tell me how the vendor, manufacturer or captive benefits from serving the sub-investment grade customer?
Ashley Whyman:
Absolutely, there are quite a few benefits that a vendor or manufacturer realizes by providing a financing solution to the sub-investment grade customer. At the highest level, I mean for vendors and manufacturers without captive financing arms, they are able to drive incremental sales volume by selling more product and hopefully retaining customers for many years to come which results in future revenue and obviously bidding out the competition.
There are manufacturers who have internal or what we call captive financing arms, however, the storied credit customer often does not fit into the credit box of the captive. Or the captive may have a customer exposure issue. Working with an external fiancé show partner like NFS Leasing allows the captive to stay and provide a solution to the customer, which helps the manufacturer move the product in the case of exposure issues retain that much desired customer stickiness.
In addition, there are other benefits to outsourcing financing to a partner like NFS leasing, including the limiting of the risk of default and managing the off lease process. NFS has become an expert in managing that process through its internal resources. And lastly, is really the benefit to the end user/customer itself, since much of the market is for essential use equipment, if the customer cannot receive the necessary financing, it means lost revenue and providing a solution is a win for the customer, the manufacturer, vendor, the job market and the economy as a whole.
Rita Garwood:
That is fantastic, it sounds like there is a benefit for everybody.
Can you tell me what a typical vendor program for the sub-investment grade customer would look like?
Ashley Whyman:
Rita, it’s a really good question and I’d say there is not a typical vendor program. It really depends on the needs and requirements of the specific vendor or manufacturer and the vendor program comes in many shapes and sizes, but just to run through three examples, there is a simple referral where vendor or manufacturer refers a customer to an independent equipment finance company like NFS Leasing and we document the lease on our own paper.
There is a private label, which is attractive to a lot of manufacturers and lenders and then there is syndication, where the independent finance company buys a paper from the captive. There are also vendor portals, which are online tools that help the management and transmission and tracking of information between the manufacturer vendor and the third party financing company. And this is an important tool because it allows the vendor manufacturer to be able to manage data, track data and progress on the customers that they have referred to the third party financing company.
And over our 15 year history at NFS Leasing, we’ve worked with many vendors, manufacturers, and captives, to customize programs tailored specifically to their needs with a great deal of flexibility. We pride ourselves on being transparent, solutions-driven, creative and fast.
Rita Garwood:
That is great, so that is the last question I had for you. Do you have any final thoughts on this topic?
Ashley Whyman:
First, I just wanted to thank you and The Monitor for hosting us today and then second just to reiterate for manufacturers and vendors and captives out there that NFS Leasing is here to offer solutions to your credit challenged customers, we are in the small, mid, and large ticket space and like I said previously, we offer customized programs and solutions to figure needs and again help you grow your businesses and at the end of the day move more product and generate more revenue. And if you want to learn more about becoming a partner, I would welcome you to visit our website at www.nfsleasing.com or you can email us at [email protected].
