Ten years ago, SI was one of the first sites to cover KWIPPED, which was one of the first, and now likely the oldest (and biggest), marketplace for equipment rental procurement for all your equipment rental needs. Launched to help businesses with idle equipment and equipment rental agencies connect with businesses that needed to rent equipment for the short to long term, it served a niche in complex and project procurement that the major procurement platforms weren’t (and still aren’t) solving.
It works well, and worked well since day one as it grew quite fast, and while it met a lot of the market needs, it didn’t solve all of the market problems that were out there in equipment procurement for precise/complex projects and one-time acquisitions. Namely:
- Some buyers wanted to rent to own, but suppliers weren’t (or couldn’t afford to be) offering that
- Some buyers wanted to lease, or lease to own, for long periods of time, but needed up front financing (which suppliers couldn’t afford)
- Some suppliers wanted to help buyers get financing, but they could only recommend a few lenders, who were often:
- too strict in their lending criteria
- too costly with their rates
- too slow, and buyers walked away
- Some suppliers didn’t like the loss of visibility into, or control, of the sales process with current lending processes (send the buyer away to a third-party lender and hope she comes back)
- Many lenders didn’t like random referrals they were unlikely to ever approve (which wasted their time), or the spray and pray tactics savvier buyers who knew how to find options would use (which wasted their time)
In other words, buyers and suppliers wanted financing options so they could lease to own (or even buy outright), but neither of them liked the current application and approval process, and lenders wanted an easier, more efficient way, to get requests relevant to their lending business, so they could waste less time in approvals and more on hitting their lending targets (because they need to lend to make money).
Being techies, the founders of KWIPPED, who started off by making introductions to potential lenders on behalf of suppliers they knew well and buyers who asked, realized there had to be a better way to solve this problem, because forcing buyers to go offline and deal with a lender through old-school fax and email just wasn’t a good experience for anyone. They realized that there should be a platform like Lendgo (that could obtain, and compare, personal mortgages and refinancing options side-by-side), but for business equipment financing and leasing, and, more importantly, one that meets the need of all three parties, not just the buyer or lender.
So that’s what they set out to do, and they do it through the APPROVE marketplace (which can be accessed through the KWIPPED platform, the seller’s website, or even a third-party marketplace through a plug-in).
In KWIPPED, or a supported supplier marketplace, when a buyer brings up a listing, they will see the buy-it-now price, the rental price, and the estimated financing price (per month) based on the equipment type and a predictive model based on a database of over 75,000 financing applications and 3+ responses to each (which allows them to predict, with high accuracy, the estimated financing for that item for a buyer with average or better credit rating).
To start a financing application, it’s a 60-second process for the buyer who just needs to fill in some basic details to kick the process off. At this point, the request will be routed to a supplier’s financing (assistance) department if they have one, or the APPROVE financing team who will contact the buyer for any specific information required to make a lending application, get clarity on their needs, augment the application with the right data in the right language to optimize clarity and success with the lenders, and then, when the application is ready, kick off the automatic application process in the system.
Unlike many of these marketplace financing/mortgage/insurance platforms, the APPROVE platform is not a spray-and-pray platform or one that relies on buyer expertise to build a short list of potential lenders to send the application to. Once all the information has been collected, they use a predictive (machine learning) model that has been trained on this data set of over 75,000 financing requests, over 300,0000 quotes, and third-party risk and financial data on the buyers and sellers to predict which vendors will approve the financing and what the rates will be, and then send it to the top 3 vendors with the lowest predicted rates and a high chance of approval. If one or more of these vendors denies, it will continue down the list of potential lenders (who are predicted to charge higher rates and/or have a lower chance of approval) until it gets 3 quotes for the buyer. And, if the financier on the APPROVE or seller team happens to know that a particular lender is more or less likely to approve a specific request based on experience, they can override the rankings and issue the request direct to the lender (but generally the platform works quite well and it’s best to let it work its predictive model).
This is a very important differentiation. You don’t want to send a financing request to just any lender because:
- some very risk averse lenders will only approve the top top tier of buyers (the cream of the crop that could probably afford to buy outright), and you’re just wasting your time
- some less risk averse lenders will lend to anyone, who want to pay exorbitant interest rates that are 2X to 3X prime (and should only be a last resort)
- some lenders specialize in certain industries and equipment types, and don’t want to lend outside their domain of expertise
- etc.
This means if you don’t target the financing applications properly, you are going to get a lot of lender rejections or a lot of bad offers that the buyer won’t accept, leading to a lot of wasted time on all parties (and platform mistrust). Through laser focussed targeting, buyers know they have a real shot of getting financing at a rate close to the predicted value, sellers know that buyers are serious if they follow through with the application, and lenders know that, if they want the business, they have (at least) a 33% chance of getting it. That gives these lenders better odds than banks offering a mortgage! Moreover, since APPROVE targets the quote requests, the odds that they will be willing to quote the application is 80% or more, compared to 50% at best for a random application. This means that APPROVE is at least 60% better for lenders than random seller referrals, making it worth the lender’s time to process buyer applications from the APPROVE platform much more quickly.
Moreover, unlike most of the market “lending” platforms out there, all parties have complete visibility into where the application is at all times.
The buyer can see when the financing request has been formally issued to the lenders, when a lender has returned a quote or rejected it, and then the 3 quotes side by side once 3 are received (and then select one to accept through the platform).
The lender has a view into the status of all of its open requests, as well as its request history, and all communications between it and either the APPROVE or supplier financing team (to collect any additional data it decides that it needs to issue a quote).
The lessor/seller can see where the process is at any time for each buyer that submitted a financing request, any communications that went back and forth between the APPROVE financing team and the lender (on the lessor/seller’s behalf), what quotes were returned, and when a buyer has accepted a quote and then begin the process on their end of completing the transaction without delay.
The APPROVE platform, especially when accessed through KWIPPED, a supplier web site, or third-party marketplace, makes the entire process of finding the right equipment, engaging with the supplier, getting the right financing, and closing the deal smooth, efficient, and relatively painless for all parties.
So while, like KWIPPED, this is NOT a typical sourcing or procurement platform that SI would normally cover, it is a very important platform nonetheless as most of your direct, indirect, and complex services sourcing platforms don’t enable the identification of rent-to-own or lease-to-own options when you need to temporarily (or permanently) acquire new equipment for a new construction, commissioning project, factory, or lab, and definitely don’t help you with financing when you can’t afford to, or don’t want to (because you have other, better, uses for your working capital now), pay for the equipment up-front. Like KWIPPED, APPROVE fills a very specific niche that is overlooked until it is desperately needed, and one that any organization that needs to rent or buy equipment, that just can’t be sourced or procured through normal S2P/P2P platforms, should know about.