Today's market is saturated with capital equipment investment dollars from lenders that may not have expertise in the specific sectors in which they're lending. And while the access to capital is a boon from a low interest rate perspective, the lack of industry expertise and understanding of a business can result in onerous lending terms when the market retreats. In this week's Point of View, I present several considerations middle market businesses should take into account when choosing capital finance partners.
Due to today's positive market conditions, a wide variety of lenders can offer low rates without necessarily offering deep experience lending within a business' particular industry. This lack of expertise can cause friction when a sector goes through a natural cycle. A lender may try to impose harsh terms, underscoring a lack of knowledge about the industry and the business' ability to operate in a natural downturn, which ultimately put the business at risk.
Middle market businesses seeking capital finance partners might consider the following:
Lastly, middle market businesses seeking capital finance partners should consider the product variation being offered as all lenders are not created equal and do not offer the same breadth of financing products. Is your lender offering you the product that is best for your business or best for them? My suggestion is to choose a lender that is able to provide a custom tailored solution to your individual need. Or one that provides you with alternative structures that can provide different financial impacts.
Eric Miller is Group Head and Managing Director of
CIT Capital Equipment Finance where he is responsible for overseeing financing activities for large ticket equipment leasing and lending, as well as project finance related activities. To view more observations presented by Miller, go to
"Capital Equipment Finance: The Lifeblood of Growth," the latest piece of market intelligence in the CIT Executive Insights video series.
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