Most small business owners have less than $12,000 sitting around and can’t afford to front significant purchases, but they still need to procure equipment to power their dreams. And yet: if what they need costs less than $15,000, good luck getting a bank to glance at that loan application. Micro-ticket financing can help entrepreneurs obtain equipment at a manageable monthly price without hitting their credit scores and future borrowing prospects. Here’s how it works and why it’s a smart option.
How Much Is a Micro-Ticket Lease?
Equipment leasing arrangements (sometimes called “tickets” in the industry) can span a wide range of amounts, from $500 on the lower end to several million dollars. Because the risks and demands of leasing can vary widely between amounts, financiers break down tickets into these segments:
Micro: Up to $25,000
Small: $25,000 - $250,000
Middle: $250,000 - $5 million
Large: Over $5 million
Over $1 trillion in equipment value has been secured by financing, and micro- and small tickets account for one-third of that amount—meaning that, by volume, most equipment leases land at $250,000 and below. Clearly, many entrepreneurs take advantage of these financing options to start and grow their businesses.
Banks Can’t Offer Micro-Ticket Financing
Traditional lending institutions, such as banks, assess risk on a different model because they disburse cash, not equipment. Banks require extensive applications, including reams of paperwork, which are then forwarded to a human underwriter to evaluate. Underwriting is a skilled job that requires time and compensation, regardless of whether or not the loan is approved, and the process can take months. In short: banks can’t afford to loan less than $15,000 because of underwriting costs.
Point-of-sale lenders like Clicklease, on the other hand, are working with self-collateralized equipment, which is much less risky than cash and can be repossessed if payments default. Because of the lower risk profile, Clicklease applications are evaluated by a proprietary algorithm, which returns approvals within minutes. And because we’re not paying underwriting fees, we can offer financing as low as $500 and up to $20,000.
Micro-Ticketing Offers More Flexibility than Loans
Beyond accommodating a broader range of amounts than traditional lending, micro-ticket financing offers several advantages to small business owners—especially those just starting out or running a side hustle.
Because the financing is tied to a specific piece of equipment, the risk to the business as a whole decreases—other assets beyond the financed equipment won’t be repossessed if the loan defaults. Entrepreneurs can feel more comfortable taking a chance on new equipment while protecting their existing assets.
Additionally, micro-ticket financing covers the exact amount of capital needed. Applicants don’t need to worry about not having enough to cover their costs or taking a hit from getting more capital than they need.
Over the long term, equipment financing allows business owners to keep their options open and stay agile. Instead of forking over a lump sum, they can preserve a stash of cash for emergencies and make small monthly payments. Additionally, because Clicklease applications don’t trigger a hard credit pull, their credit scores won’t be damaged by applying—so they’re still able to secure traditional loans if they need to.
Finally, micro-ticket financing can benefit your equipment selling business, too. Clicklease handles processing and payments; you get fully funded for your sale with no fees and no hassle.
Ready to transition to point-of-sale financing for your customers? Clicklease can integrate easily into your existing storefront. Let’s chat.