When an application is thorough and accurate the adjudication process is much quicker the likelihood of an approval is much stronger. A well presented lease less than $75,000 can be adjudicated within an hour.
Traditional new equipment lease
- signed credit application
- copy of ID
- full legal business name
- a quote on the equipment
- length of lease requested
- other pertinent information or detailed loan notes
Lease buyback of equipment or operating capital on top of equipment
These types of applications are more complicated, therefore more information is required. Besides a completed and signed application, the following items should be included for review.
- recent financial statements
- comparables when the value is more than $75,000 or if it is used
- ensure clients are clear that they are going to be signing for the deal personally as well as corporately
- detailed loan notes why they need operating capital Are they growing? Is there A/R problems?
If it is clear that there is a strategy to pay the loan, we will be more comfortable with an approval. It is important to note that a lease buyback or operating capital request still needs to be asset backed. We achieve that by having a piece of equipment that is free and clear of other debts, being sold to Weslease. Essentially, the client is both the vendor and the lessee. Weslease will generally pay about 70% of current market value on an asset.
If a client is looking for more cash back than the equipment is worth it could be backed up with a collateral mortgage against the clients home or rental property. In this scenario the loan to value must make sense for the lease. We cannot lend strictly on property as the asset. Collateral mortgages are advantageous when a piece of equipment being acquired is affixed or so specialized it is worth nothing if the deal collapses and it has to be repossessed. A collateral mortgage provides the security in these types of situations.
A pre-approval is often the first step in obtaining financing. However understanding the process and providing as much information upfront allows the adjudicators to fully understand and support the deal being presented. Approving a $40,000 deal is much different from approving a $200,000 deal. We must be able to justify this deal to our investors and ensure each and every deal fits within our guidelines.