“We are opening up the credit window a little bit. We do more repeat business now. Today, I’m more willing to bet on the horse that I already know than the
new guy coming down the pike. We go back to customers that are still in
business and find out what is working for them and what else they need.”
— James Padden, President, Padco Financial
Challenges Spawn Changes
Responding to the less-than-robust economic
recovery, independent funding sources often look for
different opportunities and changes in their approach
to business. “We’re always trying to do something
different, creative and innovative,” Hofmann explains.
“From a marketing perspective, US Capital is further
expanding its use of social media marketing. In 2011,
we moved forward with our social media marketing
initiatives, including Facebook, Twitter, Linked-In,
YouTube and our own US Capital blog. We’ve found
them to be helpful in new business generation and
personnel recruitment. Regarding our product lines,
we don’t envision any material changes to our current
product mix. We reach out on a real-time basis and
talk to our customers and we’ve been told we have
the financial products they want to help them fulfill
their business goals.”
Although continuing to do business with lease
brokers, in 2012 NEF is increasing its direct sales
force, growing it from three to seven, giving the
company offices in Chicago, Cleveland, Dallas,
Tampa, New York and Norwalk. And at Padco,
Padden is considering volume-related pricing for its
investors, and the company is moving its headquar-
ters to improve cost control.
Standing Out Among Competitors
Because competition is a factor in any business sector
and especially among equipment finance and leasing
companies, many strive to position themselves differently in order to stand out among the crowd.
“US Capital views itself as more than just a funding
source,” Hofmann says. “We see ourselves as an
extension of our customers’ sales team. For example,
we provide our customers with a variety of sales tools
that can help their sales team offer financing to their
prospects and customers more easily, thereby hope-
fully increasing their core product sales. We like to
work with our vendors’ and other customers’ internal
marketing team to develop product financing promo-
tions that we think will help to increase their market
share. One thing we like to do in particular is to
attend our customers’ sales meetings to understand
more of how we help them to succeed. In fact, we
like to make joint sales calls with their salespeople
when financing can help them close the larger sales.”
Padden notes, “We are private and my source of
funds comes from private investors. It gives us a bit
more latitude and reaction time. We don’t have big
committees; it’s just us here. We have a proven track
record, and as long as we can continue to pick and
chose wisely, I’ll still be able to get funding.”
NEF’s Carlson adds, “We distinguish ourselves by
being faster and more flexible on terms, not neces-
sarily rate, than our competition.”
Menzel finds that being a niche funding source
distinguishes Financial Pacific from the rest of
the pack. He explains, “I’m very fortunate. I work
for somebody that truly dominates a niche. We do
second- and third-tier credits. We serve a very impor-
tant segment of the marketplace, people that don’t
have perfect credit or are having trouble accessing
the capital markets. We are first and foremost a risk
management company. We have to know the risks
because we are managing a lot of small units, on the
average $25,000, so you can’t do it on a transaction-
by-transaction basis but on a pool basis, so you have
to all the data behind each deal pooled together to
analyze the trends and performance.”
Menzel concludes, “Over the last few months
we’ve started to see competition increase — people
coming back into the market getting recapitalized.
The competitive environment is going to heat up, but
the interesting thing is the market isn’t robust, so
it’s all going to be about market share. The pie isn’t
any bigger.” m
