From the Author

We often get this question with our new (and sometimes returning) clients. In the following article, we break down the process for getting an equipment financing approval and answer some common questions that come up about it.

Small and medium-sized businesses are vulnerable to surprises. And when a business owner wants to finance equipment to resume or improve operations, equipment financing comes in as a savior. How long should you expect to wait for the approval of funds when you’re in a rush? Can the process be expedited? How can I get the best result for my business? All of these questions are probably on your mind, and we’re here to help answer them in this article.

There’s no short answer to these questions because financing is a complex process. But when you have the direct assistance and support of professionals, you can get financing approval in no time. On average, the financing approval can occur anywhere from 2 hours to 3 days.

Key Reasons Approval Timeline Can Look Different
⦁ Your responsiveness
⦁ Completion of paperwork
⦁ The complexity of the deal
⦁ Uniqueness and structure of the financing deal

Financial Review

Essentially, the finance company will need to conduct an in-depth financial review. Once the quantitative data is clear, you can evaluate whether or not the financial position of your business is good enough to opt for a financing solution.

What will you need?
⦁ Past 2 years financial statements of your company (audited preferred)
⦁ Balance Sheet and Income Statements
If you show up to a finance company with these documents prepared, you will effectively expedite the back and forth process of gathering these documents.

Communicate the Back Story of Your Business

If you want to speed up the approval process, make sure to have a back story that would allow the financing company to understand your business journey. In fact, the back story will allow the financing company to determine the future potential of your business as well as the reasons for the current financial situation you are in (good or bad).
When it comes to additional financial review, most finance companies can review crucial financial documentation in a single day. Remember, you can explain your stringent financial situation, elaborate on existing circumstances, economic factors, and many other aspects of your business in your back story.

Move Closer to the Approval

Think of approval financing as a circle of sequential stories that pair up to reflect your financial situation. If you communicate the relevant requirements and meet standard criteria, you should be able to improve your financing approval chances significantly.

 

Turnaround Time

In most cases, businesses can expect to hear from the financing company in a single day. However, the delayed response of your application can be due to a number of factors. For instance, a finance company may be receiving applications in high volume that makes processing slower.
Often financing situations and needs are outside of the standard window of operations. As a result, the financing company requires more time to work to ensure that your business is getting exactly what it needs. The variables can be structure, term length, payment type, and even the type of equipment or software that you are trying to finance.

Application Time is the Key

The above gave you a sense of the comprehensive research that finance companies do to review your application and financial information. However, the application takes no more than a day to process when all requirements and documents are given. Optimistically, you can even get a response from your finance company on the day you apply. This outcome is especially likely if you show up with all the required documents ahead of time.

Final Thoughts

If the finance company wants to inquire about more information, the approval can take more time. But as mentioned earlier, business financing can be processed quickly. Nonetheless, it will still vary depending on your situation.
If you have a bad business credit rating, and no story to tell, you may face rejection. However, having a back story to go along with your credit situation can make all of the difference in a rejection and an approval. So long as you bring forward the needed documentation and have a truthful back story, you can expect to get financing for your business’ urgent or long-term needs quite promptly. Expect on average 1 – 3 days for a financing approval.

 

REFERENCES:

⦁ https://www.valuepenguin.com/small-business/equipment-financing
⦁ https://westminsternational.com.au/blog/3-things-you-need-to-get-equipment-finance-approved/
⦁ https://lanterncredit.com/small-business/equipment-financing
⦁ https://www.nav.com/blog/heavy-equipment-financing-leasing-for-2020-550339/
⦁ https://teamfinancialgroup.com/blog/the-beginners-guide-to-commercial-equipment-financing/

 

 

Blue Street Capital

Here at Blue Street Capital, we aim to provide you with the most up to date information on the financing industry so that you can become an educated buyer. Should you have any questions about this article, or any other information related to the equipment financing industry, please feel free to reach out to us using the contact form below. You may also give us a call at 714-316-1180.