Equipment Finance: An Invaluable Tool Helping Businesses Make Smarter Decisions

Brian Scott

May 07, 2020

Learn More About Western Alliance Bank Equipment Finance

It’s the cost of doing business. That is the mindset many corporate leaders and business owners fall into when making the choice to invest in the vital tools and resources needed to keep their companies generating revenue.

Unfortunately, this investment can become a significant financial trap for many, regardless of industry. From manufacturing and healthcare to hospitality and transportation, the cost of equipment and specialized tools can run into the hundreds of thousands, if not hundreds of millions of dollars. Never has that been more relevant than in these challenging times and changing economic conditions, where it is critical for businesses to evaluate the right equipment needed to optimize both their finances and capabilities. Factor in the fact that technology is evolving faster than the speed of light – especially in the healthcare field – and a piece of equipment currently being made may be obsolete by the time it is received and installed.

Those who are faced with the cost of purchasing new equipment either to enhance their product offerings or replace equipment that is nearing the end of its life cycle face enormous burdens. The two most considerable begin with dedicating a significant amount of revenue – revenue that could be reinvested in boosting hiring, fueling research and development or broadening service or product distribution footprints – to updating equipment. Next, they face the challenge associated with understanding exactly what equipment they need.

Many times, the result is taking the path of least resistance without fully thinking through purchasing decisions. Consider a hospital that may need new imaging equipment and decide to use their $100 million, 25-year bond, but as technology changes, they may find that after five years, the imaging machine is outdated and not worth the price tag they initially paid, but remain saddled with obsolete equipment that cannot be resold and 20 more years of loan payments. The same can be said for a host of other high-priced investments companies make.

It is in this environment of elevated C-Suite apprehension that equipment finance resources can become invaluable tools for navigating the often-complex world of investing in high-priced, yet vital equipment and tools.

Understanding Your Industry, Your Business and Your Specific Needs Creates Smarter Decisions

Consider the impact an experienced, knowledgeable and nimble equipment finance team can provide to help company’s gain and maintain a competitive edge:

  1. Take on Risk with Customers

    Lenders can often be especially critical of industries or equipment they may not understand. Western Alliance Bank’s Equipment Finance Group has embraced the bank’s relationship-centric approach to doing business. Taking time to understand operations and environments, and deeply believing in the continued success of its clients, as well as the long-term value of the equipment they are investing in, drives the group’s willingness to take on risk with customers, as opposed to leaving them to navigate it alone. By understanding the value and potential re-sale, in addition to unique operating factors such as seasonality, banks can design customized payment structures to better benefit companies, which makes sharing the risk an appealing option to many businesses. As well, banks can negotiate specific terms with OEMs to potentially delay or space out payments during equipment installation processes or while functionality is being assessed on site.

    Similarly, while taking on risk is one benefit of having a seasoned equipment leasing team on a business’ side, another is its role as protector from equipment obsolescence. By working closely with an equipment finance group, the C-Suite has added peace of mind that their banking team will work in their best interest to protect their cash flow and assets from becoming outdated too soon.

  2. Accurately Evaluate Needs Against Best-Investment Opportunities

    Too often, the lure of innovative equipment and cutting-edge technology can financially hinder instead of help businesses that are looking to add new machinery to boost their operations. A seasoned equipment finance team is well-versed in weighing a company’s true needs against what equipment is available in the industry. While a piece of equipment that may produce 10,000 widgets per minute may seem like the perfect efficiency-boosting solution, its price tag likely will not be justified for a manufacturer who sells 500,000 widgets per year. The same goes for evaluating the many capabilities of machinery that, while attractive, may not be of much, if any, use. A skilled Equipment Finance Group can provide greater clarity when evaluating options, offer deep industry knowledge of current technologies and view all available solutions through an unbiased lens. The ultimate goal is to be a good steward of customers’ financial and operational assets.

  3. Build Smart, Flexible Financing Options

    Upgrading equipment can be a significant risk given the many factors affecting a business’ operations. Whether seasonality, purchasing trends or economic conditions, equipment finance specialists can assess the wisest investments a company can make, and then build a financing plan that takes into consideration cash flow, production schedules and realistic earnings projections. When backed by a nimble business-minded bank, an equipment finance group can often leverage untapped resources, including financing options within other areas of the bank, government initiatives that provide tax-free or low rate investment incentives and even relationships with original equipment manufacturers (OEMs) and their captive sources.

For companies purchasing new equipment, having a knowledgeable, seasoned team on their side becomes a practical and smart-money solution to helping chart a course toward greater business success and provide the edge in highly competitive marketplaces. The Western Alliance Bank’s Equipment Finance sales team delivers spot-on funding options that fit your business strategy, including lease lines from 1MM to 50MM. For more information, connect with Brian Scott, Managing Director or Jon Brown, Commercial Sales Leader of the Equipment Finance Group or Lance Waller, Vice President of Sales:

Brian Scott: [email protected], (602) 296-6649

Jon Brown: [email protected], (602) 389-3522

Lance Waller: [email protected], (615) 337-0650