Jim says he can get 5% interest rates from his bank. Poor Jim.

As a business owner of an equipment intensive company, Jim is always on the lookout for new equipment. He has relationships with every dealer in the area and when the time comes to purchase, he’s paid for the equipment in several ways. His father, who started the business, only paid cash. While Jim tried to keep that up for several years, it became hard to do as competition increased and prices fell.

He has used his bank many times for a loan, but things just aren’t as easy as they used to be. Jim remembers a time when he could talk to his loan officer and tell him about business opportunities then the loan officer could actually make an approval decision, funding in a day or two. But those were the good ‘ole days. Today it has taken as much as 60 days for the bank fund his equipment. And the paperwork needed…wow. Things have changed much, but considering his bank has changed names 7 times in the last 30 years, it’s somehow not surprising.

But today, Jim is in the market for $50,000 in new equipment. Soured on the whole financing process, he is going to look at new options. Recently introduced to a new equipment finance company one of his competitors uses, Jim applied. The approval process was fast and required much less documentation—even though business has been less than perfect lately. The payment looked wonderful…but the interest rate seemed high. A few points higher than what he thought he might get form the bank.

So Jim went back to the bank where they told him the rate would be around 5%, but they’d need twice as much paperwork, 30 days to approve the credit (IF they can approve the credit) and he remembered he’d experienced as much as 60 days after that to get the equipment funded. A few years ago, the bank even turned him down. Something about “exposure”? But…hey…he could save 2 or 3 percent on interest rate. Worth it, right?


You see Jim…like most small business owners…has been brainwashed. The quest for the lower interest rate has him losing as much as 90 days of revenue (and profit) producing equipment working for his company. The impact of that time period could be hundreds to thousands per month when the 2 or 3 percent he is looking to save could pale in comparison to the money he could be earning if the equipment were in service. And rate is just a part of financing. The equipment finance company offered a 7-year term. The bank is offering 5. The savings in cash flow would be huge to Jim. Also, the bank wanted 15% cash down and the equipment finance company just wanted the first payment up front. That’s another huge difference. Not having to put down big cash outlays when buying equipment would be really helpful to Jim. And then there’s the biggest thing: Did the bank actually approve Jim? What if he wasted all this time and opportunity…and he doesn’t get approved?

All this for 2 or 3 percentage points? Poor Jim.

Don’t take your eye off the ball and don’t allow yourself to be brainwashed. An experienced equipment financier can help guide through your options, preserving your cash, maximizing cash flow with fast approvals and funding at competitive interest rates. At Key Credit, we help people like Jim make smarter decisions every day with finance programs that work for business. Let’s talk.