What to Expect When Partnering with a Commercial Lender for Equipment Purchases

Posted by Keystone Equipment Finance Corp. on Feb 12, 2024 8:00:00 AM

As a business owner, you understand that using cash to purchase equipment can strain your cash flow which can cause ripple...

As a business owner, you understand that using cash to purchase equipment can strain your cash flow which can cause ripple effects throughout your business. Even long-established businesses don't always have cash for acquiring or replacing equipment when needed.

Equipment financing can provide much-needed funds for purchasing commercial equipment such as trucks, construction equipment, and more. But if you’ve never financed heavy equipment or trucks, the process may seem daunting, but it doesn’t have to be.

This post discusses the basic steps in a typical commercial equipment financing process, including before, during, and after the funding stage.

Pre-financing Stage

This phase begins with shopping for a lender. You may already have one in mind but have yet to complete an application. If you are still weighing options, consider an independent finance company that operates within your industry. You will find that they understand your needs better and can often complete the entire transaction faster than a bank.

Once a lender is selected, the next step is to complete an application. Many lenders have online forms that can easily be submitted through their websites. Most applications require basic information including:

  • Contact information for all owners, including full name, phone number, email address, Social Security or EIN Number
  • Your company information, such as business name, DBA (if applicable), address, business start date, and corporate structure
  • Details of the equipment being financed, and vendor/dealer information

Most applications are fairly simple, requiring basic information while leaving room for any additional details you may want to provide. For example, the Keystone Equipment Finance Corp. application lets you select your sales rep, if you've already been communicating with one. It also provides room for optional descriptive information and allows you to upload documents.


During the Financing Process

Once you submit your online application, you'll typically receive feedback via email or phone within a day or so. The lender may contact you to ask for additional information to assist in the credit analysis, such as:

  • Federal Tax ID number
  • Tax returns
  • Bank statements

All this information is used in the credit evaluation and underwriting process. At Keystone, we evaluate your character, cash flow, and collateral (the equipment you are purchasing).

After reviewing the necessary information and documents, your lender will make a credit decision and will provide you with the terms and down payment information. Typically, the better your financial history, the more flexible the payment terms and conditions. Keystone will help to design payment terms to fit your financial circumstances.

One thing to keep in mind, if the down payment is higher than you might have currently available in cash, Keystone will consider refinancing additional equipment you might own along with the purchase. Using any equity you may have in your existing equipment could help reduce, or eliminate, the out-of-pocket down payment and allow you to be approved for a loan.

Once you agree to the loan terms, you receive the loan documentation. The agreement is a contract detailing your loan, including the payment terms, equipment details, total amount being funded, down payment, payment amount, and term length.

Review the loan agreement in detail and if you have any questions, ask your lender before signing. Once the documents are signed, the lender sends the funds to the equipment seller. With Keystone that’s typically within 24-48 hours. When the seller has received the funds, the equipment is yours to put into service.


Post-funding Stage

After the loan is completed and you’ve put your equipment to work, make sure you understand the payment process and keep up with your loan payments. Many lenders, including Keystone, provide an online portal where you can make payments and receive your year-end tax statements. These statements are necessary to take the interest deduction on your business taxes each year.

Maintain communication with your lender even after the purchase is complete. If you have any trouble making your payments, your finance partner may be able to assist, but they can't help you without open communication. Some lenders may be willing to renegotiate terms or provide payment extensions if you run into issues. Keystone is familiar with your business and understands the challenges you face. A representative is always available to help and answer any of your questions.

Why Finance Your Equipment Purchase?

Equipment financing can be beneficial when expanding your services, adding to your fleet, upgrading existing equipment, or replacing broken-down machinery. Keep in mind that the equipment being financed can be new or used equipment. You can also refinance existing equipment that has equity to reduce monthly payments or get cash out for working capital.

Keystone Equipment Finance Corp. has a deep understanding of your industry and business needs and provides fast and flexible equipment financing with excellent customer service.

Contact us today to learn how our financing programs can help you grow your business.