At Equifund, we understand that securing financing for vehicles, equipment, or trucks is a crucial step for many businesses. As a finance specialist, I highlight what lenders evaluate when assessing financing applications, from low to high risk. Knowing these factors can help you better prepare and improve your chances of approval.
- Calculate your monthly loan repayments here
- Looking for truck finance, click here
- Need extra cash flow, click here
1. Credit history and credit score
Low Risk: A robust credit history and a high credit score are fundamental to a low-risk profile. They reflect your ability to manage credit responsibly and make timely repayments, providing lenders with confidence in your financial reliability.
High Risk: A poor credit history, marked by late payments, defaults, or a low credit score, raises red flags. It indicates a higher likelihood of repayment issues, making lenders cautious about approving financing.
2. Business financial health
Low Risk: Strong financial statements are a cornerstone of a low-risk evaluation. This includes consistent cash flow, profitability, and a solid balance sheet. Lenders prefer businesses with positive net income, sufficient reserves, and a low debt-to-equity ratio.
High Risk: Inconsistent cash flow, losses, high debt levels, or inadequate reserves categorise a business as high risk. These factors suggest potential difficulties in meeting financial obligations, increasing the lender’s risk.
3. Asset quality and value
Low Risk: Lenders favour high-quality, well-maintained assets that retain their value over time. Such assets are easier to resell and have a stable market value, minimising the lender's risk.
High Risk: Older or poorly maintained equipment that depreciates quickly or has limited resale value poses higher risks. Lenders are wary if the asset’s value might not cover the loan balance in case of default.
4. Down payment size
Low Risk: A significant down payment reduces the overall loan amount and the lender’s risk. It shows the borrower’s commitment and financial strength.
High Risk: Minimal or no down payment increases the lender’s exposure. It can indicate that the borrower might be over-leveraged or lacking sufficient capital, thus posing a higher risk.
5. Industry and Market Conditions
Low Risk: Operating in stable, growing industries with a positive outlook is advantageous. Lenders prefer sectors with steady demand and low volatility, which assures them of your business’s long-term viability.
High Risk: Industries facing economic challenges, high competition, or regulatory uncertainties are considered high risk. Market instability can impact your revenue generation and repayment ability.
- Talk to us about your financing needs, click here
- To expand your fleet, click here
- To get fast and competitive equipment finance, click here
6. Borrower experience and management
Low Risk: Extensive experience in your industry and a successful management track record contribute to a low-risk assessment. Strong leadership and proven expertise inspire lender confidence.
High Risk: Inexperienced management or a history of business failures increases risk. Lenders may doubt your ability to navigate challenges and ensure business success.
At Equifund, we strive to help businesses navigate the complexities of asset financing. With over 60+ lending relationships, we will work with you to secure favourable financing terms. Focus on maintaining a strong credit profile, ensuring financial health, choosing quality assets, making substantial down payments, operating in stable industries, having a clear business plan, and demonstrating experience. These steps with the help of Equifund will put you in a strong position to acquire the necessary financing for your vehicles, equipment, and trucks.
Let's make smart equipment decisions together. Contact us today.
At Equifund Finance, we pride ourselves in:
- No paperwork Finance
- Over-the-phone approvals
- Hundreds of Australian businesses helped
- New or used Vehicles and Equipment
