Produced by John Elliott of LeaseWorld.org
While it may seem that mega-corporations dominate our economy, in actual fact, over 90% of businesses are considered small businesses. In the United States, this translates to over 50% of workers employed by small business which amounts to 24 – 30 million small businesses according to the Small Business Administration. In Canada, about 48% of the total workforce work for or operate small businesses according to Industry Canada calculations from Statistics Canada. In either case, many small businesses struggle with cash flow and gaining access to capital to finance their operation and to acquire equipment. According to the Equipment Leasing & Finance Foundation, approximately 8 out of 10 businesses use financing as a means to acquire equipment. However, traditional routes are failing to keep up with small businesses and their behavioral shifts when they are looking to secure equipment financing.
Problems Small Businesses Face When Seeking Equipment Financing Through Conventional Routes
Traditionally, the primary way of obtaining equipment financing was to get a loan or line of credit form your bank or explore equipment leasing options through the supplier. While both of these options support the utility of equipment financing, they fall short in meeting what has become the expected “customer experience” like in many other traditional industries that have now been “disrupted”.
- Traditional Banks are slow and usually require a lot internal financial details, financial statements, and personal guarantees
- Banks can have lengthy turnaround times for reviewing applications
- You are required to physically be present to initiate and move through the process
- Lack user experience when compared to other industries such as access points, mobile, and execution
- Time and resource constrained business owners cannot shop and compare equipment financing options effectively through conventional channels
- Business owners often settle for equipment financing only offered through the equipment supplier or their bank
- Business owners are disconnected from market options and rates and this can lead to ill-informed decisions
Small Business Trends in Equipment Financing
Finding the best equipment financing rates and a great user experience and now becoming a fundamental part of the journey for small business owners seeking capital. Many business owners are now and beginning their search online to secure financing much they would shopping for any other product. Traditional banks and other lending institutions are also realizing they need to explore their options in order to offer customers online opportunities for financing.
Mobile is also becoming more relevant for small businesses to access financing options. Kabbage, a technology company that connects small businesses with capital, reported that 17% of small businesses are now through mobile and growing.
- Continued trend to seeking equipment financing online to find the best rates and user experience
- Increasing adoption of mobile apps and mobile browsing to search and secure equipment financing
- Niche or disruptive online finance companies are wining customers because of the value and experience they provide vs. the rates they provide
- Equipment suppliers are partnering with equipment finance companies that give their customers means to apply for financing directly from their website
- Traditional banks are now taking the technology revolution serious and exploring their own options to get in front of customers online by exploring new services, partnerships, and integrations
- Generational shift in business ownership will further solidify online and mobile as core channels to securing equipment financing
The Benefits to Going Online for Equipment Financing
Small business owners are going online for the best equipment leasing services for many of the same reasons they already use other online services for their business like accounting (i.e. Quickbooks), office supplies (i.e. Staples), Shipping (i.e. FedEx), Marketing Automation (i.e. Active Campaign), Project Management (i.e. Trello), and Sales CRM (i.e. Salesforce).
- Business owners want quick and effortless access to the best equipment financing options with the least amount of input
- Convenience and time savings is one of the biggest reasons business owners first turn to online
- Applying for credit can be a self-preserving means to capital because business owners can be more open when completing their applications and not having to be self-conscience about credit woes or financial details if completing in person at the dealer level.
- Equipment leasing marketplaces can provide interest, time, and cost savings by comparison shopping lenders much like shopping for hotels or flights
- Support for many different credit profiles and business types
- Access points to credit and capital; mobile, web, dealer portals
- Online convenience versus offline burden
- Privacy – only those that need to see the information have access to it
Best Places to Get Equipment Financing Online
- EquipmentWallet.com – Focuses exclusively on equipment leasing & financing and is armed with a roster of conventional, specialized, and institutional lenders. Businesses are matched with lenders who bid for the client’s business.
- LeaseQ.com – Online platform that focuses on equipment leasing with support from many leading lenders. Lender pricing is built into the system and allows borrowers to comparison shop in a matter of seconds.
- Fundera.com provides an array of business financing options from term loans to business start-up loans, and equipment financing. They use both technology and advisors to help assist clients in choosing the best financing options for their business.
- Lendio.com offers businesses access to many online financing options, such as lines of credit, short-term loans, and equipment financing. They have also introduced a franchise model where local representatives help make business owners aware of Lendio and its services and how businesses can benefit.
- Jocova Financial.com – Provides small business equipment financing and equipment leasing options. Jocova Financial offers both personal service and online tools and technology to guide customers through the application process.
The trend to move online and mobile for small business equipment financing will continue to become more common place and eventually the norm. As lenders and mobile technology become more aligned to service small business demands, this will further increase use cases and the adoption of small businesses. The generational shift in business ownership will further solidify online and mobile as core channels to securing equipment financing. Customer experience, comfortably with technology, and convenience will continue to be the driving factors in the shift; customers want what they want when they want it. Shopping for equipment financing online allows businesses to eliminate many barriers to accessing capital they have encountered in the past.
What’s next.. Machine Learning and AI to assist customers and use of the Blockchain within the industry are the near future events that will again re-shape the equipment leasing industry.