Resources: Supporting Challenged Credit Businesses

Equipment financing resources that help you discover more ways to grow your business.

NFS Leasing provides a wide variety of equipment financing resources, from informative articles, Toolkits and educational videos to quick grab business infographics to help your business grow and succeed. Our goal is to continue to grow our Resources Library so you can easily discover more ways equipment financing can grow your business.

Financing Equipment Outside the Bank

NFS Leasing, Inc., 2021

Financing Equipment Outside the BankFinancing equipment outside the bank might be the best thing a business can do.
Many businesses may feel that their banking relationship is becoming increasingly complicated. Banks are under more and more pressure to comply with higher and higher standards of regulatory compliance and risk measurements. As the bank’s business model evolves and tightens, it directly affects your business potential. Financial decisions take longer, and it may seem like the partnership is more about their limitations than your business potential and opportunity. It’s not the banker’s fault, but if you need to secure equipment to fuel growth, you need decisions and options to support that growth opportunity.

Remember when our grandparents told us the old line about not putting all our eggs in one basket? There’s something to that when it comes to how you borrow money for your business these days. Using the bank for all your equipment needs diminishes how much money they can lend to you for working capital. And working capital is really what banks do best. Most bankers don’t understand the ins and outs of equipment very well anyway.

A diversification strategy might be the best option for you. What if you could maximize your access to capital while potentially improving your working capital relationship and securing equipment financing that better fits your equipment needs? You can.

Every lender has a somewhat mysterious “exposure” limit—a maximum amount of money they will lend you even if you have a strong credit score and always pay on time. The problem for many equipment-intensive business owners is that you typically learn of the exposure limit after you’ve crossed it. A diversification strategy allows you to preserve access to credit among lenders and minimize this exposure problem.

Another important point is that equipment debt can eat into your bank’s ability to provide working capital. With this exposure limit essentially being the maximum amount, a bank can lend, every equipment loan or lease eats into access to working capital and vice versa. Access to working capital is a considerable concern for early-stage, high-growth, and turnaround companies. But if you leverage working capital lenders – like banks – to help you with working capital and leverage an experienced equipment lender to help you with equipment, you diversify and maximize your access to capital.

Also, leveraging an experienced equipment lender has other advantages. Equipment lenders who know commercial equipment can offer higher loan-to-value financing (as much as 100%), longer terms, better cash flow options, residual-based leasing, and more — ensuring you get the most ROI from the equipment. Most banks really don’t have the expertise with commercial equipment to offer these flexibilities.

At NFS Leasing, we manage diversification strategies like this for equipment-intensive, early-stage, high-growth and turnaround companies every day while overcoming the limitations of traditional lending. If you need a story lender to dig a little deeper and find real solutions, let’s talk.

A diversification strategy might be the best option for your business.

Growing Sales with the Tougher Deal

NFS Leasing, Inc., 2021

That’s a missed opportunityWhen vendors and manufacturers get a deal done for customers facing financial limitations, they do more than simply close a deal. They help a customer in a challenging circumstance get the equipment they desperately need to power revenue while establishing the foundation of a long-term relationship. But far too often, they pass on customers with financial obstacles because it’s too much work for too little reward. They may simply feel they don’t have a reliable funding source that delivers confidence of execution when those customers need it most.

That’s a missed opportunity for the vendor and the end user customer.

Vendors and manufacturers can grow their business by a wide variety of credit circumstances, not just the easy application only or large, established customers. So, when a tougher credit background with a complex story walks into the office, vendors and manufacturers should consider serving their “challenged-credit” customer with a “story” lender.

Here are 5 recommendations for success:

  1. Take the work of the tougher deal off your desk. Working these deals can take time. They can require more documentation and a deeper look at business issues. An established, reputable story lender understands this and works the financial issues, so you don’t have to. The lender gathers information and sets expectations while freeing the vendor up to work their side of the deal or help the next customer.
  2. Get the story behind the application. To effectively underwrite and close challenged credits, the lender must make an investment in the story of your customer, before investing in the equipment of their business. The dedication to speak to and learn from the customer behind every opportunity is critical to success.
  3. Treat every business to a first-class experience. Just because a business may have financial obstacles doesn’t mean they should feel judged, put down or in any way inferior. Most people and businesses have had a few bumps in the road, so freeing the buyer of that derogatory feeling should be a staple of how a challenged credit lender goes to market.
  4. Leverage the assets. A great challenged credit lender can leverage a customer’s asset base to quickly get the deal done in some really challenging circumstances.
  5. Trust & Transparency. Vendors should know that upon introducing their customer, their valued relationship will be protected, they will always know where things stand in the process and that they can trust the lender to deliver results in a way that enhances the customer experience.

NFS Leasing: Your most challenging deals…done.

At NFS Leasing, we overcome the financial challenges that stall traditional lending alternatives. In fact, we give you direct access to our experts as an extension of your team to help work with the customer, dig deep for the story/assets and create a solution. If you have an opportunity that needs a funding source willing to go the extra mile and find real solutions, let’s talk.

At NFS Leasing, we overcome the financial challenges that stall traditional lending alternatives.

Funding a Growth Vision: The Capital to Grow with Confidence

NFS Leasing, Inc., Updated: 2021

Funding a Growth VisionThere is nothing as important, powerful, or enjoyable as hearing the story of business success. Learning about company origins, challenges, competitive advantages, and industry outlook is essential to delivering impactful solutions. But the vision for the future is always the best part of the story. It’s inspiring to hear the passion and innovation that drive companies forward. But too often, there is a hesitancy to take the risk and confidently act on big ideas. At the heart of this trepidation lies concerns over funding the critical infrastructure, like new equipment and technologies, required to make bold moves.

Equipment may be the most scalable method to grow a company. From rollercoasters to modular buildings to advanced medical technologies, we’ve supported a diverse group of growing companies. Across a wide variety of industries, the amount of new, revenue-producing equipment in place directly correlates to a company’s ability to execute on growth plans. If a vision requires an investment like this, a solid finance strategy is critical.

Equipment First

A sound equipment finance strategy begins with a sound equipment usage strategy. Essential items to address are:

  • How long will the equipment be needed?
  • Will the company have long-term customer demand to support equipment investment?
  • Are companies staffed well enough to sustain increasing production requirements?
  • What are the delivery, installation, training requirements to get the equipment in place and driving revenue?
  • What is the required ramp-up time before revenues from production arrive?
  • Will the equipment have a secondary or lower-usage life in other applications?
  • How do companies dispose of end-of-life equipment?

Addressing equipment issues allows companies to build a finance strategy that maximizes flexibility, cash flow, and ROI because the financing is designed around usage. For example, equipment subject to demand fluctuations or shorter-term contracts may require usage flexibility or payments aligned with contract length. An operating lease could meet that need without committing long-term capital to short-term opportunities, minimizing business risk and amplifying financial outcomes.

Cash is King

“We just use our revolver.” “We get bank loans.” Or even worse, “We’ll just use our cash (equity).” These are common ‘finance strategies’ we hear when talking to growth leaders. But it’s essential not to take a one-size-fits-all approach to equipment financing–especially when acting on a growth vision. In most aggressive growth companies, cash is king.  A sound finance strategy should work to help invest in the revenue-producing equipment needed while preserving the cash and cash flow for working capital.

Most importantly, the right finance strategy for growing companies should more effectively match cash inflows and outflows. The up-front capital commitment of a growth vision with uncertain cash recovery and ROI/TCO models might be the most significant obstacle to acting on growth plans. Creative equipment capital can help minimize this impact by reducing cash outlay and even design payments around implementation activities. For example, a company could use a step-up payment structure that lowers payment obligations in the first several months of equipment operation and gradually ramps up as revenues start arriving from new business.

Non-Traditional Capital

To start building a finance strategy to realize a growth vision, find a lender willing to invest in your story– lenders willing to invest in your future, not just your past. It requires years of experience and dedicated expertise to offer financing flexible enough to fuel early-stage, turnaround, and high-growth companies. So don’t fail to capitalize on opportunities because of bank and traditional lender limitations. Out-of-the-box visions require out-of-the-box capital partners.

Whether you’re actively seeking funding or beginning to put a plan in motion, NFS Leasing can help you realize your vision. Our team brings a relentless focus on finding a way forward, is highly collaborative, and demonstrates great empathy in our journey to bring differentiated non-bank lending alternatives.

With a wealth of experience deploying capital to companies requiring funding beyond the limitations of traditional lending, we are committed to digging deeper, getting creative, and solving problems. Going the extra mile is a necessary element of funding the growth visions of companies. At NFS, going the extra mile is not just what we do. It’s who we are.

To learn more about NFS Leasing or begin telling your growth story to one of our experts, contact us today.

Out-of-the-box visions require out-of-the-box capital partners.

Capitalizing on the Chaos: Creative Capital in a Post-COVID Economy

NFS Leasing, Inc., Updated: 2021

Capitalizing on the ChaosThere is always opportunity in chaos. Over the last twelve months, companies sought a pandemic economy emergence that transcended stability or even a return to whatever normal used to be. The last year brought a monumental transition in working environments, seismic customer behavior shifts, and previously unimaginable government spending. Companies faced, and continue to face, a once-in-a-generation move in digital transformation (DX), business model evolution, product innovation, and go-to-market strategy. If companies capitalize on the opportunity at hand, it’s a shift that can reshape competitive landscapes—forever.

Is your company capitalizing on the chaos?

Logistics operations are accelerating investment in warehouse automation. Digital customer experiences are transforming retail shopping. Healthcare and biotechnology are beginning to reach beyond protection and prevention to improved quality of life with technologies that were once science fiction.

With an economy poised to surge as the world citizenry regains the freedoms of a post-COVID life, now is the time to act on the breakthrough strategies that recover, improve and disrupt your industry. But realizing the benefits of a bold plan requires more than vision. It requires capital.

Are you facing challenges accessing capital for your post-COVID growth strategies?

Many cutting-edge companies find themselves at the intersection of robust growth plans and limited access to capital. Bank lending is often an inadequate funding mechanism for early-stage innovators and high-growth firms. Their underwriting is built on the principle that past performance is the best, and in too many cases the only indicator of tomorrow’s outcomes. But recent events have been less than favorable to many higher growth companies. If they’re underwriting your past, (or your recent performance) they are unlikely to meet tomorrow’s capital needs.

Accordingly, early-stage and higher growth companies find themselves in the shuffle of investment presentations on the desk of private equity firms, venture capital, and investment banks. These are critical conduits to capital for many companies working to realize bold visions coming out of the crisis. The good news about these capital sources is the available ‘dry powder’ on the sidelines waiting for a suitable investment. The more challenging part is that it can take real-time to achieve this partnership, and the world is moving very quickly. Additionally, your company’s trading ownership for the capital you need to succeed may be necessary, but it’s expensive. The cost of equity is always higher than the most costly debt.

The reality is you need both bank capital and equity capital. But you might need something else. You might need a lender to fill a niche or gap where the banks won’t go while preserving equity for the highest return investments. You might need a lending resource that complements the lenders of your capital structure or ‘capstack’ and expands your access to funding.

Need creative capital to come back from the chaos?

For example, Apple, Amazon, Tesla, and even Microsoft. These were all companies that didn’t fit traditional underwriting models at one point. Traditional lenders wanted to underwrite IBM, Blackberry, and long-distance phone companies. The past doesn’t always predict future performance. Whether you are turning around a struggling enterprise with a robust new growth plan, breaking into a market with a new concept, or growing faster than your historical infrastructure can support, you need a lender to invest in your future, not just your past.

As companies invest in digital transformation, new product lines, acquiring new revenue-producing equipment before realizing growth revenues, six, seven, and eight-figure investments are often required. Without the critical infrastructure from new equipment and technology powering your business, growth plans remained limited or shelved entirely.

A creative equipment and project lender willing to invest in your future, your story, can offer solutions that preserve cash, equity, maximize cash flow, tax positions, and even complement other senior lending relationships. These ‘ story ‘ lenders can overcome underwriting challenges traditional lenders deem unreachable because of their extensive equipment knowledge and experience working with early-stage and high-growth companies. Armed with a deep understanding of your vision, story lenders solve problems with a commitment to find ways forward and get the deal done. Story lenders might be the key to capitalizing on the chaos and realizing growth plans.

Are you facing challenges accessing capital for your growth strategies?

NFS Leasing is THE story lender.

Have a vision for the post-COVID economy?  Does that vision require an equipment or technology need?   Let’s talk.

With roots in technology and innovation, NFS Leasing has funded the equipment and project needs of early-stage, turnaround, and high-growth firms for almost two decades.  Deploying capital to companies requiring funding beyond the limitations of traditional lending, we are committed to digging deeper, getting creative, and solving the problems that empower you to capitalize on the market opportunities.

Increase Your Approvals by Understanding Changes in Credit During COVID

by Jessica Rucker, NFS Leasing Senior Credit Analyst. Published in AACFB

Jessica Rucker HeadshotWhen we look at the devastating economic impact of the shutdowns and COVID, it would be natural to assume that conditions are bad across the board. It would be logical to think revenues are down in almost all non-tech, non-home delivery industries. A GDP shrinkage of -31% in the 2nd Quarter is terrible. While we know some obvious sectors are suffering, that’s not true for all businesses. Why is that and what can you do to get your deals approved and funded? How are small businesses really doing and what’s the opportunity for brokers and funders in the current uncertain conditions?

While consumers benefited from direct stimulus, businesses had the Paycheck Protection Program (the PPP) from the SBA to help them. Unfortunately, many agree it wasn’t effective. As this Business Insider article on the PPP reports, the requirements were complex. The loan forgiveness parameters were ‘murky’ meaning many businesses did not apply that may have been eligible. In fact, $134 billion remains undrawn of the allocated funds for the 2 tranches of the program.

What most companies need now is money more than equipment. Those who finance in heavy equipment industries like construction often have high dollar value equipment to borrow against by doing a sale/leaseback. This is something unique that you can offer to your customers. For new equipment needs, you have more options for your customers with B, C or Alt credits than other conventional lending options, especially if credits get worse.

Interested in learning more about how understanding recent credit changes can lead to more approvals? Get in touch with Jessica Rucker here for a further explanation on how this can help your business.

NFS Leasing’s Economic Revitalization Program

NFS Leasing’s Economic Revitalization ProgramContact NFS Leasing today to learn how we can help you embrace the new normal and seize opportunities, providing flexible solutions for your business.