COMMERCIAL
EQUIPMENT FINANCING

Equipment financing and leasing solutions for middle market
companies operating in capital intensive industries.

WHAT IS COMMERCIAL EQUIPMENT FINANCING?

Commercial equipment financing is a business financing solution designed to help mid-sized companies acquire or upgrade their equipment, often ranging from industrial machinery equipment to office and technology essentials. Middle-market companies that require costly equipment but lack the capital to purchase these assets find commercial equipment financing a great option.

There are two primary solutions: commercial equipment financing and commercial equipment leasing. With the help of a commercial finance lender, equipment loans allow companies to purchase and own their equipment outright. The borrower makes regular payments until the loan is paid in full. This option is most beneficial for companies who plan to keep their equipment long term, and even more so if the equipment is expected to retain its value after the life of the loan.

Leasing offers more flexibility to businesses by allowing them to secure equipment with lower up-front costs. The business can often put little to no capital down and instead make regular, recurring payments to retain and utilize leased equipment temporarily. Plus, leasing frequently will provide the company with tax advantages for the equipment purchase. When the lease duration is up, they can buy the equipment at a discounted price, upgrade to newer models, or return it. This option helps businesses stay updated with advancements in equipment technology while maintaining healthy cash flow.

HOW DOES EQUIPMENT FINANCING WORK?

The process begins with the borrower completing a business credit application, usually requiring financial records and company documents. That gives the lender a better understanding of the business’s financial health.

The equipment lender’s underwriting process may differ depending on whether the lender is a bank or non-bank lending institution. Banks often require collateral and a good credit profile, making it a complicated process for certain businesses. Non-bank lenders often do not require collateral and can work with a broader range of credit profiles.

The results of the underwriting process will help determine the business’s creditworthiness and pricing. The loan terms, often called the loan structure, include the interest rate, loan duration, repayment terms, and equipment ownership. Once the application is approved, the lender will provide the funds to the business or the equipment vendor, depending on the agreement.

MAIN TYPES OF EQUIPMENT FINANCING

EQUIPMENT LOANS

A business borrows a specific amount of capital from a lender to purchase equipment outright. The business owns the equipment once the loan is paid off, and it may be used as collateral for the loan. The loan typically comes with fixed interest rates and a predetermined repayment schedule.

EQUIPMENT LEASING

Lease financing involves renting business equipment from a commercial equipment lender for a set period through monthly payments. The lessor retains ownership of the equipment during the lease term. At the end of the term, the business can usually purchase the equipment at its fair market value, renew the lease, or return it to the lessor.

WHY CHOOSE WINGSPIRE EQUIPMENT FINANCE?

Backed by funds managed by Blue Owl Capital (NYSE: OWL), a leading asset manager with over $175B in AUM, we are recognized as a leading provider of middle market equipment financing solutions for transaction sizes ranging from $1MM to $100MM. We have earned the trust of mid-sized businesses, private equity firms, and sponsored-backed companies operating in many industries. As a non-bank provider of funding solutions, we are driven by a team with extensive experience in complex equipment financing structures. This expertise and our ability to work with various credit profiles make us a preferred partner for commercial equipment financing.

FINANCING STRUCTURES WE OFFER:

BORROWER PROFILE:

TRANSACTION SIZE

$1MM-$100MM+

CREDIT PROFILE

CCC+ to BB-

ANNUAL REVENUE

$50MM+

MINIMUM EBITDA

$5MM

TYPES OF EQUIPMENT FINANCING STRUCTURES

LINES OF CREDIT

An equipment line of credit provides businesses with a specific range of capital to be used to purchase equipment. This option is best for businesses who need more flexibility in their equipment procurement process than traditional loan structures allow.

FINANCE AGREEMENTS (EFA)

A business receives funding that can be used to purchase operational equipment. It is most common for commercial equipment financing. The borrower will own the equipment after the purchase, but the lender will hold a lien on the asset until the loan has been repaid.

SYNTHETIC LEASES

A transaction in which a child company purchases equipment and proceeds to lease it to the parent company. It is usually popular with large corporations aiming to improve their debt-to-equity ratio. They are often considered an off-the-balance sheet operating lease.

TAX LEASES

A form of equipment leasing in which the lessor, who retains ownership of the asset, also maintains the right to associated tax advantages. The lessee makes payments to use the equipment but claims no ownership-related tax benefits.

SALE LEASEBACKS

This type of transaction occurs when a company sells an asset to a lessor and then proceeds to lease it back from the lender. The seller gets to continue using the asset through payments to the lessor per the terms of the lease agreement.

TRAC LEASES

A TRAC (Terminal Rental Adjustment Clause) lease is a financing option for commercial vehicles. It features lower monthly payments, estimating the equipment’s residual value. Lessees often have the choice to buy the equipment at the lease’s end.

THE ADVANTAGES OF EQUIPMENT LEASING

Equipment lease financing offers numerous advantages for businesses looking to acquire assets
without making a large upfront CapEx investment. Some of the key advantages include:

CASH FLOW MANAGEMENT

Lease payments are typically structured as fixed, regular payments over the financing term. This predictability makes it easier for businesses to manage their cash flow and budget effectively.

CAPITAL LIQUIDITY RETENTION

Leasing allows businesses to acquire necessary equipment without tying up a significant amount of capital. This preserves cash flow for other operational needs.

OFF-BALANCE SHEET FINANCING

Operating leases, in particular, may not be recorded as a liability on the balance sheet. This can improve financial ratios and make the business more attractive to investors and lenders.

100% FINANCING TERM STRUCTURE

Typically non-bank lenders allow for financing for the soft cost associated with an equipment lease. This may include, installation, software, training and delivery.

A LEADER IN MIDDLE MARKET EQUIPMENT LENDING

Wingspire Equipment Finance brings critical financial support to the front line for mid-sized companies operating in capital intensive industries. With the right partner, middle market companies, private equity firms, and their portfolio companies can drive business growth and maintain their competitive edge. Our flexible financing solutions empower our clients to tackle the obstacles that can often come with complex CapEx projects, ensuring access to the equipment needed to thrive in their respective industries.

COMMERCIAL EQUIPMENT FINANCING:
FAQs

Working with Wingspire Equipment Finance to secure equipment funding is seamless. Simply submit our inquiry form, and one of our financing experts will contact you to answer any of your questions. Our dedicated team will guide you through the lending process every step of the way and create a financing solution tailored to your unique business needs.

The cost of capital will vary depending on the type of lender you work with and can range from single to double digits in interest rates. The borrower’s credit profile and the type of financing may also affect the rate. At Wingspire Equipment Finance, we offer some of the most competitive rates in the industry for middle market equipment transactions.

Traditional bank lenders often require good credit to qualify for financing and usually require a lien on the business. At Wingspire Equipment Finance, we can consider other aspects of the company when determining a credit decision, not just the credit profile grade. We also do not have any collateral requirements.

Yes, soft costs are often included in equipment financing transactions. These are typically related to shipping and delivery, installation, training, etc., and will depend on your unique equipment acquisition needs.

Absolutely! Financing used commercial equipment is a common practice and a strategic choice for businesses looking to save on costs.