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In today’s tightened credit market we find that some type of structure may be necessary to complete an approval, while we do not require additional collateral we are open to taking it. Here are a couple of examples where TEAM Funding rolled up our sleeves and found a creative way to approve a transaction that may have been a decline.

Obtaining successful approvals for C-credit customers is often times as much about negotiating “the proper structure of the transaction” as it is about understanding “the financial story” of the Lessee.

At TEAM we strive to approve each customer with a 10% security deposit, for 12-36 months; using only the new equipment as the collateral.
 
However a large number of leases are successfully funded with deposits ranging from 15-50%. Other leases are approved with additional collateral such as 1st or 2nd liens on real estate. And many customers will pledge titled vehicles that are paid for.  Feel free to get creative and explore these options with your Lessees.

“Properly Structured Terms” is often the compelling cause to approve C-credit customers. We welcome your ideas.

Keep in mind that C-credit Lessees need a Funder that will “think outside of the box”. This is commonly the only way to get their new business started or help them re-establish their poor credit history.  

With a little creativity you can now assist your C-credit customers with funding that will jump start their businesses and reward you with thousands of dollars in commissions from…. what used to be “dead deals”!

Want to Know the Truth about C-credit?
“It requires creativity and a willingness to seek solutions!”

TEAM has been funding C-credit transactions since 1992. The market for finding C-credit customers is virtually limitless…Every year thousands of new businesses start-up that require equipment financing. Unfortunately they cannot obtain credit from banks or other standard lenders. Additionally, many older businesses find themselves in periodic cash flow problems; they have worked through them and resolved their problems, yet have tarnished their credit along the way. We have found that there are many business owners that deserve credit and are qualified to pay for credit if a lender will just listen to their story.  

Here are a few examples of successfully funded lease transactions.
Look for the creativity as you read these stories.

• Consulting Company: Lessee needed $68,000 for Hardware/Software.  Good company with 5 years time in business and 15 employees.  Sales over $1,000,000/year with 6 figures of profitability.  Lessee has only been in the US for 5 years with 2 trade items.  We secured the deal with a larger 30% security deposit and did a site inspection to verify their employees and secure area for the equipment.  The deposit along with a shorter 24-month term (because their cash flow was present) allowed us to make an approval out of this file.
  
  
• Clean out company: Lessee needed $50,000 for a pump truck but the lessee was a little light on the banks. Profitability was mod 5 but gross sales were only about $350,000 making this deal right on the line from a cash flow standpoint.  We talked to the owner about the possibility of a truck that was a year older and a little less money in the $30,000 range.  The PG and Owner had a BK just 2 years ago, since he did not have much cash to put up as a refundable security deposit we took another pump truck instead to help secure the deal.  Another example how creative thinking and outside of the box structure got TEAM over the hump.  Instead of an outright decline for a 50K truck, TEAM found a way to not only help the customer but also save the deal from a decline and mitigate the risk with another truck.
  
  
• Excavating company: with 27 years experienced owner.  Company had some slow pays therefore they did not qualify for standard underwriting.  TEAM acquired financials and completed an interview to determine the strengths of this customer.  TEAM found out in the interview that the lessee had been renting this equipment for more than the monthly payment.  When this was added back to the financials they were now cash flowing enough to cover this debt. TEAM actually saved them $500 a month over renting.  This was approved $55,500, 36 months with 20% refundable security deposit. 
  
  
• Automotive shop: in business 19 yeas with an owner’s credit score of 598. The owner is moving the shop closer to town to a building he owns. When a customer owns their building it shows stability and creates more comfort in the transaction, TEAM approved $41,400, 36 months with a 10% refundable security deposit and a blanket lien on equipment.  This is an example of a good strong A&B business type, brick and mortar where the lessee gets up in the morning and goes to a shop he owns. The owner has a handful of employees and while he has some past credit issues that keep this from being a standard deal, he was organized and provided financial statements showing organization and cash flow to complete this transaction.
• Excavating company: in business for 4 years was just awarded 2 new contracts for $950K.  Company was clean and cash flowing but owner had past BK and a 560 Credit Score.  TEAM approved this one for $59,000, 36 months with 10% refundable security deposit. 
  
  
• Swimming Pool Contractor: This was a small business, with very few employees, owned by a brother and sister. They wanted $17,500 for equipment used in constructing swimming pools. Unfortunately they only averaged a high-3 bank balance in their business checking account. The Lessee shared with us that much of his business was “in cash”. So we requested a $7500 certified check as his deposit and he express mailed the check the next day! This lease was approved & funded in spite of their financial weaknesses. Neither owner had a mortgage. Sister had a 645 personal credit score and Brother had a 526.

• Propane Sales & Delivery Business: In this case, the Lessee needed $45,000 for portable propane tanks located at various customer sites. The equipment is remotely located, which makes the transaction almost unsecured! During our telephone interview we realized the Lessee owned his office building. He agreed to a 2nd lien on his real estate which was enough security to approve funding for his portable propane tanks. By the way, TEAM does not require costly appraisals to secure real estate liens, which means it is now practical to fund leases of all dollar sizes using real estate as additional security. Lots of C-credit Lessees own real estate. Call your TEAM representative for more information on how to fund leases secured with real estate. 

• Dental Practice with a Bankruptcy: The dentist wanted $33,400 for a hardware/software upgrade to his business. During the interview we discovered that he had recently gone thru a divorce and filed bankruptcy. Once we gathered his corporate financial statements, it was very clear that he was making an excellent income. This was an easy approval once we understood “his story”. We offered him an immediate approval for 36 months, 10% security deposit. Initially he turned us down – the rate was too high for him. About 7-10 days later he called back and accepted our terms. He had searched for lower priced money and failed. The dentist learned to appreciate his approval and knows that he probably only needs this one lease before he can obtain cheaper money again.

• Small Manufacturing Company with 6 employees:  This 8 year old business applied for $71,000 for a used CNC machine. One partner just discharged a personal bankruptcy due to a divorce. The other 2 partners were cleaner credit, a 625 and a 631 personal credit score. Annual sales volume was about $650,000, but they had very high accounts receivable, low 5 checking balances and a 58 paydex rating. From the interview we discovered that they had 2 company vehicles that were paid for. Their combined market value was approximately $35,000. The vendor indicated that the CNC machine would hold its value and was re-saleable. They agreed to pledge the vehicles as additional collateral. This lease was approved and funded for 36 months with a 15% security deposit + the title to both vehicles held in TEAM’s possession.

• Telephone System for 7-Month old Mortgage Business: The mortgage industry is higher risk than many business types. In this case the Lessee had been in the industry for over 5 years and had already hired 7 sales people for his new business. Their average checking account balance was medium 5 and he had over $90,000 in his retirement account.  Though retirement accounts cannot be pledged, his personal life was organized, his personal credit was fairly clean and he had a history of making money in the mortgage industry. He was approved for $35,000, 30 months, 15% security deposit.

• Construction Contractor Wins New Airport Contract:  This business was only 18 months old and the owner had weak personal credit. However, he just won a 36 month $400,000 contract at the airport. As long as he could obtain the equipment and complete the work, he was assured payment from the city. Upon review of the contract we agreed to approve his lease for $45,000, 30 months, with a 20% security deposit. The equipment was good collateral and could be resold in the event of default.

• Stone Cutting Contractor with a Paid Tax Lien: This Lessee had been in business for 12 years. Most of his customers are general contractors and home builders. So his company paydex rating is consistently in the 50-55 range because  “I pay my bills when my customers pay me!” His personal credit is only a 585 credit score. His tax returns reflected annual sales of about $450,000 with a medium 5 net income. He claims that some sales were “in cash”. The problem with his credit is he had a paid tax lien for $13,000.  He just paid it off 3 months ago. TEAM approved his lease for $27,000 with a 25% deposit, 36 months because the equipment was good collateral, long time in business and he took care of his tax lien on a timely basis. This customer has integrity.