Mastering Middle-Market Equipment Financing: A Broker’s Guide
- Dylan Myerson
- Feb 2
- 4 min read
Updated: Feb 5
Middle-market equipment finance deals present a tremendous opportunity for brokers looking to boost their commissions with only a slight increase in effort. If you've primarily worked on smaller transactions, now is the perfect time to step up and capitalize on the lucrative middle-market space. At BSB Leasing, we partner with brokers to ensure their deals are structured properly and have the best chance of approval. So, what makes a strong middle-market submission? Let’s break it down.
What Qualifies as a Middle-Market Deal?
Middle-market transactions range from $100,000 to $1,000,000+ and require a full financial package for underwriting. Unlike smaller transactions that can often be approved with a simple application, these deals require a deeper analysis of the borrower’s financial standing and business objectives.
Essential Components of a Strong Middle-Market Submission
A well-prepared financial package is crucial for securing approval. Here’s what you need and why it matters:
Financial Statements provide a historical overview of the company’s financial health. Lenders typically require the last 2-3 years of tax returns or audited financial statements to assess revenue trends, profitability, and the business’s overall stability.
Debt Schedule outlines the borrower’s outstanding loans and financial obligations. This helps underwriters determine the company’s leverage and whether they have the capacity to take on additional debt.
Balance Sheet gives a snapshot of the company’s assets, liabilities, and equity. It helps lenders assess liquidity and financial positioning.
Profit & Loss Statement (P&L) reveals how much revenue and profit the company has generated over the past 2-3 years. It highlights income streams, operating expenses, and net profitability.
Personal Financial Statements may be required if a personal guarantor is involved. These documents show the financial standing of key individuals behind the business, offering lenders additional security.
Business Bank Statements for the last three months help underwriters evaluate cash flow trends, daily balances, and the company’s ability to handle recurring expenses.
Signed Credit Application authorizes lenders to pull credit reports and formally assess the borrower’s financial background.
Equipment Invoice details the exact equipment being financed, including make, model, serial numbers, and cost. Lenders use this to verify the financing amount and collateral value.
Lastly is the Transaction Write-Up, arguably one of the most important parts of a middle-market submission. This is where brokers have the opportunity to tell the story behind the deal. A compelling write-up should paint a clear picture of the business, its operations, and how the new equipment will contribute to its success. Underwriters want to understand why the company needs the equipment, how it will be used, and what impact it will have on growth and revenue generation. A well-crafted write-up helps lenders see the potential in the deal, making approvals easier and terms more favorable. Taking the time to build a strong, detailed narrative can make all the difference in getting a deal funded.
Decoding Financial Statements: Key Ratios & Cash Flow Analysis
A fundamental difference between app-only and middle-market transactions is the reliance on financial statements. Funding sources use these statements to evaluate a company’s financial stability and its ability to repay obligations, primarily through financial ratios. Understanding these metrics allows brokers to anticipate underwriting concerns, address potential red flags, and structure stronger deal submissions. Because of this, brokers who understand these key metrics can better position their deals for approval. Underwriters use these ratios to identify potential risks and ensure the business is financially sound before extending credit. Having insight into how these ratios influence funding decisions allows brokers to proactively address concerns and present stronger submissions.
One of the key ratios used in underwriting is the Current Ratio, calculated as:
Current Ratio = Current Assets / Current Liabilities
This measures a company’s ability to cover short-term obligations. A ratio above 1.0 generally indicates healthy liquidity, whereas anything below 1.0 may suggest cash flow concerns.
Another critical component is cash flow analysis. Underwriters look at net operating cash flow to ensure the business generates enough money to cover expenses and debt payments. If a company’s net cash flow is consistently negative, it raises a red flag about its financial sustainability. By understanding how these financial indicators affect underwriting decisions, brokers can refine their submissions and increase their chances of securing funding for their clients.
Why Brokers Should Target Middle-Market Deals
If you’re debating whether middle-market deals are worth the extra effort, let’s talk about commission potential. These transactions offer significantly higher commission payouts compared to smaller deals, making them an excellent way to enhance your earnings. The additional work mainly involves gathering financial documents and presenting a well-structured package—skills that become easier with experience.
Moreover, middle-market deals help brokers develop deeper client relationships, positioning them as trusted financial advisors rather than simple deal facilitators. These clients are more likely to return for future transactions, leading to repeat business and valuable referrals.
How BSB Leasing Supports Your Success in Middle-Market Deals
At BSB Leasing, we bring unmatched expertise to middle-market transactions, working closely with brokers to navigate the complexities of structuring and funding deals. Our team doesn’t just process paperwork—we actively collaborate with brokers to strengthen their submissions, ensuring they are well-positioned for approval. With access to a vast syndication network, we connect brokers to a diverse range of funding sources that might otherwise be out of reach. This means more financing options and tailored solutions that meet the unique needs of each transaction.
Our dedicated team provides hands-on support throughout the process, offering strategic insights, underwriting guidance, and best practices to enhance deal quality. Whether it’s crafting a compelling transaction write-up, analyzing financials, or identifying the right lending partner, we are committed to helping brokers succeed in the middle-market space.
Middle-market deals offer brokers the opportunity to significantly increase their earning potential, and BSB Leasing is here to ensure those opportunities turn into funded transactions. By leveraging our expertise, relationships, and support, brokers can confidently take on larger deals and expand their business. Let’s work together to maximize your success in the middle-market space.
