The equipment finance industry has demonstrated great resilience in turbulent times, with lenders highlighting their agility and adaptability in an ever-shifting marketplace. Which companies are sustaining long-term growth despite the changes? The ones that anticipate and prioritize the changing needs of their customers.

Justin Tabone and Bill Carey know all about it. They are longtime executives in EverBank’s Vendor Equipment Finance (VEF) business, which is marking its 20th year in operation. They say the key to longevity in a competitive industry is a client-first philosophy that starts at the top and is shared with employees at every level, from sales and credit to operations and servicing.

“Building and maintaining customer relationships is at the heart of what we do,” said Tabone, senior vice president of originations. “We continue to evolve from a technological perspective, but it’s really about that personal experience and relationships and that connectivity to our clients. You can never lose sight of that.”

Consistency is another critical component for industry leaders like EverBank, which has begun a new chapter of service and client partnerships with the rebrand from TIAA Bank to EverBank in 2023.

“Right from the beginning, it was all about supporting the customers,” Tabone said, “bringing the right financial products and solutions to our vendor partners so they could provide better equipment finance solutions to their customers and maintain their margins and sell more equipment. That has been our focus since Day One and it has not changed over the last 20 years.”

EverBank’s VEF business, which began as US Express Leasing (USXL), provides customized financing solutions for equipment manufacturers, distributors and capital markets partners. Market specialties include healthcare, transportation, construction and materials handling.

With decades of experience at EverBank and its predecessor companies, Tabone and Carey have an interesting perspective on the industry at large and how effectively finance companies have adapted to what has become a more service-oriented economy.
 
“The equipment finance industry was founded on the simple premise of lenders and lessors providing credit to businesses seeking machines, equipment and other tangible assets,” said Carey, senior vice president and associate general counsel. “But around 40 years ago, businesses around the world underwent a massive technological transformation. That’s when personal computers and imaging equipment were married with software to produce equipment that retained memory, stored data and produced diagnostic readings. The U.S. economy skyrocketed, and software and services accounted for a large part of that growth.”

The equipment leasing and finance business had no choice but to adapt, he said, “so a gradual integration of those soft costs merged into the old-fashioned equipment financing, eventually spawning bundled financing agreements, fee-per-use allocation and managed equipment services contracts.”

The industry has grown exponentially in recent decades, according to Carey, despite market-altering events such as the Great Recession in 2008-09 and the COVID-19 pandemic.

“The present uncertain economic environment is not as daunting as those occurrences,” he said.

Lingering challenges include rising interest rates and the federal government’s growing debt burden.

“Higher costs of borrowing are affecting lenders and borrowers for a long period relative to the prolonged and historically low interest-rate environment that followed the Great Recession,” Carey noted.

Still, he sees solid opportunity in the modern marketplace, thanks in part to a capital infusion by the government into infrastructure projects coast to coast.

Also, “a slower adoption of electric vehicles and green-energy equipment will prolong the life and profitability of manufacturers and distributors of motorized equipment, machines and plants without negating the inevitable transformation to equipment that runs on cleaner energy sources,” Carey said.

Focused on Solutions

The Equipment Leasing and Finance Association reports that nearly eight in 10 U.S. companies use some form of financing when acquiring equipment, including loans, leases and lines of credit.

Demanding innovation and efficiency from their funding partners, then, are savvy vendors and customers who have access to vast amounts of information online that didn’t exist 20 years ago, said Kim Montgomery, who leads healthcare equipment financing in EverBank’s VEF business.

“To be relevant in this space, the entire team needs to understand the market and needs of vendors and the end-user customers. We have developed products, terms, technology and processes to support the unique needs of the end users and continue to innovate every single day,” she said. “We speak the language of the end-user customers, who range from individual practitioners and practice administrators to CFOs of large health systems. We understand the technology we finance and the needs of our vendor partners, by spending a significant amount of time with them in the field. And we develop relevant point-of-sale finance offerings for our vendor partners’ customers, to efficiently facilitate the implementation of essential technology.”

The trust factor is of the utmost importance, Montgomery added. “Our vendors and customers trust us – and that is something that can only be earned over time,” she said.

A significant investment in technology has resulted in faster answers for clients, according to Montgomery.

“We can take an opportunity from quote to approval to documentation to funding in the same day, even within a handful of hours,” she said. “Our vendor online Fast Answers portal offers 24/7 access to robust finance quoting tools, real-time status on pending opportunities and critical portfolio management reporting.”

Indeed, business models have evolved over the past 20 years, according to Megan Sundmaker, who leads EverBank’s equipment financing for capital markets. Assets range from Class 1-9 trucks, trailers and aerial lifts to information technology, telecommunications and manufacturing.

“Technology has transformed the way businesses go to market and how we operate internally,” she noted.

Other observations by Sundmaker as EverBank’s VEF marks 20 years: Electric vehicles are an emerging trend in the transportation category, and renewable energy equipment represents a new vertical in the marketplace.

The Nature of Risk

The most successful equipment finance companies find a way to achieve a “balancing act” in terms of risk, according to Tabone. At EverBank, that involves prudent management of the bank’s balance sheet while also providing competitive and effective financing solutions to customers. That’s no small task in a complex macroeconomic environment with persistent headwinds.

“We have a strong performing portfolio that has been through and withstood many cycles,” Tabone said.

Ray Sullivan agreed. He leads the VEF industrial equipment financing platform at EverBank, inclusive of transportation, construction and materials handling.

“Through our partnerships with OEMs, dealer networks and captive finance companies, we have the ability to manage in-house exposure across various industries,” Sullivan explained. “We play a crucial role in securing contracts from leading manufacturers, captive finance companies and dealer networks in various sectors, including construction, materials handling, transportation, specialty vehicles, vocational trucks, private fleets and manufacturing.”

The team of seasoned professionals not only comprehends financing but also understands the equipment’s lifespan, the true value of the assets, and how these systems can aid the vendor partner’s customers in achieving their business objectives.

“Our collaboration aims to secure financing choices that perfectly match your customers’ needs,” Sullivan said. “Our approach to building a successful vendor program involves a deep understanding of the specific circumstances of each client. That’s why we dedicate time and effort to comprehend your business and goals, seeing things from your point of view. Our focus is on developing structured finance solutions that are easy to implement, tailored to your specific requirements and growth trajectory, and deliver clear bottom-line advantages.”

Clients have come to expect that level of expertise and often view EverBank’s VEF team as a strategic partner in their business.

Segment exploration is a constant, according to Tabone, including new industries that have strong adjacencies to markets currently served.

He stressed the importance of well-structured financing solutions and noted that the vendor programs VEF supports have grown in both size and scale.

“Over time, as we evolved, we’re in a position where we are the primary finance company for some of the largest captives in the industries we serve,” Tabone said. “We are more experienced. Our balance sheets have gotten larger. Our resourcing, our platforms, have become more robust and we have been able to grow within the market and position ourselves to support an even larger vendor program.”

He added, “This hasn’t taken away or distracted us from serving our smaller scaled vendor partners; they’re still an integral part of what we do. But we cross-market now in terms of the vendors we support in terms of their size and overall capabilities.”

Multiple Layers

Tabone enjoys the multilayered aspect of his work in equipment finance and leasing.

“It’s finance, it’s technology, it’s sales and equipment and interacting with the end user,” he said. “In healthcare, for example, on any given day we could interact with the CFO of a hospital, a sales rep who needs to make their quota that month, and finance leadership at the bank or our marketing partners. It is multifaceted in terms of how we do business and how we go to market. I don’t know a lot of industries where you touch so many different areas on a continuous basis. That’s what is really unique and interesting about this business.”