A: So, what we had was a customer that has been in business for about 4 years. He’s in the transportation business, and his banks of late were a little bit light, and he was looking to purchase an old trailer. Like 13-year-old trailer, and so, that falls outside of the scope of a lot of lenders, but others can help. But then you start adding in his bank, and the fact that his credit, while having a reasonable score, was actually very light with only 4 tradelines, and the largest of those tradelines was a mortgage, which was closed and had started the foreclosure process at one point. So outside of that, he had one small auto loan, and two credit cards that made up his entire credit bureau.
A: Well the score was 687 – which, again, is reasonable, but anyone that looks at it is not going to look at it as a typical 687, obviously. And so, when you combine all the facets of the transaction – the light credit, the trouble on the past foreclosure on the last line that he had, looking at an old trailer, there weren’t a lot of people that were willing to consider that type of transaction. What he did have to bring to the table was a couple of trucks that he owned free and clear. However, they were also aged assets. One being a 10-year-old truck, and the other being about 13 years old. And so, once again, that’s another stopping point for many lenders that we’re familiar with even. Because of this he had run into some declines because the assets were too old to be used as collateral, or the asset that he was looking to purchase was too old. So combined with the credit profile, banks, etc. it just became a very difficult transaction. However, we were able to approve him taking those two trucks as collateral to get his trailer done.
A: I believe those were cash purchases. They were not recent purchases. He had been in business, as I said, 4 years, and I think they were purchased a few years back.
A: No, he was coming out of a slow season especially, in this case, and he’s looking to expand the type of hauling options that he has for his customers, he had been mainly doing dry van, you know dry goods hauling at this point, and he was adding a low boy to his offerings to haul heavy equipment, and coming out of the slow season, his bank balances were very light, and he didn’t have the cash to move forward with something like this at this time.
A: That is correct.
A: It was part of the interview process for us, and as we go through and interview the customer and obtain all the information on his overall credit profile, to see what his credit looks like, what his bank statements looks like, yeah, we determined that we needed some extra strength, and I already had the information in my back pocket knowing that he had additional trucks free and clear. When I approached him about offering those, it was not something that he was opposed to.
Next week we will check in with another one of our finance officers. Stay up to date and learn more from our valuable resources at www.AmericanEFS.com/The-Bottom-Line