The Best Thing for Your Bank Relationship

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Finding Diversification in Your Sources of Capital

Many of you may feel your banking relationship is increasingly complicated. Bankers are under more and more pressure to comply with higher and higher standards of regulatory compliance and risk measurement. As their tightening business model evolves, it’s affecting your life too. Decisions take longer and may seem like this new world is more about their limitations than your opportunity. It’s not the banker’s fault, but if you need to acquire a big package of equipment to fuel growth, you need what you need.

Remember the line about not putting all our eggs in one basket? There’s something to that when it comes to how you borrow money for your business these days. Using the bank for all your equipment needs eats up how much money they can loan you for working capital. And working capital is really what those guys do best.

A diversification strategy might be the best option for you. What if you could maximize your access to capital while potentially improving your working capital relationship and securing equipment financing that better fits your equipment needs? You can. Diversification of your sources of capital can enable you to achieve these things and more.

Every lender has a somewhat mysterious “exposure” limit—a maximum amount of money they can lend you even if you are a great credit that always pays on time. The problem for many equipment-intensive business owners is that you only find the line after you’ve crossed it. Diversification allows you to preserve access to credit among lenders and minimize this exposure problem.

Another important point is that equipment debt can eat into your bank’s ability to provide working capital. With this exposure limit essentially being a maximum amount a bank can lend, every equipment loan eats into access to working capital and vice versa. By leveraging working capital lenders – banks – to help you with working capital and an experienced equipment financing provider to help you with equipment, you maximize your access to capital.

Also, leveraging your equipment financing provider has other advantages. People who know commercial equipment might offer higher loan-to-value financing (as much as 100%), longer terms, better cash flow options, residual-based leasing, and more to ensure you get the most ROI from equipment. Most banks don’t have the expertise with commercial equipment to offer these flexibilities.

But what happens when your equipment needs themselves reach “exposure limits”? Some equipment-driven businesses need multiple equipment financing providers to diversify there, as well. These businesses should seek an equipment financing provider that has not one credit policy to lend from, but perhaps dozens. These providers can be a long-term solution for you, offering a variety of finance choices, all with a single phone call. Access to a partner like this can help position you for the best options and minimize the headaches of dealing with multiple providers.

For more than 30 years, TimePayment has offered flexible monthly payment options for equipment needs starting at $500 and reaching to $500,000 and beyond. From startups to growing national brands and local dealers to major equipment manufacturers, over 1 million companies have trusted TimePayment’s innovative technology tools and creative capital to address equipment needs.

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