If you’ve had your application for machinery finance rejected, it can be a major blow. No-one likes a knock-back. But when it is in regard to a key business acquisition, it can be a serious set-back. If the machinery, plant or equipment is essential to the operation of the business, not being in a position to acquire the goods can derail business plans, operating schedules and customer delivery deadlines.
But the situation does not have to signal the end of the process or a downturn for the business. For business owners that have had a machinery finance application rejected, there are options available to source cost-effective loans.
Jade Equipment Finance specialises both in equipment finance and in assisting customers in this situation. We outline the options which are available and how we may be able to assist.
Reasons for Rejection
The reasons why a bank or lender has rejected an application for plant, equipment or machinery finance will determine which solution we can seek to achieve loan approval. It can determine your next move and/or how your Jade consultant approaches your finance application.
The most common reasons for loan application rejection that we hear from customers are:-
- Credit issues: the credit rating, history and profile of the business and/or business owner(s) is rated as poor or bad and as such not within the guidelines of the lender to approve the application.
- Insufficient documentation to complete the business finance application form: many banks and lenders require a vast array of financial records and information to support the loan application. New businesses and start-ups rarely have acquired the docs required.
- Trading time: some lenders will have minimum trading times for businesses to be eligible for finance. This may be 12, 18 or even 24 months.
- Industry: the lender may not extend finance to the particular industry in which the business operates.
- Type and/or condition of equipment: the lender may not finance a particular type of equipment or the age/condition of the machinery may not meet their guidelines as acceptable security.
- Loan preference issues: the terms and conditions requested by the business may not meet the guidelines for loan approval by the lender. These may include the minimum or maximum loan amount, the finance term, balloon amount or the finance structure preference.
For each of these rejection reasons there is a possible solution.
Credit Issues
For business with credit issues, we can pursue a Bad Credit Equipment Loan. Many banks and lenders do not offer loans to bad credit applicants, but as a broker style lender, we have connections with non-bank lenders that are in a position to approve such applications.
Bad credit applicants can expect a higher interest rate than that offered for good credit applicants; additional security against the loan may be requested in addition to the machinery; and special conditions may be attached to the loan.
Our consultants handle all the liaison and discussion with lenders so applicants do not have to deal with that. We strive to source the most cost-effective and workable loan offer possible. Applicants can address their credit profile and fix any errors to improve their prospects.
Insufficient Documentation and Trading Term
For businesses rejected on the basis of insufficient documentation the solution is Low Docs and No Docs Equipment Finance. The name says it all – these are loans for businesses that don’t have all the financials required to complete the application form. These solutions are suited to new businesses and start up and can also be applicable to businesses that do not meet the minimum trading terms for some lenders.
As with bad credit loans, these types of loans are not offered by all lenders. But we do have lenders that readily offer this type of finance. Applicants can be offered cheap rates and may expect that the credit profile of the individual business owners will be assessed as part of the approval process.
With some applications, additional security may be required or a cap placed on the loan amount.
Industry and Machinery and Equipment Types
Not all banks and lenders extend finance to all industries and on all types of equipment. If a loan application is rejected for either of these reasons, we can very likely assist. As specialists in machinery and equipment finance, we have a wide selection of banks and lenders on our lender panel and can source finance for most industries and for all types of business equipment.
Used machinery will be assessed for age/condition and that will impact the interest rate and loan conditions. In some cases the loan amount being requested for used goods may not be approved by the lender. In these instances, businesses can opt to reduce the amount requested by paying a deposit to the seller.
Finance Structure
Where the lender does not approve how the applicant would like their finance structured, it’s definitely time to engage our services. Our consultants are skilled negotiators and experts in structuring finance. We select one of our lenders that is amenable to discussions around loan terms, loan amounts and other conditions and we then handle the dealings on your behalf.
Avoiding Disappointment, Saving Time
If a business is considering applying for machinery finance but has some doubts about their prospects of being approved, speaking with us about pre-approved finance is a highly recommended way to go. We source quotes and process the application for finance based on the preferences of the business. During the process, where and if required, amendments can be made to achieve a mutually workable result.
By securing pre-approved finance, the business knows they have their loan approved for a certain amount and based on certain conditions. They can then move confidently forward to the acquisition phase.
Loan application rejection can be personally hard to take. But it does not have to be final. Solutions are available and we have professionals ready to assist businesses source workable outcomes for their machinery finance requirements.
Speak with a Jade Equipment Finance consultant on 1300 000 003 to discuss solutions where a loan application has been rejected.
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
