The major banks are demanding better quality credit risk, and are becoming more selective with what they view as higher risk transactions. When assessing a deal they have a strong focus on the returns to the bank, rather than simply growing their volume of lending.

The probable ownership changes in UDC, with the sale from ANZ ownership to the Chinese owned HNA Group targeted for completion in mid to late 2017, could also impact the equipment finance market in New Zealand. Already we have seen credit rating agency Standard & Poor’s downgrade UDC’s credit rating.

Regardless of your current funding situation – whether you’re actively looking to borrow now or if you’re happy with your current set up – it pays to have a Plan B, just in case things change. Because they can, and do change. And sometimes sooner or more radically than you expect. Having alternative funding options reduces your risks around exposure with one funding source.

Your Plan B doesn’t necessarily mean you need backup options for all your funding – you could simply look at other funders’ criteria and see how your borrowing would fit. Another option is to finance one or a smaller pool of assets with a new lender purely to establish a relationship with them. This is known as diversification of funding lines, and has a number of benefits – read more here.

Your business partner at Finance New Zealand will be able to provide more information, and provide guidance to help you find the best solution for your business.