Equipment-Only Loans at Celtic Capital
We get many questions about our Equipment-Only Lending Program so we asked Mark Hafner, President and CEO of Celtic Capital, a series of questions to clarify the lending parameters:
When will you do an equipment-only loan?
When we do equipment-only deals, (whether for a pay-off or to provide additional working capital) ideally, what we’re financing is existing manufacturing equipment that’s in a plant and owned by the company. The equipment needs to be in the facility where we can see it and it can be appraised.
Occasionally, we’ll do exclusively rolling stock (i.e. trucking companies). And we’ll do a capital expenditure loan when it’s connected to an accounts receivable loan.
When won’t you do an equipment-only loan?
We won’t do:
Equipment that isn’t under the control of our client (i.e. rental equipment at job sites; anything movable and is out at a customer’s site).
Capital expenditure loans on a stand-alone basis.
How do you determine the borrowing base?
We lend off of the forced liquidation value appraisal. If there’s no prior appraisal or no fairly detailed list of the equipment, it’s hard to get a sense of its value until we get an appraisal.
As a first step, it’s beneficial for the borrower to put together a list of what they have that includes the year the equipment was manufactured (not the year they bought it) and a description of the equipment (make, model and serial number). With that list we can get an estimated value and then come back with a proposal on something that makes sense. There is no cost to the borrower for this.
About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.
As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.