The commercial drone market is set to experience an even bigger boom as more consumers and businesses start to deliver goods, increase security, or enjoy the freedom of filming and flying, triggering greater demand for financing options in a market that caters to large and small buyers alike.
Drones, which the US Federal Aviation Administration classifies as “unmanned aerial vehicles” or UAVs, are aircraft that are either remote-controlled or programmed to perform tasks on specific routes autonomously. The market for drone-related hardware and software meant for commercial use will be worth $21.8 billion by 2027, representing a six-year compound annual growth rate of 16.2% from 2020 through 2026, according to a recent industry report.
The diverse (and growing) group of industries behind this demand includes agriculture, construction, warehousing and fulfillment, real estate, security, manufacturing, and energy infrastructure — not to mention an array of non-military public-sector applications from hazardous-site inspections to border monitoring. Meanwhile, governments are scrambling to provide safety regulations for a world in which drones join ships, trains, and trucks to ensure the mass movement of goods to market.
Drone orders need financing to keep pace with demand, shortages
The need for drone financing is further accelerated by two factors linked to the coronavirus pandemic. First, lockdowns and social isolation have increased pressure on online emporiums like Amazon, Etsy, Walmart, and their non-retail counterparts to make site-to-site delivery faster and cheaper. Second, measures to slow the spread of Covid-19 in China — recently stepped up — have disrupted the manufacture and delivery of drone-related hardware and software. The resultant scarcity makes it harder for companies to lock in commercial-drone orders without installment financing to make such investments commercially viable.
To understand commercial-drone financing, it helps to know that, though order size varies significantly, it’s almost always a major investment relative to the size and scale of the buyer in question. “In this light, the need for credit is as acute for a rancher who wants a couple of drones to keep track of livestock and inspect fencing as it is for an online retailer or parcel-delivery service looking to buy a fleet of drones to speed last-mile drop offs,” says Dmitry Voronenko, CEO of lending-software maker TurnKey Lender.
“Relatively, both scenarios represent significant outlays in the name of long-term savings, and both types of purchase are easier to greenlight when financing is an option,” adds Voronenko.
Commercial-drone sellers who take this message to heart don’t have to wait to extend next-generation lending to eager purchasers. They can provide lending that, boosted by machine learning and artificial intelligence, provides instant credit decisioning and automated processes — along with flexible loan and lease options — that improve customer experience, increase order size, and facilitate return business.
Commercial drone buyers vary significantly, so customized financing is a must
But with so many different types of commercial-drone buyers out there, configuration freedom of provided financing is vital. Fortunately, with the right lending software, drone sellers can:
- Create customized credit products in seconds
- Streamline and automate legacy financing processes for digital transformation
- Deploy bank-grade scoring tailored to in-house business specifications and enhanced by proprietary artificial intelligence
- Virtually eliminate human error and operation inefficiencies
Drone financing can go even deeper. For example, TurnKey Lender’s cloud-based platform works with drone makers’ processing infrastructure to provide seamless loan management, alerts and reporting, and customer portals, in an integrated solution that incorporates flexible business logic.
This fusion lays the groundwork for deep-data analysis to shed light on customer performance and preferences, and thereby shape potential loyalty programs. In turn, responsive settings help drone manufacturers roll out new financing programs and special offers in minutes. Robust lending technology also means there’s no limit on lending models a drone seller can make available, including vendor financing, supplier financing, inventory financing, factoring, rent-to-own, lease to own, etc — in just about any permutation imaginable.
In-house financing supported by robust technology means more dynamic scoring
According to TurnKey Lender’s Voronenko, the most important point about commercial-drone financing is that you don’t have to be a dedicated lender, or do business with a bank, to provide it.
While some specialty UAV lenders have emerged, the alternative of “using purpose-built lending software from a fintech company like ours means the data, the customer information, and the fees stay in-house — with you, the drone maker — instead of relying on a third-party financier that can also confuse customers about who they are ultimately doing business with,” says Voronenko, a lending-tech pioneer who co-founded TurnKey Lender in 2014 and provides capital-equipment financing software to sellers and manufacturers in 50+ countries.
TurnKey Lender also helps drone makers by responsibly pushing the boundaries on traditional credit scoring. While commercial credit scores are important in evaluating loan applicants, nothing sheds more light on a commercial applicant’s creditworthiness than the structure of its income, their purchasing behaviors, and their short- and long-term cash flow patterns. With the applicant’s permission, TurnKey Lender empowers drone dealers to pull bank-statement data and analyze in terms of credit standing compared to vast data arrays filtered by artificial intelligence.
Besides helping drone makers can turbo-charge their credit scoring by reviewing cash-flow dynamics and gathering income and revenue data, state-of-the-art lending technology can set them up to comply with anti-money-laundering and know-your-customer rules in any jurisdiction.
In gauging the potential impact of commercial drones, not even the sky’s the limit
Loan servicing and management is also made easier when drone manufacturers use lending software that’s designed specifically for capital-equipment financing. TurnKey Lender’s white-label service suite is time-tested and proven reliable by some of the world’s leading lenders to meet the credit needs of businesses large and small. Using its software, drone manufacturers configure their loan servicing so that:
- Repayments can be made automatically or through the borrower’s dedicated portal
- Drone makers can send loan statements either monthly or at other intervals
- As well as appearing in the credit recipient’s online portal, due and past-due notifications can be pushed via text and email
Industrial-use drones represent a big and exciting new commercial opportunity with unlimited potential applications. For manufacturers to get more drones out working for their customers, they need to provide financing. And to do that most efficiently, they must consider doing it in-house using the best lending software available.
Would you like to see how this would play out for your business? Request a personalized TurnKey Lender demo today to learn more: