By: Mary Francik on August 26th, 2021
How Can I Help My Customer Reach an Approval?
Picture this: you have recently gained a new customer and are excited to begin doing business with them. The new revenue and potential for more growth is promising for your business and you are eager to see where this partnership will go. Just one more step – your customer’s credit needs to be approved for financing. And, cue the bump in the road: your customer is not able to reach an approval. Without an approval, you are unable to help them acquire the equipment they need and you are missing an opportunity to create a long-standing customer relationship.
There are several reasons why a business may not get approved initially. Perhaps their business has limited tenure or historically they have paid cash and have not established business credit. A decline may not be a hard “no” but rather an indication that your finance partner needs additional information. Whatever the situation is, you want to ensure an opportunity to serve a customer’s needs. So, what options do you and your customer have?
During the six years I have been working in the financial industry at GreatAmerica, I’ve worked with a number of office technology providers who have run into this very roadblock. Sometimes, additional context and information about your customer can help us determine if there are other avenues we can take. Like most financial services providers, we will not approve deals that would be counterproductive to our mutual business objectives. At GreatAmerica we believe it is important to look at the big picture and understand why an application may have been originally declined. By digging a bit deeper, we may uncover additional details that allow us to grant an approval.
RELATED: 5 Challenges That May Prevent Your Customer from a Credit Approval
What Are My Options?
If your customer is not able to reach an immediate credit approval, there may be two options we can explore:
- Personal Guarantee: with this type of guarantee, the business owner’s social security number is requested, and their personal credit is reviewed. A history of good personal credit is a positive attribute and may offset the elements preventing the business alone from getting approved. This may allow the owner to personally support the transaction, in addition to their business.
- Corporate Guarantee: this guarantee allows your customer to receive support from a parent or affiliate company that will benefit from the transaction, using their credit to support the transaction until positive credit history is established.
Both methods are great ways to get your customer’s application approved and help them build their business credit.
What questions are important to ask in understanding if a personal or corporate guarantee is appropriate?
How can you as their provider begin to determine if it is worth exploring a personal or corporate guarantee option? Here are a few questions to ask:
- Does your customer have a parent or affiliate company, or shared ownership in any other business?
- If the business tenure is limited, is the owner of your customer willing to provide their personal guarantee to support the transaction?
- Are there other factors that should be considered? For example, does your customer have any experience within the industry? Maybe they came from a different company where they had a C-level position and would have significant knowledge and expertise that they could bring to their business and be successful?
GreatAmerica works to establish credit by looking at the whole picture. In doing so, we get a better idea of the history of the owner, how long they have been in the industry, and how much experience they have.
What if I do not feel comfortable asking the customer for their personal information?
Asking your customer for personal information might seem like an uncomfortable situation to navigate and education is key to overcoming that discomfort. The more your customer understands, the more likely they’ll grasp that you’re helping them get what they need. GreatAmerica is also available to have that conversation with your customer and we provide resources (like this blog) to help you educate your customers about leasing and business credit.
It is important to note that a personal guarantee is a contingent liability, meaning, it impacts the personal guarantor only if the business itself is not able to meet its repayment obligation. While the obligation is a contingent liability, an inquiry will report on the personal credit of the guarantor.
What is the benefit of personal and corporate guarantees?
In addition to helping your customer lease the equipment they need to conduct business, personal and corporate guarantees help your customer establish business credit. It allows the business to establish a good payment history and demonstrate the ability to support debt levels. These are positive data elements for future credit reviews.
It is our mission to help your company achieve greater success. We understand getting your customer approved plays a significant role in that success. Approvals also play a significant role in our success. These tightly aligned goals are why we review every transaction that comes through our doors to identify and collect the information we need to determine if we can grant an approval. Education and communication during every step of the process allows you to start that business relationship with your new customer on a positive note and establishes you as the business resource who enables them to grow and succeed.
Your GreatAmerica representative is here to help you help them! Reach out to a GreatAmerica Representative for more information.
Mary Francik has been with GreatAmerica for 6 years. She is a vendor relationship manager and helps independent dealers achieve growth and operational excellence with program customization and industry knowledge.