Equipment Leasing Brokers Ignored By Large Banks
Let’s be very clear here – Banks are ZERO RISK PLAYERS!!!!
Large FDIC and OCC regulated Banks that have been classified as “Well Capitalized” are generally focused on three categories;
- Growing the Asset base
- Improve the efficiency ratio
- Keep NPA’s under 1%
Everything they do and decisions made are impacted by these three key drivers! Brokers send transactions to large Banks for obvious reasons, core deposits, avoid “reputation risk” and most importantly – Banks pay Brokers. What they don’t realize is that the key drivers for success in banking today work against the Broke/client best interests.
The vast majority of equipment purchases in the United States are under one million dollars. Transactions of this size do absolutely nothing to move the needle when it comes to growing the Asset Base. Transactions are slow walked – no decision is a decision. They wait for the Broker to move on.
If a Bank had to gamble on which demographic would keep their NPA’s under 1% and they could choose a 6 year old company with top line revenues of 27 million and compiled financial presentation or a Fortune 1000 company with top line venues of several 100 million and an Audit for financial presentation, which do you think they would choose?
In addition to that, Banks want to do more with less people. Fin-tech has taken over consumer lending. They are cutting full-time equivalents and turning to automation, as they should. Payroll is a huge fixed expense that works directly against their efficiency ratio. Banks are also exiting the Brick and Mortar model of Banking in favor of the “online” model. Why? It dramatically improves their efficiency ratio. Banks want Audits because they can make decisions on transactions with fewer employees. Transactions from a Broker that have compiled statements get the slow walk treatment.
When a broker presents a typical mid-market transaction for 1/MM with internally compiled statements it automatically conflicts with two out the three Key Business Banking drivers.
That’s why Banks are slow to look at, respond too and fund your transaction.
The highest growth rate in new business volume went to the Independents, increasing by 59.9% to $12.7 billion. Approximately 70% of Captive Brokers, as well as Independents Brokers, reported growth, compared to 61.1% of Banks. Large-ticket represents only 17% of the total market, but had the strongest growth in 2015, expanding to $23.8 billion. This expansion in the large ticket market segment suggests a consolidation toward bigger entities with lower risk. The small-ticket segment represents 33% of new business volume, reaching $41.0 billion in 2015. (U.S. Equipment Market Study 2016-2017)
Find an independent funding source you are comfortable with. One who understands your business model as a broker. An independent set up to work with compiled statements. An independent that can document your transaction, fund the vendors, service the lease and get you paid!!!!!
Equipment Leases is set-up to respond to any business needing Equipment Financing as well as any reputable broker needing to get their clients project funded or a sale-leaseback in place. We can say “YES” when most say absolutely not. $50,000 to upwards of $5,000,000 with fast approvals, flexible terms, great rates and willing to look at challenged credit situations, B-, C or D credit deals looked at and if there is a way to get them done our credit managers can do it.