Ford Credit stresses dealer education to help small businesses
Fewer than 15% of new small business credit applications get approved
Ford Credit is emphasizing education and strong dealer relationships to increase access to capital for small businesses.
Fewer than 15% of new small business loan applications get approved, Ford Credit President and Chief Executive Cathy O’Callaghan said during the Ford Pro Accelerate forum on Sept. 30.
The conference featured discussions about how commercial vehicle leaders, technology providers, government officials and financial services firms can address economic challenges facing essential workers in construction, manufacturing, logistics and energy industries.
Many new small business owners may be skilled at their craft, “but to run a business, you might need deeper access to financial information, which may not be readily available to some of our small essential businesses,” O’Callaghan said.
That financial information includes:
- Types of available credit;
- When to spend to grow the business; and
- Processes to build solid financial records to show to financial institutions.
“There are also hurdles on the lending side of the business,” O’Callaghan said, noting that some financial institutions receive “hundreds of thousands” of small business credit applications.
“That means they’ve got to take the time to understand those individual businesses and the economy’s environment that they participate in,” she said. “They don’t always have time to do that.”
Road to capital goes through dealers
Increased access to capital for small enterprises requires a deep understanding of borrowers’ specific situations and growth goals as well as mentorship to give them more financial expertise, O’Callaghan said.
For Ford Pro, the commercial vehicle division of Ford, strong dealer relationships are one way to achieve this, she said.
“We have many entrepreneurs who have become dealer principals, and they need coaching from us on some of the deeper sides of financials and what sort of credit policies are available to them,” she said.
In addition, dealers can help small enterprises achieve long-term prosperity by educating them on tax benefits, savings, investment and insurance, O’Callaghan said.
“Some of our bigger dealer principals will have to be a coach and mentor to some of the small businesses,” she said. “And that’s really effective. They’ve gone through those growing pains. They’ve put in place benefits for their employees, and they can teach small businesses.”
Meanwhile, Ford Pro is poised for ample financing opportunities, with a 43% market share in the Class 1 to Class 7 market in the third quarter, up 0.8 percentage points year over year, according to Ford’s preliminary earnings release today. Transit van sales soared 32.3% YoY, and Ford Pro’s paid-software subscriptions jumped 30% YoY.
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