We have recently spoken with numerous customers that are sharing their unique stories on what they are experiencing in the current banking environment. This insight may help your company make an informed decision on how to grow your business.
One of our customer’s used their bank to purchase a $100,000 excavator. The bank gave them a 3-year loan but required they deposit $100,000 in Certificates of Deposit as collateral that had different lengths of time for redemption over the 3-year period. It was up to the customer to remember to request the redemption at the designated time or the money would roll-over. Put simply, why commit funds to the bank only for them to then lend that same money back to you at a higher interest rate?
Another customer funded a truck with their bank. The truck was under warranty, however, when the truck broke down there was a 6-month delay on getting parts from the dealer to fix the truck. The bank repossessed the truck as well as other collateral as they had a blanket lien. Most bank loans for both equipment and working capital have blanket lien provisions. A blanket lien means your lender can seize all assets owned by the customer. Be careful putting up all your assets as collateral for one purchase and make sure you work with someone who is willing to work with you when times get tough. Keep in mind with a properly structured equipment lease the leasing company only has title to the equipment being funded.
Last, we have seen a large increase in payments being reported late on company credit bureaus and in most of the cases our customers aren’t aware they are being reported late. In one case, our customer had a few large pieces of construction financed with the manufacturer. The way the payment portal was set up, they could only make their payments online thru the manufacturer’s web portal for the amount that was invoiced on the last billing statement (the customer wasn’t aware there was a partial amount due in addition to that amount showed). After 2 years of making what they thought were payments on-time we found the manufacturer had been reporting them 90 days late on almost every payment.
With interest rates rising, inflation at a all time high, and supply chain issues continuing, now, more than ever, before you sign any paperwork make sure and read the terms in detail, spending an extra 30 minutes can make a huge difference in making an educated decision.
We have recently spoken with numerous customers that are sharing their unique stories on what they are experiencing in the current banking environment. This insight may help your company make an informed decision on how to grow your business.
One of our customer’s used their bank to purchase a $100,000 excavator. The bank gave them a 3-year loan but required they deposit $100,000 in Certificates of Deposit as collateral that had different lengths of time for redemption over the 3-year period. It was up to the customer to remember to request the redemption at the designated time or the money would roll-over. Put simply, why commit funds to the bank only for them to then lend that same money back to you at a higher interest rate?
Another customer funded a truck with their bank. The truck was under warranty, however, when the truck broke down there was a 6-month delay on getting parts from the dealer to fix the truck. The bank repossessed the truck as well as other collateral as they had a blanket lien. Most bank loans for both equipment and working capital have blanket lien provisions. A blanket lien means your lender can seize all assets owned by the customer. Be careful putting up all your assets as collateral for one purchase and make sure you work with someone who is willing to work with you when times get tough. Keep in mind with a properly structured equipment lease the leasing company only has title to the equipment being funded.
Last, we have seen a large increase in payments being reported late on company credit bureaus and in most of the cases our customers aren’t aware they are being reported late. In one case, our customer had a few large pieces of construction financed with the manufacturer. The way the payment portal was set up, they could only make their payments online thru the manufacturer’s web portal for the amount that was invoiced on the last billing statement (the customer wasn’t aware there was a partial amount due in addition to that amount showed). After 2 years of making what they thought were payments on-time we found the manufacturer had been reporting them 90 days late on almost every payment.
With interest rates rising, inflation at a all time high, and supply chain issues continuing, now, more than ever, before you sign any paperwork make sure and read the terms in detail, spending an extra 30 minutes can make a huge difference in making an educated decision.
