Most small business owners try hard to cut their expenses. Usually, their expenses spiral out of control due to high costs incurred on delivering their services/sales. Besides, additional costs are also incurred in delivering the supplies to their premises.
So, as a small business owner, the first thing you would want to do is buy a commercial truck that will deliver your orders and stockpile the supplies. But what if you don't have money to finance a truck purchase like many small business owners?
Well! We have a solution just for you. This article will give you an overview of how to avail a commercial truck financing loan. Besides, we will give you a complete upshot of one of our favorite equipment/truck financing companies.
Financial Pacific Leasing is one of the best equipment financing companies that helps you be the owner of your very first truck. The best thing about this company is that it works with all sorts of customers despite their poor credit scores so that they can take their business to the next level.
Financial Pacific Leasing Inc. is a subsidiary company of a bank called Umpqua Bank—a Portland, Oregon based bank. Financial Pacific Leasing has been in the lending business for over 46 years and is headquartered in Federal Way, Washington.
Financial Pacific Leasing was founded in 1975 and has since grown its business to 50 US states. The company specializes in providing small-ticket equipment leases. Besides, Financial Pacific also works with third-party brokers and lessors as a part of its normal business operations. Financial Pacific Leasing offers services both as a financier and a lessor.
The industries served by Financial Pacific Leasing include medical/pharmaceuticals, retails, restaurants, repairs, and vocational training. Other industries excluded from this list include boats, vehicles for personal usage, adult-themed manufacturing, spas, gaming industry, improvements, etc.
The company joined the Umpqua Bank in 2013 to diversify the bank's lending platform. Financial Pacific has a qualified staff of over 150 individuals. Financial Pacific Leasing helps customers acquire both used and new equipment.
Financial Pacific Leasing works with all sorts of customers. The company doesn't only work as a leasing platform, but it also helps other lessors to find customers for their equipment. As a leasing company, Financial Pacific Leasing has many advantages to boast. It works with customers who fall in any of A, B, and C credit ratings, requires no bank statements, has a special program for start-ups, and gives you 100% pre-funding with zero conditions attached.
There are still some issues with financing your loans from Financial Pacific. These include a stricter underwriting process, higher rates than competitors, and higher TIB requirements.
How Does The Financial Pacific Leasing Work?
Financial Pacific Leasing mainly operates in three ways: helps third-party originators finance equipment for their customers, sells/leases equipment of equipment vendors, and leasing equipment to business customers. Below, we explain how all these three diverse business operations come together.
Financial Pacific Leasing has been providing crucial help to third-party originators. It has made it possible for many third-party originators around the country to finance equipment for their customers. Financial Pacific Leasing has two types of contracts for third-party originators.
The first one is Small Ticket financing, and the second one is called Financial Pacific commercial. In the former case, the company works with A, B, and C type customers and finances loans from $5,000 to $150,000. An application must be submitted for obtaining Small Ticket financing.
In the FinPac commercial financing, the company works with only A-type credit customers, and the financing goes as high as $500,000 (starting at $150,000).
Financial Pacific Leasing understands the importance of leasing for small businesses. It knows that companies can themselves act as equipment lessors. It seeks to make equipment leasing easier and more profitable for small businesses. With many years of experience in the industry, Financial Pacific sure knows how to sell/lease your equipment.
The company ensures that your deal is closed and that your profit margins are excellent. Besides, you get to enjoy the benefits of fast credit decisions and immediate payment once the equipment is delivered. Since leasing can be an affordable option if a customer cannot find cash for an outright purchase, FinPac brokers a deal that works both for the vendor and the customer.
Equipment Leases for Business Owners
Financial Pacific Leasing is a leasing company that believes in a fast-track, easy, and simple way to obtain lease financing. You don't have to feel daunted while applying for an equipment lease at FinPac. Financial Pacific leases both new and old equipment.
You may avail of additional tax benefits by leasing equipment from Financial Pacific. Besides, Financial Pacific is an industry leader, so you can be sure of getting the best possible solution for your financing problems.
Moreover, leasing has many advantages. Leasing can save you from paying cash upfront or keep credit lines free for other business-related expenditures. Besides, with leasing, you pay the lease installments as the equipment is used, which helps with tax cuts. Lastly, leasing makes it easier to budget for other important expenditures.
“It is important to stress that there is NO minimum credit score requirement at Financial Pacific Leasing”
Who Should Apply For Commercial Truck/Equipment Financing With Financial Pacific Leasing?
Financial Pacific Leasing finances small businesses. That's why financing from FinPac can go only as high as $150,000; at FinPac, the loans start at $5,000 and cap at $150,000. The company provides loans/leasing to only those customers who work in FinPac approved industries.
Moreover, the financing given by Financial Pacific Leasing doesn't vary on a case-by-case basis; that is, the loan will only be given if the borrower works in one of the approved industries.
The loan provided by Financial Pacific Leasing is subject to a rigorous documentation process. Similarly, the approval of all loan applications is also subject to the approval of the Financial Pacific underwriting committee. The loan, however, is not subject to a 'minimum number of years in the business' qualification.
A new business is just as likely to get a loan as an old guard of a particular industry. It is important to stress that there is NO minimum credit score requirement. This does not mean that the company does not look at your credit score.
The credit score might be an important factor, but the company has not disclosed any minimum credit requirements in that regard. Financial Pacific doesn't require either a minimum number of standing in the business or a minimum credit score to finance your loans, making it a go-to choice for all customers.
While there are no credit requirements for customers at FinPac, the company has input criteria for the third-party originators that can work with it. The two types of financing provided to originators are discussed below.
Small Ticket financing at FinPac will get you a credit anywhere between $5,000 and $150,000. Besides, the small ticket financing is less risk-averse as the company works with customers with diverse credit histories. Moreover, even start-ups can apply for a $45,000 financing arrangement under this regime. This type of financing at Financial Pacific has earned its name for closing deals in a record time.
On the other hand, if you have a robust credit history and even better cash flows, you will be able to secure a better financing arrangement that may start at $150,000 and end at $500,000.
Now let's talk about the criteria for third-party originators.
- The originators should have experience working in the equipment financing industry.
- They should be able to get their credit reports.
- They should also know how to calculate payment.
- The ability to document and close the transactions is also required.
Financial Pacific Leasing accepts borrowers with lower credit ratings; this makes it the right option for borrowers who haven't been able to find other financiers. While that's good news, we advise borrowers and originators to read their contract before keenly signing it. You may fall into a payment trap that will dry your cash account—FinPac is famous for its unforgiving collection methods.
Since the company provides no information about the term and charges on the website, it isn't easy to assess the overall favorability of its financing options.
Financial Pacific Leasing Application Process
Loan applications at Financial Pacific Leasing entail many steps. Starting with submitting a signed credit application, the originators are also supposed to provide a SIC code (outlining the business' nature) and an equipment invoice.
Similarly, a PG is also required if, as a borrower, you have more than 15% ownership. Additionally, the loan application can be subject to even more approvals.
The conditional approvals which can be a part of your application process are invoice review, proof of your time in business, ownership proof, proof for the location of the lease, vendor's approval, and proof of fleet.
There are two main steps in the application process:
- The first one is a fully completed Third-party Originator Application.
- Submission of a Resume or a Professional biography.
After submitting all of the above documents, the application process is initiated. Accepting an application is subject to a review of the following documents:
- Review of the Resume or Professional biography.
- The credit reports which are submitted for all the principals.
- Review of funding source reference.
- Review of each company.
- Experience in the industry.
- Besides these, there is also conditional approval which was discussed above.
Financial Pacific Leasing Commercial Truck/Equipment Financing Interest Rates
When it comes to equipment financing, the best indicator of a good deal is how high or low the interest rate and down payment are. Besides these, the loan repayment term should also be considered before signing up for a lease/loan. Let's walk you through the most important part of your loan/lease financing agreement with Financial Pacific.
The interest rate at Financial Pacific starts at a meager seven percent, but it can shoot up to 40 percent. The interest rate depends on how much you are borrowing, down payment, your credit rating as a borrower, and several other factors.
The amount of loan you can avail from FinPac depends on the equipment financing you need. Using small ticket equipment financing, you can get a loan between $5,000 and $150,000. On the other hand, if you go for a loan provided by the commercial division at FinPac, the loan amount comes within the limits of $150,000 to $500,000.
Term Length is another factor considered important by many borrowers. Greater term length means that you will have more time to repay your loan. Loan Term at Financial Pacific starts at 36 months and can run as long as 60 months.
The down payment at FinPac is low compared to other lenders in the market. As a borrower, the maximum amount you are required to pay as a down payment can only run as high as 15% of the value of the equipment. However, you may also pay nothing as a down payment.
When the lease term ends, you are given the option to pay a preset amount for purchasing the equipment. At the end of the lease term, these buyout options come in various forms. The buyout at FinPac is a $1 buyout, 10 percent buyout option, and Fair Market Value (FMV) buyout option.
A $1 buyout agreement means that you have to pay only 1 dollar to buy the equipment's residual value (whatever is left at the end of the lease term). Put, when the lease ends, you have the option to pay $1 and get the complete ownership of equipment transferred in your name.
FinPac helps you get tax cuts on your lease repayments like some lenders. On every installment you pay, you can avail of tax benefits.
10% Buyout Option
10% buyout options mean that you have to pay 10% of what the equipment is worth at the end of the lease term. This entails that the monthly installments are lower as you get to pay more at the end of the lease term, unlike a $1 buyout, where you have to pay only $1 to get the complete ownership of the leased item in question.
Fair Market Value (FMV) Buyout Option
The Fair Market Value buyout option lets you buy the equipment at its fair value. Fair value is essentially the market value of the leased item at the end of the lease term. However, the borrower can also choose not to buy the equipment in this case.
Usually, the fair market buyout option is exercised by those customers who don't need equipment in the long run and thus want to return the equipment at the end of the lease term.
The lessee incurs other costs as a part of the agreement. There is usually a vehicle insurance fee of $200 paid by the borrower/lessee. Similarly, the title transfer fee is also a part of the lease repayments. The title transfer fee depends on the cost of the leased item. Fees are subject to change.
Other costs charged fall broadly into two categories discussed below.
Loan for customer services
Customers are charged additional fees, which may include the following: assumption fee, contract fees, overnight charges, payments over the phone, and wire transfer.
Loan for Portfolio services
Additional charges relating to portfolio services charged to a borrower include an addendum, credit, inspection, field calls, interpreter services, etc. Most of these costs are fixed. However, they may vary depending on an individual agreement.
What are the leasing rates at Financial Pacific Leasing?
The effective interest rates at Financial Pacific Leasing range from 10 percent to 30 percent. The rates depend on the down payment and the amount of loan taken.
Does Financial Pacific Leasing charge the origination fee?
Yes. Financial Pacific Leasing charges an origination fee.
What is the loan term at Financial Pacific Leasing?
The loan term at Financial Pacific Leasing ranges between 36 to 60 months.
What is the benefit of a maximum business loan term?
The maximum business loan term means how long you can take to repay your loan; keeping the loan payments lower than if the loan term were smaller, has the added benefit. So, you can take on bigger loans while keeping your payments small. However, there is one caveat, the longer the loan term, the higher the interest you are supposed to pay.
How can I qualify for Financial Pacific Leasing?
Financial Pacific Leasing loan is not conditioned on being in the business for a minimum number of years. Similarly, no minimum annual revenue is set for a borrower to be able to get the loan; a minimum credit score is also not required.
Does Financial Pacific Leasing provide loans to all customers?
Yes. Financial Pacific Leasing gives loans to all the customers except those who have applied for loans in the prohibited categories. Nonetheless, the business loans have to be applied only for business purposes which are:
- For launching new products or expansion of services.
- Working capital
Does Financial Pacific Leasing offer any small business loans?
Yes. Financial Pacific Leasing provided small business loans. However, not all small business loans are created equal. Small loans vary depending on the amount of loan and the interest rates charged. The other loan terms also differentiate the loans. So, the type of loan you choose will determine what interest rate and the amount you are charged.
Does Financial Pacific Leasing charge a prepayment fee?
Yes. If paid before the anticipated time, a prepayment fee is charged for small and big loans. The additional fee is made part of the contract. If you want to enjoy the benefits of saving on paying interest rate by paying the loan amount sooner than the anticipated time, keep the prepayment fee in mind because any amount/interest payment saved from paying the loan earlier might be canceled by paying the prepayment fees.
Which one is better: leasing or financing?
Leasing or financing are both good options for acquiring equipment. However, the answer to which option is better depends on your individual business needs. It would help if you went for the option where you will be charged lower interest rates and down payments.
In addition, also keep in mind the nature of the equipment you are going to lease. Whether the business needs the equipment for a prolonged period or a short one? Will the piece need an up-gradation, or will it become obsolete with time?
What is funding time? How long does it take to receive funds?
A traditional lender, like a bank, sometimes takes an entire week to fund your equipment. However, non-traditional lenders like leasing companies are much quicker regarding loan applications and financing your loans. Funding via online lenders can be received in as much as 24 hours.
Nevertheless, the precise timing can differ and usually depends on the type of equipment that has to be financed. At times, some equipment entails additional administrative work by lenders.
How can businesses benefit from equipment leasing?
All businesses can reap the benefits of leasing their equipment or getting their much-needed equipment on lease from leasing companies/other vendors. Leasing from leasing companies makes getting newer equipment easier as no large payments are required.
Moreover, unlike traditional loans obtained from banks, the credit requirements for loans from leasing companies are very lenient. A leasing company asks for a decent-enough credit score and a business standing of two years on average.
However, Financial Pacific Leasing has done away with even those requirements in this case. Financial Pacific Leasing loans are open to customers, even those with bad credit scores.