Questions about drone and lidar financing

Commercial Drone Financing FAQs

What is Commercial Drone Financing?

Ultimately commercial drone financing isn’t all that different from any other type of equipment financing.  It’s just a way to afford a large purchase more easily by utilizing monthly payments.  Commercial drones are still considered a newer industry in the world of banking, so not all banks are willing to lend to drone companies.  Luckily you’ve found!

How does it work?

The overall process is remarkably simple.  Typically only a few bits of information are required (company name, address, phone number and dollar amount).  Once approved we would need a copy of the invoice and we will send documentation electronically paying the vendor directly.  We handle everything start to finish.  In most cases there is no need for supporting documentation.

Who Qualifies for commercial drone financing?

We’re always happy to process an application to see if your company qualifies.  Even if you don’t think you’ll qualify you never know, we can get creative, use supporting documents if needed, perhaps corporate or personal guarantees to get you an approval with the best rate possible.  Rule of thumb is two years in business with some lending history is a good start, though we have certainly been able to get younger companies approved.

What does it cost, what are the rates?

If you’re a vendor offering financing to your customer it costs nothing, that’s right no fee at all.  If you’re the company financing your drone purchase, you’ll have the interest and a minimal documentation fee.  This is all reviewed and laid out prior to the signing of your documents.  The estimated rates will depend on a number of factors such as the dollar amount, term length, and of course credit profile.  Large purchases with strong credit may be as low as 6%, a small purchase (under $10,000) on a short term (12 months) for a customer just starting out could be in the low teens but a great way to build company credit.

What’s the down payment?

Believe it or not, in most cases a down payment is not required.  Typically, you’ll have the first payment due at signing, but it’s even possible to have deferrals, 30,60 or even 90 day deferrals may be available.

What if my customer defaults?

Nothing to worry about here.  It is the banks responsibility to make sure the customer is approved and will pay back their loan, if they don’t it falls on the bank and the customer, not on the vendor.

What are the terms of the financing agreements?

It really depends, but for the most part they all follow the same basic guidelines.  After the last payment the customer owns the product free and clear.  There are no balloon payments or surprises.  In the world of commercial drones we find the most common loan term is 36 months, but there are terms available from 12 to 60 months or possibly longer for customers with very strong credit.  We’re always willing to get creative and flexible to fit your business needs.

What documents are needed?

Sometimes none!  If a business has been around for 2+ years and they have a little borrowing history we may be able to get them approved with nothing more than their company name and address.  Now for larger deals ($200,000 or more) we may need some additional financial information such as last years tax returns.  If a company is less than 2 years old or a Sole Prop we may need a full application filled out with a personal guarantee from the owner.  For the most part, just the company name and address gets the ball rolling.

Do you need guarantees?

Nope.  Assuming the company is 2+ years old with some borrowing history we can likely get an approval on company credit alone.  Sometimes if the company is less than 2 years old or there’s no real business credit we can look into a personal or corporate guarantee to get the financing request approved.  This is up to the business owner if they’d like to offer the guarantee to help their odds.

How long does the financing process take?

Not long at all, usually we can wrap the whole thing up in just a day or two.  Most delays occur on the vendor or clients end as invoices are finalized or we wait for documents to be signed.  Once an application is submitted, we can usually have a credit decision in just a few hours.  Once approved we just need a copy of the invoice and the electronic documents signed.  From there we’re issuing payment to the vendor and everything is wrapped up.  Obviously there’s more that happens behind the scenes and we need to make sure all the paperwork lines up, but for the most part it’s a very fast and easy process.

Why not just use my regular bank?

There are advantages to using our program over a regular bank.  For one, ease of use.  We don’t need mountains of paperwork and we work directly with the vendor to get what we need.  Another advantage is speed, a retail bank can take weeks to reach a decision whereas we can get an approval same day.  We also don’t require down payments.  Most banks will want some form of down payment maybe 10-20% or the first 3 payments in advance, in most cases we can do just the first month payment due at signing or even offer deferrals.

I’ve heard of “Tax Section 179” and accelerated depreciation, what’s that?

Tax Section 179 allows you to write off the full purchase price of your drone equipment in the year you buy it even if you’re financing.  So for example:

Let’s say your company is looking to purchase a $100,000 drone with LiDAR.  It’s November and you decide to do a 60 day deferral on the initial payment.  Even though you haven’t made a single payment on the drone purchase this year it doesn’t matter, you still get to write off your full $100,000 purchase price on this year’s taxes.

This is a fantastic way to balance out the books or save money upfront for growing companies.  I always recommend speaking with your accountant to go over the specific needs of your business, but this can be a very powerful tool.

Why should I offer commercial drone financing?

Why wouldn't you want to make your drones and drone equipment as easy to purchase for your customer as possible?  Reality is 80% of businesses utilize some form of financing when making a purchase.  By offering monthly payments your letting your customer get exactly what they need, not just what they can afford with a big lump sum payment.  This should be a win-win situation where you as the vendor are able to make more sales, and your customers are able to obtain the exact equipment they need to be successful regardless of budget constraints.

Do you only finance commercial drones?  I have other equipment needs for my business...

Though Skynancing's main focus is the drone industry we are happy to help with your other equipment needs.  This could be office furniture, HVAC, equipment, even commercial vehicles.  No need to bundle with drone equipment either, just let us know what you plan to purchase, fill out an application and send us a copy of your invoice, we can handle the rest!

Leave a Reply

Your email address will not be published. Required fields are marked *

Scroll to top