In mid-September, Equify Financial, a privately owned, independent specialty finance company based in Fort Worth, TX announced the expansion of its equipment leasing and finance business to include the small-ticket vendor/dealer channel. To lead this business expansion, Equify named Dan Krajewski, a well-known equipment finance industry veteran to its executive team as Executive Vice President of Equify Financial, LLC. This expansion into the small-ticket vendor/dealer channel will enable Equify to service a wide range of transaction sizes and credit profiles all under one unregulated financial institution.

Many in the equipment finance industry are familiar with Krajewski not only for his track record of success, but also for his dedication to the equipment finance industry. Krajewski currently serves as a Board Member and Treasurer of the Equipment Leasing & Finance Association (ELFA). He has also served as Chairman of ELFA’s Captive & Vendor Finance Steering Committee, a member of ELFA’s Independent Finance Company Steering Committee, Liaison with ELFA Lease PAC, and ELFA Industry Futures Council.

Equipment Finance Advisor met with Dan Krajewski and Patrick Hoiby, President of Equify Financial to learn why Equify is entering the small-ticket vendor/dealer channel and how this new group will leverage Equify’s current equipment finance offerings to provide creative financing options nationwide.

Equipment Finance Advisor: Dan, please tell us a bit about why this opportunity to join Equify Financial was so attractive to you personally.

Dan Krajewski: When I was looking to move on to my next opportunity, I looked at a couple of different critical factors. Number one was the reputation of the company and its management team. Secondly, the longevity of it. Have they been around? Have they been able to produce, and are they supported by a stable financial backer? Lastly, and probably most important of all, I looked at the culture of the company. Equify has a culture of what they call “servant leadership.” This was very important to me as servant leadership is really about your employees; it’s not about telling them what they need to do. It's about asking them what they need to be successful. That style of leadership rings true to me.

EFA: Patrick, what made Dan the best choice to build this new group for Equify?

Patrick Hoiby: We experimented with this process several times, going all the way back to our original roots in 2012, and have never been able to successfully pull it off. Dan came with this pedigree that was hard to ignore. The more I talked to people in the industry about Dan, and the more I learned about the integrity he possesses, the way he does things and his proven track record – not only once, but twice. It was almost a no brainer trying to bring Dan in to do what we have not been able to accomplish in 10 years.

EFA: What makes this a good time to enter this segment of the equipment finance industry for Equify and how will this new group leverage the existing equipment finance business at Equify?

Hoiby: I think everybody's in agreement that we may be in for some turbulent times ahead, especially when we get to 2023. Equify as a company, as an independent, has always been countercyclical to the market. Now, even though what Dan is doing may be more mainstream, it's going to have some nuances to it that will be uniquely Equify. I've always told myself that when everyone is running one way, you need to turn around and run the other way, because that is probably the right direction. I had a lot of naysayers saying this is not the right time to do this, but I think this is exactly the right time to do this while everybody may be considering pulling back from the market.

Krajewski: I certainly would agree with Patrick. I would also add that in my view, this market is big enough where it's always a good time to get into it as long as you do it strategically, intelligently, with the right group and you do it with the right financial backing. As Patrick said, Equify's pedigree is that they were built to assist smaller companies, those that have greater needs. Non-bankable customers are their status quo since they built the organization. It's not to say that we're going to only do difficult deals. We're going to broaden our base to do a wide variety of transactions – A through C rated companies on the credit spectrum. I believe from a perspective of availability, Equify's uniquely positioned to to leverage what they've done for the last 10-plus years and bring that into the smaller ticket space and be extremely successful.

EFA: Will your focus be national in scope, and will your team focus on any specific equipment sectors?

Krajewski: The business will operate on a national scale. We are going to start with what we know best – the construction, transportation and energy sectors. Later we will expand into other sectors such as manufacturing, medical, warehouse distribution and machine tools. There's a wide variety of industries that we can go pursue. Being part of the ELFA and on the board, and being associated with the Foundation, we will leverage their Monthly Momentum Monitor to help us determine where opportunities lie as we grow.

EFA: Let’s talk about differentiation for a moment. There are many players in the small ticket vendor finance market. How will your team differentiate itself from others in the space as you partner with vendors and dealers?

Krajewski: If you look at the ability to provide the full range of financing products in a typical vendor/dealer environment, you're usually either application only or big ticket. You're typically not both. We have both sides of the house covered allowing us to hand the ball back and forth. When the big-ticket players see smaller opportunities, they're going to work with us. When we see bigger opportunities, we're going to hand the transaction off to them.
We are also crafting a platform that is going to be application only up to $500,000 and it is going to be tiered by credit quality. There will be certain caps within the credit tiers, but this platform will open access for borrowers to get a higher level of usable dollars in the hard asset space. We're also going to be deploying a strategy around existing customers that have utilized the application only program and are A type credits. For these customers we will be expanding our application only program to $1 million dollars for A rated, seasoned customers.

EFA: Patrick, do you believe there will be any resistance from the existing Equify team to having a new group in the mix right now?

Hoiby: We have had this conversation back and forth since Dan started. I think for the existing group, there is always a bit of fear of the unknown. They don't know what's coming, but when we actually had the chance to sit down and lay out the opportunity for them and how they work into this small ticket group, most of them became very excited because we are going to expand their base. There are business opportunities our team is not calling on right now because they don't have the time to do a $50,000 deal when they can drive down the road and do a $5 million deal. It's going to mesh very well. I'm very excited about what's starting to come together.

EFA: Dan, let's talk about the team that you're building. Are you going to be building a full sales, operations and credit team, or are you going to be using some of the existing resources that are available?

Krajewski: Our plan is threefold. Number one, we're going to be opening an office in California. This is the first time the company has put together a remote office. Secondly, we're going to utilize the existing operational staff and build on it in Fort Worth, Texas. Our platform will be more sales and account management. And lastly, we're going to be hiring some regionally based staff to handle different sectors of the country as we grow, but sales will be based out of California. We are going to focus on regions where Equify is strongest first, which has been the southeast, the south and the Texas area, with a bit in the Southwest. The organization is also building out the large ticket side and I will ask Patrick to talk about that effort.

Hoiby: For a long time, the “knock” on Equify was we couldn't do business outside of Texas, but we retooled our marketing efforts and the way we hire salespeople. Now we are finding success outside of Texas, Florida, Illinois, Utah and Denver. The professionals we are adding outside of Texas are putting up nice numbers. We realize that we have a product that will translate into customers outside of Texas. I believe our successes are the result of better hiring practices and better marketing.

EFA: What are some of the advantages you see right now for non-bank firms, such as Equify?

Krajewski: As a non-bank, we have the ability to structure deals and to take on business that the bank groups have hesitancy to do in uncertain times. We've seen many times how cyclical this business is, especially in a regulated environment. I think being non-regulated helps us smooth out that curve.

Hoiby: I believe our biggest advantage, especially right now, is that the banks are pulling back a bit. We can feed a little bit farther up the food chain. We're seeing A credits and some things that in normal times we would not get an opportunity to serve. They are seeing the value that we bring as a company to them, and I think that momentum is going to continue to get stronger as the bigger banks continue to pull back. We are seeing a lot of that movement in the market right now and I expect that to continue for at least another 18 months.

EFA: We're in a highly inflationary environment with rising interest rates. Are you concerned about how borrowers will react to rising interest rates when they need to finance equipment acquisitions?

Krajewski: Certainly, the access to capital is always important and having a provider like Equify is good for the marketplace. Secondly, even though there's inflation and higher interest rates, there's still demand for equipment. The economy really isn't slowing down significantly. It may slow down a bit, but there's still going to be significant opportunity, especially considering the supply chain should be loosening up a bit. Over the last few years, we had problems with financing because of supply chain issues impacting the ability to get equipment to different locations. I believe that is correcting itself and the supply chain is going to open creating demand for that equipment.

EFA: Finally, this opportunity came together with the assistance of Bob Rinaldi of Rinaldi Advisory Services. Please explain Bob’s role in putting this together?

Hoiby: I hired Bob almost eight months ago, because sometimes as a company you live in a vacuum, and you just don't know what you don't know. Bob really opened a whole bunch of doors that we previously either ignored or just didn't consider. It is incredibly valuable to get an introduction to somebody like Dan through Bob Rinaldi. Bob has also helped us in other ways, as far as strategically looking at different markets to move into without giving up our core credit principles, which has always been heavy on the asset and less focused on cash flow. Bob provided some unique ideas that I don't believe I would have generated myself.