In a recent equipment finance Investor Conference in New York, I was not surprised to learn that U.S. equipment leasing companies are increasingly offering working capital loans to customers. We’ve been doing what we call “professions loans” in the United Kingdom for a year, and demand is growing.
Since our business focus has always been to serve small and medium companies, it was a natural outreach to respond to our clients’ working capital needs. Our product provides short-term liquidity to professionals, such as doctors, accountants and architects, and the loan terms may be anywhere from three months to 3-years.
We plan to expand the product to a wider range of our customers in the near future to allow for the changing needs of our customer base. Working capital financing is also used by financial services companies to provide financing when clients are acquiring equipment that has some risk potential associated with it, such as laser machines or often vehicles where the finance company wants to avoid being the owner of record for the equipment and thus avoiding vicarious liability issues. It provides a reliable return for financing companies and meets the cash flow needs of growing organizations; frankly it is a “win-win” scenario.
While we were not offering professions loans when we started D&D Leasing in the UK in 2008, we began offering it a year ago when we discovered it was an exciting and rewarding segment for our business growth.
Working capital fills a gap that grew out of the global financial crisis and the banking industry’s toughening loan criteria was especially challenging for smaller companies.
Our typical customers using professions loans have under $2million in revenue on average, and have less than 10 employees, but we are flexible and interested in
supporting growing companies and entrepreneurs, regardless of their size.
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