Manufacturer finance programs have become an essential tool in equipment sales. Particularly common in industries like technology and construction, where high-cost equipment and infrastructure play a critical role, finance programs align manufacturers, vendors, and customers in a model that fosters business growth, customer loyalty, and financing accessibility.

What Is Vendor Financing?

At its core, vendor financing involves the partnering of a manufacturer and a finance company to extend credit to customers through a formalized program approach. This enables customers to overcome upfront cost barriers, while ensuring manufacturers can focus on their core operations and finance providers can manage the credit process.

How It Works

The process is not as complex as one might think. It starts with development of the financing program, where a manufacturer and financial institution define the terms and conditions under which credit will be extended to customers. This includes interest rates, repayment terms, and eligibility criteria. Once finalized, the program is carefully rolled out, alongside the finance company, to the manufacturer’s vendors and/or dealers.

When a customer expresses interest in purchasing a product, a vendor/dealer offers the customer a financing option. Should the customer want to finance their equipment, as opposed to paying cash, they apply for financing with the finance company. The customer's creditworthiness is assessed, which may involve reviewing credit scores and financial statements.

Once the customer is qualified, the vendor/dealer presents financing options tailored to their needs. Customers can choose from various plans, including leases, loans, or customized structures such as deferred payment schedules.

Upon agreement of the financing terms, the vendor delivers the product, and the customer begins repayment according to the agreed-upon schedule.

Lastly, the financial institution pays the vendor or manufacturer in full and manages the customer repayment process.

Program Structures

Financing programs can be structured in several ways based on the manufacturer’s needs:

  • In a private label agreement, the manufacturer offers financing under its own brand name. This approach allows the manufacturer to create a customized financing solution that aligns with its products and customer base. Because the private label financing process includes manufacturer branding, customers often perceive it as a seamless part of the purchasing experience.
  • Quasi-private label financing refers to an agreement where the manufacturer collaborates with a financial institution to provide financing options under the manufacturer’s brand, while disclosing the name of the finance company.
  • Co-branded programs involve collaboration between a manufacturer and a financial institution to create a financing solution that features both brands, but relies more heavily on the branding of the finance company. This agreement allows both parties to leverage their strengths and provide attractive financing options to customers. This option is often utilized when a manufacturer has program relationships with multiple financial institutions.

Brilliant Begins Here

Vendor financing is a powerful tool for businesses looking to increase sales, enhance the purchasing experience, and drive revenue growth. Whether you’re looking to establish a financing program or learn more about the benefits of financing for your customers, contact PNC Vendor Finance. Visit pnc.com/vendorfinance for more information.