Financing, Liens, and Your Business

Businesses finance equipment because they want to grow and generate more money. Borrowing is one way for people and businesses to increase the amount of leverage they have.[1] When it works out, borrowing makes it possible for the assets a business has to go further. A company that can invest in more equipment can take on more jobs and earn more money, at least in theory.

But sometimes, unfortunately, it just doesn’t work out. There can be business slowdowns for any number of reasons. In 2020, COVID-19 forced some small businesses to shut down. In 2008, the financial crisis halted many construction projects that investors had previously been excited about.[2] No borrower was to blame for these recessions, but they still had to deal with the consequences of them.

When the worst happens, the kind of financing you used may actually impact the options that collectors have. And the type of equipment financing that we offer here at Alliance can actually work in your favor. For example, consider liens. Liens are a way for creditors to secure debts.[3] Under one of our Equipment Finance Agreements, the only lien that can be placed is on the specific equipment you financed with us.

This is very different from the blanket liens that are typically used when entrepreneurs finance their equipment with a bank or credit union. Blanket liens can allow those creditors to seize and sell any business assets they can get their hands on. This can include everything from the financed equipment to inventory and even the real estate the business sits on.

Liens, and particularly lien enforcement, are a downer. No one wants to think about them. Even for lenders they’re a lengthy and difficult process. But in a world that’s changing as rapidly and seriously as ours, it’s a good idea to take this into account when making a decision about how to borrow. Using Alliance Leasing is a great way to limit your risk.