It is our plan to provide a free series about equipment finance. Over the coming months we will provide 1 topic per week.
Part 1 – Preapproved lending limits
Jason Smyth is the Managing partner in Rockhampton who 15 years experience in equipment or asset finance in Central Queensland. Jason’s has this to say about preapproved lending limits…..’
Equipment finance is an industry that is largely reactive – that is, a business owner comes to a realisation that they need to buy a piece of equipment and they need to finance it. They check out prices on the equipment, then call up to see if they can get the finance approved.
Imagine the feeling they have when we tell them we have that approved already.
This works in a lot of cases because we are able to get pre-approved lending limits in place to cater for just this situation. This means NO delays and NO uncertainty. It also means that in many cases a client may be able to use this buying power to their advantage and negotiate like they have cash in the bank. So no more waiting for an answer go to the negotiation table or go hunting with a pre-approval.
We work closely with our clients to establish what they may potentially need in their business.
Once we do that, we get to work putting a “limit approval” in place for them. This limit may be for specified items of equipment that will be purchased over a number of months, or it may be a bulk limit for unspecified items with a dollar amount indicating how much the bank will lend them.
Another bonus for the client is because the finance is pre-approved, we can usually prepare documents the same day they find the goods, which enable a very quick settlement time and a lot of the time the same day of signing the docs the loan settles.’
In summary a pre-approved limit is:-
1) Free (at this stage)
2) Used widely when several signing parties are likely to be involved in a business. That is only 1 person has to sign
3) Enables you to plan ahead for purchases over the next 12 months
4) Let’s you take advantage of items for sale at auction
5) Puts you in the best position to negotiate like you have cash in the bank with suppliers