- Proven by being in business or current field of employment for greater than two years. Individuals who are starting businesses but can demonstrate strong management and experience in the industry will be considered.
- Individuals - no negative credit reference report. Established credit history. Home owners with reasonable equity. Company - Strong working capital, sound trading history, equity in balance sheet with retained earnings, no repeated repayment problems from a particular industry
- Ability to meet repayments, determined by the applicant’s income or financial statements
- The client’s asset backing, which is evidenced by the applicant having equity in their home and/or other tangible asset backing such as managed funds.etc .
- Any other factors relevant to granting approval. Cars vs equipment credit process is very different.
- If the applicant does not have the above qualities, equipment finance advisors will have to demonstrate to financiers why the applicant should be given finance when the criteria is outside their credit policy. These reasons should be documented clearly in the comments section of the application.
- Clients that do not satisfy the financing criteria may have a better chance of obtaining finance, particularly for motor vehicles, if they are able to pay a deposit or make a large initial payment of the total asset cost (such as 20%). In this instance, it is best to talk to the financiers before submitting an application.
Perceived as High Risk What Financiers Don’t want
- New ventures. Tax returns not completed.
- Defaults, bankrupts. Directors, guarantors not asset backed. History of losses and poor working capital. Directors who will not guarantee their debt is seen as a character issue.
- Highly geared, earnings cannot support further borrowing.
- Cash businesses that don’t declare income.
- Little or no personal wealth created.
- Particular industries. Each financier will have different lists.
Motor vehicles including cars, vans and trucks
Commercial vehicles including trucks, buses, trailers, prime movers.
Earthmoving equipment (yellow goods) bobcats, loaders, excavators.
Medical and dental equipment
Manufacturing equipment including engineering, metal and wood working.
Agricultural equipment tractors, headers etc
perceived high risk equipment
Boats, planes - Need to confirm that they will be used for assessable income in established business. Due to third party liability, financiers prefer these goods to be financed as chattel mortgage as the client is the owner and is liable for risks.
Professional office fit outs, demountable partitions, desks, and chairs as goods are worthless if sold. Generally prefer professionals and the amount borrowed to be less than $100K. For example, Accountants, Doctors, Pharmacists, Solicitors, etc. Restaurant fitouts are extremely hard to finance.
Computers particularly if software component exceeds 20%.
Specialised equipment with no secondary market and low resale value.
Used equipment greater than 4 years old. However, cars, tractors and trucks older may be acceptable. Please speak with the financier for more information.
Projects that require labour and capital works to be funded. For example, installation of equipment, concrete slab.