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A new funding model to better serve customers

by Eamonn McMahon

Ever since the ‘idea’ days, when we burrowed away in the dark, damp basement of Somerset House, we have always stretched to benefit the Customer. As a tech-based business, our business model has never been about milking and butchering the cow for the last penny, but instead serving customers efficiently to position for volume.

One of the realities of the asset finance industry is the unnecessary layers of intermediation. The ultimate provider of capital, who might be a pension fund, a family office or a corporate investor are typically positioned so far away from the customer that a lot of inefficiencies and ‘economic rent’ creep in as the money moves along. It is the Customer who ultimately pays for this with higher leasing costs and slower, more time-consuming transactions.

The many layers of the asset finance industry add cost and bureaucracy

In many of the smaller asset finance deals, more than half of the cost of the finance is covering intermediary, admin and agency costs rather than compensating for expected credit losses or wholesale funding costs. Over-intermediation is of course a problem across the entire the economy but has always been particularly bad in asset finance and financial services more generally. The financial services industry captures 8% of the economy and over 1 million employees, which frankly is bonkers in a world where tech should be capable of optimising capital flows and servicing loans or leases. Talent and young people should be focused on creativity, engineering and supporting society, rather than moving money around – alas, a blog post for another day…

So, what are we going to do about it? Well after proving the strength of our tech-based vendor model last year during our PoC, we persuaded a leading Dutch Asset Manager, with over $10bn of assets under management, to fund our customers. So over the coming months,£5M of equipment in the UK will be financed in a few clicks over the equipal platform. The finance is being provided using an innovative financing structure known as a Forward Flow facility.

This week, our web app paid out on its first deal under this facility: a 3-year Hire Purchase agreement on some rotary screw compressor equipment for a small engineering company in New Cross, south London. Funds from across the globe financed the equipment. No banking bureaucracy. No Leasing Companies. No brokers. Just a lean tech platform and a progressive asset manager.

How does this help the customer you might ask?

Well, the proof is very much in pudding… Our finance is:

  1. Cheap We start at 4.9% APR and the vast majority of our deals price below 8% APR.
  2. Fast: The forward flow facility we have in place allows for deals to be financed quickly. On Tuesday we paid out on a deal, 51 minutes after the Acceptance Certificate was signed.
  3. Fair: Our funding mechanism is customer orientated so expect fair and flexible terms. If you settle early, benefit from a healthy discount rate on your future rental payments. If you need to upgrade your equipment that is easy. There are no unnecessary admin, contract, or annual fees. We are Customer First – and will always be.

There is also greater choice, control, transparency and the fact that equipal supports our small business customers from beginning to end, from sourcing to financing to management, means we are always on the Customer’s side.

Use our tech and ‘real money’ partnerships to take the efficient road…

So try us out.  We fund over 70% of applicants and you will know in minutes if you qualify for finance. And with our ‘Guaranteed Solution’ promise, in the rare event that we can’t finance a deal, we will bring something to the table, be it guidance, support or a connection.