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Traditional Bank Credit Lines are Disappearing. What to Do?
Wednesday, June 04, 2008
Aren’t you sick of weak, old “lines” that just don’t deliver anymore? Unfortunately, the “Lines” we use for our business can have similar problems these days. If you have been reading our Business to Business Blurbs, you are already aware that Bank Lines can weaken your personal credit, but did you know that there can be other serious problems that you may face with in our 2008 American Economy?Banks are in a state of upheaval in many ways; they are closing, cutting back, and tightening up. Bank lines that are secured with real estate are being pulled (canceled) with little or no notice. It’s not a shock to call your personal banker these days and find that with no warning, he/she is not there anymore! That’s a big problem after you have built a relationship for years, and are counting on them to help your business!
The established business owner with good credit and business history, who walked into the bank and barely had to sign an application, now has to jump through hoops to get a loan. New business owners are often just Out of Luck.
There is some good news though… A GCR Capital finance solution is not tied into bank lines. Once you enter into the contract it cannot be pulled or canceled until the term of the lease, unless you make arrangements to do so. In addition, A through D credits are still being approved. And we don’t affect your personal credit! So even though we have to wait for the banks to stabilize again, you don’t have to wait to get the financing you need.
GCR Capital protects your future, while we solidify your present!
To request more information about equipment financing, GCR Capital, or rates quotes, contact us today
Ready to get the funds you need? Apply Online Now!
“How do you become a Millionaire?
Wednesday, May 07, 2008
Remember that old Steve Martin Stand-Up Line…. “How do you become a Millionaire? Well, first, get a million dollars!”Actually, there are real ways to make sure that you don’t whittle down your Net Worth – even when you want or need equipment acquisitions.
Even If you are not “old school” enough to remember that Steve Martin line, you probably also have heard the “old school” philosophy that a business owner should try to pay cash for acquisitions, and to try to stay away from financing or getting in debt. Well a savvy business owner knows that the correct type of financing is good business when it come to equipment, and working with GCR Capital is one of your best options!
Cash is the first line item on your business and personal balance sheet, so when you pay cash, that line decreases and so does your Net Worth in the same increment! When you make one or even several cash purchases, you don’t realize that is showing as continuous deductions to your Net Worth!
Net Worth is crucial when anyone looks at your business! When you are looking for a line of credit or a real estate purchase with your bank, or in some industries – a potential customer who is looking at your strength before awarding you the project, you need to protect your Net Worth. Don’t nickel and dime it away, with equipment purchases (that depreciate in value). Equipment depreciates – cash doesn’t! Save cash until it makes real sense to use it.
And don’t forget, all GCR Financing is “under the radar” which means that it doesn’t affect personal credit or show as a liability on your balance sheet, once again keeping your business profile and your Net Worth strong and healthy for the times that bank or cash options really make sense!
GCR Capital protects your future, while we solidify your present!
To request more information about equipment financing, GCR Capital, or rates quotes, contact us today
Ready to get the funds you need? Apply Online Now!
Equipment Vendors: How to Increase Sales by Matching Your Customers' Goals
Wednesday, April 30, 2008
As an Equipment Vendor you not only want to make the sale but you want to develop a long term relationship with your customers. One way to help your customers is to explain to them some of the many benefits of leasing vs traditional forms of financing.As you already know (but your customers' may not):
- GCR Leasing does not affect personal credit like banking products such as Loans and Bank lines. (They add debt service to personal credit which then makes it more difficult for to acquire additional money because credit scores go down! Even clients with very good credit will experience a decline when using bank financing because now they have more debt or the potential for more debt!)
- A GCR Capital Lease stays “under the radar”. It does not report on personal credit, and does not affect your client’s future borrowing power like a bank line or credit card.
Help your customer make smart financial decisions as well as smart equipment choices! Your customer will appreciate it when you show them that how you are helping to protect their bank relationship, so that it is still there when they need it for other things such as cash flow, real estate etc.
To request more information about equipment financing, GCR Capital, or rates quotes, contact us today
Ready to get the funds you need? Apply Online Now!
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Threats to Your Personal Credit
Friday, April 25, 2008
Everyone in America is concerned with keeping their credit score at it best possible number.Remember!!
We do not affect your personal credit. Banking products such as Loans and Bank lines add debt service to your personal credit which eventually makes it more difficult for you to acquire additional money from them when you need it because your credit score goes down!
No matter how good your credit is today, a bank loan WILL affect it because you now have more debt and/or the potential for more debt!
Many of our clients who have always gone back to their bankers, are now in a panic because they don’t have their bank to fall back on!
All over the country, banks are tightening up both their lending standards as well as what they will let their underwriters loan money for. Don’t forget that your local banker may know YOU, but ultimately he cannot go against lending requirements that come from his Board of Directors or even state mandates.
Don’t try to finance your equipment at your bank. GCR Equipment Finance Products stay “under the radar”.
They do not report on your credit, and will not affect your future borrowing power.
We actually help you protect your all important bank relationship so that it is still there when you need it.
To request more information about equipment financing, GCR Capital, or rates quotes, contact us today
Ready to get the funds you need? Apply Online Now!
Judy DiVincenzo
GCR Capital
200 9th Avenue N., Ste 200
Safety Harbor, FL 34695
727-258-0093
877-735-1584
727-258-0122
Please visit our LinkedIn profile GCR Capital
Construction Equipment Leasing Firms Target Housing Market
Tuesday, December 06, 2005
OPENPRESS) December 6, 2005 -- A red-hot construction market is attracting many equipment leasing companies to capture more of the country's growing number of residential and commercial projects.Construction is expected to grow in the billions in 2006, according to a forecast by the McGraw-Hill Construction Information Group, a market research firm in New York.
A large part of that increase will be driven by new home building. There were a record number of homes built in 2004 a substantial increase in that is projected for 2006, according to the Building Industry Association.
Construction equipment leasing companies provide leasing for many types of equipment, from backhoes and pressure washers to excavators and compressors.
"We go to where the market is building, and construction is still a real growth area for us," says Nick Myer, vice president of global strategy and marketing for Trycan leasing in Asheville, N.C."
"We believe that equipment leasing should be made easier for the small business owner(s) and for companies seeking to advance their market share. We believe that we have a program that can mean real dollars for any organization willing to try a better and faster approach to equipment financing. "
Traditional financing meant having to put down nearly 25% on equipment purchase. While this would not present a problem for the seasoned company, it might be a hardship for the new start up, or for the organization having minimal cash reserves. However, these days for those looking for construction equipment leasing there is a choice over these decisions. Leasing companies will usually finance 100 % of the equipment cost, and won't require a down payment.
In fact for a company to be considered for an equipment line-of-credit up to $10,000,000.00 – all they need do is to complete a Lease Application and return it via a toll free fax number.
"It's a need in this market," says construction firm owner Bryan Mazurkiewicz of Orchard Development in Clinton Township, who sees plenty of need for this concept. He recently needed a sweeper to complete a job, but had to subcontract the work because he couldn't lease the equipment.
These construction equipment leasing companies require no money down on equipment purchases. Can approve most transactions within the same business day and offer financing terms up to five years.
They can also offer fixed purchase options at the end of the lease term, offer skip payments to many seasonal businesses and special situation financing, or structured lease payments.
Remember!!
We do not affect your personal credit. Banking products such as Loans and Bank lines add debt service to your personal credit which eventually makes it more difficult for you to acquire additional money from them when you need it because your credit score goes down!
No matter how good your credit is today, a bank loan WILL affect it because you now have more debt and/or the potential for more debt!
Many of our clients who have always gone back to their bankers, are now in a panic because they don’t have their bank to fall back on!
All over the country, banks are tightening up both their lending standards as well as what they will let their underwriters loan money for. Don’t forget that your local banker may know YOU, but ultimately he cannot go against lending requirements that come from his Board of Directors or even state mandates.
Don’t try to finance your equipment at your bank. GCR Equipment Finance Products stay “under the radar”.
They do not report on your credit, and will not affect your future borrowing power.
We actually help you protect your all important bank relationship so that it is still there when you need it.
To request more information about equipment financing, GCR Capital, or rates quotes, contact us today
Ready to get the funds you need? Apply Online Now!
Judy DiVincenzo
GCR Capital
200 9th Avenue N., Ste 200
Safety Harbor, FL 34695
727-258-0093
877-735-1584
727-258-0122
------------------------
Please visit our myspace page GCR Capital as well as our FlickR Account GCR Capital
Key Equipment Finance Selected by UBS Leasing as Strategic Partner
Thursday, December 01, 2005
SUPERIOR, Colo.--(BUSINESS WIRE)--Dec. 1, 2005--Key Equipment Finance, the third-largest bank-held equipment leasing company in the U.S. and an affiliate of KeyCorp (NYSE: KEY), today announced that it has been selected as a strategic partner of UBS Leasing. UBS Leasing is a subsidiary of UBS, one of the world's leading financial services companies and a market leader in Swiss private and corporate customer business.UBS Leasing will be able to provide an expanded product and service offering to UBS bank customers in Switzerland interested in leasing technology and other business-related assets. This strategic partnership provides a competitive advantage to UBS Leasing with products such as project financing, technology refresh and off balance sheet lease financing, which can enable companies to take advantage of benefits like upgrade flexibility, optimal asset management and improved balance sheet management.
"UBS is a leading, global financial organization that is committed to meeting the needs of its customers," said Karen Larson, president and chief operating officer of Key Equipment Finance's global vendor services unit. "UBS Leasing already provides a wide range of financing for all types of assets, from motor trucks to technology equipment to ships for companies of all sizes, and we look forward to working with them to offer a more diversified product offering in response to increasing demand from their customers."
UBS Leasing noted Key Equipment Finance's comprehensive product offering, including US-GAAP and IAS/IFRS-compliant lease structures, as well as approximately 30 years' experience providing financing options to companies worldwide, as the primary reasons for selecting Key Equipment Finance as a strategic partner.
"Key Equipment Finance is regarded throughout the industry as a leading provider of equipment financing options for global companies," said Gino Giuliato, CEO at UBS Leasing. "Through this alliance, we will be able to provide an expanded range of products and services to meet the equipment leasing needs of mid- to large-sized businesses throughout Switzerland. We look forward to working with Key Equipment Finance's leasing experts to fulfill the increasing demand for flexible leasing options from our new and existing customers."
According to ELA - October Shows A Significant Upturn In Originations Starting Fourth Quarter 2005
Wednesday, November 30, 2005
ARLINGTON, Va.--(BUSINESS WIRE)--Nov. 30, 2005--The Equipment Leasing Association (ELA) today released the Monthly Leasing Index (MLI), which surveys approximately 20 major equipment leasing companies on a monthly basis. The key metrics highlighted in the October MLI indicate a significant upturn in originations to begin the fourth quarter. New business volume increased from September's $5.06 billion to $6.59 billion, representing a 30.2 percent increase. This is the highest reported amount of new business volume for any month this year and the second month in a row that has happened. However, this increase can be attributed to one respondent more than doubling its new business volume from the previous month."The outlook for the fourth quarter is very solid," according to Ralph Petta, Vice President of Industry Services for the ELA. "Strong new business originations coupled with solid portfolio quality point to a healthy leasing and finance business. Hopefully, these metrics hold throughout the quarter," he said.
Delinquencies (net of unearned income billed but not yet received) remained virtually unchanged from September, coming in at 97.8 percent. However, this remains below March's high of 98.46 percent. Credit approval ratios increased very slightly to 82.7 percent compared with 82.0 percent in September. Average charge-offs, however, decreased slightly, coming in at 0.57 percent, down from September's 0.69 percent. The total number of employees decreased slightly to 8,962 compared to 9,001 in September.
The MLI is issued on the 30th of every month(1) and provides trend analysis across all major performance areas of lessors, including new business volume, aging of receivables, average loss, credit approval ratios and number of employees.
Because the same companies participate in the study each month, the MLI provides a fairly reliable and consistent trend analysis of current industry activity. Results of each MLI are posted on the ELA website and in Equipment Leasing Today magazine.
Charts and graphs are available for reprint to members of the accredited media. The illustrations reflect the data provided by those companies responding to that particular question. Typically, not every company polled responds to every question.
In addition to the MLI, ELA provides a variety of data, including customized market analyses, to ELA members and organizations involved in the forecasted $248 billion equipment leasing industry. To access this and other industry information, visit the ELA website at http://www.elaonline.com/IndustryData/ or contact Dean Frutiger at (703) 516-8380.
GE may sell off distribution unit
Wednesday, November 16, 2005
2005-11-16 Beijing TimeGENERAL Electric Co plans to seek buyers for an electrical-parts distribution unit as it exits slow-growing businesses, people familiar with the matter said.
A sale of GE Supply may raise as much as US$700 million, said the sources, who declined to be identified because no announcement has been made. The unit generates about US$70 million in earnings before interest, tax, depreciation and amortization, they said.
GE Chief Executive Officer Jeffrey Immelt has sold dozens of businesses since he took over in 2001 to focus on more profitable units such as medical-imaging equipment. GE Supply, formed in 1929 and based in Shelton in the US state of Connecticut, sells electrical products such as light fixtures from GE and more than 200 other manufacturers to customers including commercial-building contractors.
'GE is concentrating on higher-tech businesses, and this is more of a distribution business,' said Mark Demos, an analyst at Fifth Third Asset Management in Cincinnati, Ohio, which owns about 13 million shares in General Electric, the world's biggest company by market value. 'There's not a lot of value GE can add to that business.'
A spokeswoman for GE declined to comment.
Companies that compete with GE Supply or buyout firms that value steady cash flow may be interested in buying the business, said Fifth Third's Demos.
Clayton, Dubilier & Rice Inc, a New York-based buyout firm, and Wesco International Inc, a competitor of GE Supply, have bought electrical-distribution assets this year.
GE Supply has more than 150 locations in the United States, Puerto Rico, Mexico and elsewhere.
Immelt may sell GE units involved in the manufacturing of appliances, plastics and equipment leasing and use the proceeds to buy back shares, wrote Nicholas Heymann, an analyst at New York-based Prudential Equity Group, in a September 14 note to clients.
GE plans to save as much as US$1.2 billion in 2006 by combining operations into six divisions from 11. Immelt has raised more than US$25 billion selling satellite, electric motor, industrial diamond and other businesses. The company on September 21 sold about half of its 52 percent stake in insurer Genworth Financial Inc for US$2.36 billion and plans to sell the rest by the end of 2006.
Consolidation in the electrical parts distribution industry has picked up this year, with Paris-based Rexel SA's acquisition by a Clayton Dubilier-led group for about US$3.5 billion and Wesco's purchase of Carlton-Bates Co for US$250 million. Until 1994, Pittsburgh-based Wesco was part of GE rival Westinghouse Electric Corp.
GE Supply's biggest competitors are closely held Graybar Electric Co, Wesco and Anixter International Inc."
GE May Sell Electric-Parts Distributor for $700 Mln, People Say
Tuesday, November 15, 2005
Nov. 15 (Bloomberg) -- General Electric Co., the world's biggest company by market value, plans to seek buyers for an electrical-parts distribution unit as it exits slow-growing businesses, people familiar with the matter said.A sale of GE Supply may raise as much as $700 million, said the people, who declined to be identified because no announcement has been made. The unit generates about $70 million of earnings before interest, tax, depreciation and amortization, they said.
GE Chief Executive Officer Jeffrey Immelt has sold dozens of businesses since he took over in 2001 to focus on more profitable units such as medical-imaging equipment. GE Supply, formed in 1929 and based in Shelton, Connecticut, sells electrical products such as light fixtures from GE and more than 200 other manufacturers to customers including commercial- building contractors.
``GE is concentrating on higher-tech businesses and this is more of a distribution business,'' said Mark Demos, an analyst at Fifth Third Asset Management in Cincinnati, which owns about 13 million General Electric shares. ``There's not a lot of value GE can add to that business.''
Kim Freeman, a spokeswoman for Fairfield, Connecticut-based GE, declined to comment.
Companies that compete with GE Supply or buyout firms that value steady cash flow may be interested in buying the business, said Fifth Third's Demos, who declined to name potential suitors. Demos said he didn't know whether GE Supply was for sale.
Immelt's Strategy
Clayton, Dubilier & Rice Inc., a New York-based buyout firm, and Wesco International Inc., a competitor of GE Supply, have bought electrical-distribution assets this year. James Rogers, a former GE executive now at Clayton Dubilier, and Stephen Van Oss, Wesco's chief financial officer, didn't return calls seeking comment.
GE Supply has more than 150 locations in the U.S., Puerto Rico, Mexico and elsewhere, according to its Web site.
Immelt may sell GE units involved in the manufacturing of appliances, plastics and equipment leasing, and use the proceeds to buy back shares, wrote Nicholas Heymann, an analyst at New York-based Prudential Equity Group, in a Sept. 14 note to clients.
Selling Stakes
GE plans to save as much as $1.2 billion in 2006 by combining operations into six divisions from 11. Immelt has raised more than $25 billion selling satellite, electric-motor, industrial-diamond and other businesses. The company on Sept. 21 sold about half of its 52 percent stake in insurer Genworth Financial Inc. for $2.36 billion and plans to sell the rest by the end of 2006.
Consolidation in the electrical-parts distribution industry has picked up this year, with Paris-based Rexel SA's acquisition by a Clayton Dubilier-led group for about $3.5 billion and Wesco's purchase of Carlton-Bates Co. for $250 million. Until 1994, Pittsburgh-based Wesco was part of GE rival Westinghouse Electric Corp.
GE Supply's biggest competitors are closely held Graybar Electric Co., with $4.08 billion of 2004 sales, followed by Wesco, with $3.74 billion, and Anixter International Inc. at $3.28 billion, wrote Curt Woodworth, an analyst at New York- based JPMorgan Chase & Co., in a Nov. 3 research report.
GE doesn't disclose results for the supply unit."
SunTrust Promotes Two Executives
Monday, November 14, 2005
ATLANTA, Nov. 14 /PRNewswire-FirstCall/ -- SunTrust Banks, Inc. (NYSE: STI) today announced that Brian E. Szabo has been named manager of its Corporate Strategies Unit, and David G. Bilko has been promoted to General Auditor, succeeding Mr. Szabo.In his new role, Mr. Szabo will oversee the company's long range strategic planning, expansion strategy, and provide strategy development and implementation support to all lines of business. Mr. Bilko assumes responsibility for all of the company's internal audit activities. 'These promotions reflect SunTrust's ongoing focus on matching senior executive talent to support the achievement of the company's strategic and business goals,' said David F. Dierker, corporate executive vice president and chief administrative officer for SunTrust. Mr. Szabo has served as SunTrust's General Auditor since 1999.
He joined SunTrust predecessor, Crestar Financial Corp., in 1990 and held a variety of increasingly responsible positions in the finance area. In 1997, he was named chief audit executive for Crestar, which merged with SunTrust in late 1998. A certified public accountant, Mr. Szabo earned a bachelor's degree from Eastern Michigan University. Mr. Bilko, a 24-year banking industry veteran, is a career auditor with broad experience.
He joined a SunTrust predecessor in 1985 and most recently, was responsible for the audit practice for the company's Wealth and Investment Management line of business in addition to overseeing strategy and prioritization within SunTrust Audit Services. Mr. Bilko is a graduate of University of Virginia and earned an MBA from George Mason University. In addition, he completed the Graduate School for Bank Administration Audit Management Program and is a Certified Employee Benefits Specialist. SunTrust Banks, Inc., headquartered in Atlanta, is one of the nation's largest banking organizations, serving a broad range of consumer, commercial, corporate and institutional clients. As of September 30, 2005, SunTrust had total assets of $172.4 billion and total deposits of $113.7 billion. The Company operates an extensive branch and ATM network throughout the high- growth Southeast and Mid-Atlantic states and a full array of technology-based, 24-hour delivery channels. The Company also serves customers in selected markets nationally. Its primary businesses include deposit, credit, trust and investment services. Through various subsidiaries the Company provides credit cards, mortgage banking, insurance, brokerage, equipment leasing and capital markets services. SunTrust's Internet address is suntrust.com."
Abu Dhabi firm buys stake in Bahrain bank
Saturday, November 12, 2005
Abu Dhabi firm buys stake in Bahrain bankMANAMA: The newly formed Abu Dhabi-based financial institution, Abu Dhabi Investment House (ADIH), has acquired a stake in Bahrain's First Leasing Bank (FLB), contributing to its capital.
FLB, incorporated last year, is the first bank in Bahrain dedicated exclusively to the introduction and expansion of equipment leasing throughout the GCC.
The company's primary leasing products are finance leases and operating leases, to the commercial and government sectors in the region.
With this development ADIH, incorporated in September, joins Bahrain- based institutions, Gulf Finance House and Ithmaar Bank, US-based Overland Capital Group and the Kuwait-based Gulf Investment House, as the principal institutional shareholders of FLB.
ADIH chief executive officer and founders committee member Rashad Yusuf Janahi said economic liberalisation in the region was reflected in an increased focus on privatisation initiatives, enhanced government spending on infrastructure and employment programmes and the growth of sophisticated financial investments.
These are all sure signs of economies ready to move beyond cash and term loans in order to build capital infrastructure, he said.
'ADIH has been set up with the aim of providing diligent investors a variety of high-yielding investment opportunities in the region,' he said.
'We have identified equipment leasing as one such business sector that has potential for tremendous growth.'
Mr Janahi said that FLB, as one of the pioneers in the area of equipment leasing in the region, had succeeded in making leasing an integral and sophisticated force in the capital formation structure of GCC companies and institutions.
'Our decision to partner with FLB was made after a thorough due diligence exercise, which included a careful study of both the market and the existing players within the equipment leasing sector,' he said.
'We firmly believe that as a provider of high-quality asset based financing, FLB effectively combines sound local knowledge, with a strong management team that has substantial international experience in lease-financing.'
FLB chief executive officer James Cracco said the bank's partnership with ADIH would provide it with added bandwidth, resources and reach to aggressively pursue core objectives of serving the business community in the region through leasing and other investment tools and thus enhance both productivity and profitability. 'We are especially looking forward to working closely with ADIH and their contacts to increase our economic presence in the UAE and the GCC,' he added."
Golf Business Magazine - The Golf Industry's Leading Business Publication
Thursday, November 10, 2005
Golf Business Magazine - The Golf Industry's Leading Business Publication: "Leasing vs Buying Turf EquipmentIn the debate between leasing and buying, leasing turf equipment is increasingly becoming a popular option at many golf courses across the nation.
Tim McNutt set about outfitting Harbor Lakes Golf Course in Granbury, Texas, with hundreds of thousands of dollars of turf equipment before the new Dick Phelps-designed layout opened for play last summer. The question was how much of that equipment to lease and how much to purchase, taking into consideration wear and tear caused by the combination of a grow-in and year-round golf in the Greater Dallas area. Harbor Lakes leased roughly 40 percent, with mowers accounting for most of that budget line."
"Greens mowers can be used as much as 300 days a year here," explains McNutt, vice president and partner of Prime Golf Group LLC, which operates four Dallas-area courses. "Deck and rough units are pretty much in use 200 days a year. After four years, a typical greens mower in the Dallas market will just be worn out. You would spend as much money keeping it [an owned unit] running as you would on lease payments."
Rather than simply paying cash or obtaining a bank loan, course operators like McNutt have become much more sophisticated in recent years about how they acquire turf equipment, using a combination of leasing, installment financing, cash and loans. With golf revenues flat or down in a still-struggling economy, many cash-flow-strapped courses have made the lower monthly payments available through leasing, in particular, an increasingly important part of their equipment-financing mix.
"There are a number of factors [favoring leasing]," says Rhonda Flanery, manager of sales and marketing for golf and turf leasing for John Deere, which has seen "an uptick" in lease arrangements in recent years.
Among the benefits of operating leases offered by manufacturers and third-party finance vendors are capital conservation, improved liquidity, reduced tax burdens (in some cases), access to new technology, reduced maintenance on newer equipment, flexible financial terms and improved asset management.
Because green fees are more sensitive to the ups and downs of the economy, public courses generally have been more likely than private clubs to lease equipment since private clubs benefit from more predictable membership revenues.
"Cash flow is a major factor and is the driver behind many of the decisions made at a course, regardless of type," says Flanery, whose company offers a program called the John Deere Credit MasterLease. "If you look at annual lease payments compared to laying out the capital for machines, you can certainly acquire more machines to care for the course using a MasterLease program rather than capital purchases."
With competition for golfers at an all-time high, owners must keep their facilities in tip-top shape. "If golfers find a course not in the type of condition commensurate with the green fee they have paid, in all likelihood they won't be back," Flanery says. "A course may be able to pay for only two pieces of equipment with its budget. But through the MasterLease program, it may be able to bundle four or five pieces and improve the overall play for the consumer because it has that flexibility from a cash-flow perspective."
Ron Ort, vice president of CitiCapital Commercial Corp.'s Golf Turf Division, leases Ingersoll Rand equipment as well as that of other manufacturers. "We are seeing an increase in leasing activity," he says. "It is primarily to stretch the capital budgets superintendents are forced to work with today. If you can't buy the fleet you are looking for with cash, you might be able to do so with a lease. That makes the course more efficient by replacing obsolete equipment today rather than waiting until the next budgetary cycle." Peter James is group president of captive finance with Textron Financial Corp., whose mission is to support the sale of Jacobsen and E-Z-GO equipment. Textron has seen an increase in the amount of leasing, although James believes that may be as much a function of internal company changes as it is the golf course marketplace.
"Courses like leasing because they don't have to take on the complete risk of ownership," James says. "Particularly with this type of equipment [mowers], after three or four years it is often in the courses' best interest to replace it anyway. With a lease, they do not have to pay for the whole piece of equipment. The finance company takes the risk of ownership at the end of the term. Leasing in the golf business has become the standard in golf cars and it will become the standard in turf equipment. It is a cheaper way to go in the long run, particularly if you don't want to amortize the entire cost of the equipment."
John McPhee, senior marketing manager/services with Toro, estimates 75 percent of all turf equipment is financed through leases or loans using a variety of funding sources-original equipment manufacturers, local banks, third-party finance companies and others. Toro offers a leasing program in partnership with GE Capital, providing leases through its distribution channels.
"Our financing volume has more than doubled in the past two years," says McPhee, noting that more courses chasing the same number of golfers has encouraged operators to stabilize their budgets as much as possible. "They still have fixed costs associated with operating the course regardless of the number of rounds. What they are trying to do is stabilize those costs through financing."
Because they wear out in a few years and technology changes fairly rapidly, reel mowers used on greens and fairways are obvious financing candidates. "Owners and superintendents are going to be the most conscious of those areas and want the highest quality of cut possible," McPhee says. "So they'll want to keep those fleets fresher and take advantage of new technology enhancements. Financing is a way to get into the new technology more quickly instead of waiting for a capital budget to become available."
Adds Toro Finance Marketing Manager Paul Danielson, "Tax and accounting considerations play into these decisions. If you have a product that turns over fairly rapidly, to keep the pristine conditions of the course, you may want to roll equipment in and out more quickly with fewer implications to your tax and accounting books. Most reel mowers would fall in the leasing category."
While the tax benefits of financing turf equipment are of interest primarily to for-profit facilities, municipal courses may have tax-revenue constraints that force them to work with limited budgets, making financing an attractive alternative. "It comes down to how many dollars you have to get the job done," Danielson says. "We've seen growth in financing with municipalities as well."
Though leasing makes sense in many cases, ownership may be the way to go in others. Some advantageous tax laws favor ownership, Danielson says. The benefits of the Jobs and Growth Tax Relief Reconciliation Act of 2003, set to expire in 2005, allows course owners a 50 percent depreciation bonus, meaning equipment can be depreciated more quickly. "This is a very good time to acquire equipment for a for-profit public course operator," the Toro executive says.
Also, Section 179 of the federal tax code allows a direct-expense deduction. "It used to be that small business could deduct only $24,000 in purchases. That has been raised to $100,000 for equipment put in service by the end of the year," Danielson says. "Then you couple that with the fact we are at historically low interest rates.
"Typically, one financing option will not be right for every piece of equipment. Look at it on a piece-by-piece basis. Financing should support your acquisition strategy rather than drive it."
Some equipment is worth owning because it lasts a long time, requires little maintenance and the technology changes more slowly, agrees Todd Gray, senior vice president of Wells Fargo Leasing, based in Des Moines, Iowa. Aerators, grinding equipment and tractors are examples. Course operators may use cash to purchase that type of equipment, but often prefer dollar-buyout leases that allow them to achieve ownership while saving cash flow along the way.
Two New Healthcare Equipment Leasing Studies Provide Comprehensive Overview and Details of Healthcare Financing Marketplace
Wednesday, November 09, 2005
ARLINGTON, Va. -- Two new studies were released this week which provide complementary macroeconomic overview and market-specific details for use by the equipment leasing industry.The Equipment Leasing Association (ELA), the non-profit association representing companies involved in the forecasted $248 billion equipment leasing and finance industry, and R.S. Carmichael & Co., Inc., a New York-based marketing research and management consulting firm, have released a new report, “Healthcare Equipment Leasing: U.S. Market Dynamics and Outlook 2005-2006.”
The Equipment Leasing and Finance Foundation, a non-profit organization dedicated to enhancing recognition and understanding of equipment lease financing, released its study researched by the University of Virginia Darden School, “Long-Term Trends in Healthcare: Implications for the Leasing Industry.” Together, The Healthcare Financing Compendium provides the most comprehensive information currently available on the dynamic healthcare market and its implications for the equipment leasing and finance industry.
"These two studies provide thorough insights into the drivers of healthcare equipment leasing," said Ralph Petta, vice president of industry services for the Equipment Leasing Association. "This is a tremendous resource for organizations in healthcare and equipment leasing to understand how the healthcare marketplace is financed and why."
The ELA/Carmichael market study focuses on the leasing practices of healthcare providers, including hospitals, outpatient centers and physicians' offices. It also examines the market from the standpoint of healthcare equipment vendors and lease financing competitors.
Highlights from the report include:
-- The estimated size of the U.S. healthcare equipment leasing market in 2005 is at least $7 billion in terms of new volume.
-- The healthcare equipment leasing market is projected to exceed $8 billion in volume by 2007, attributable mainly to forecasted equipment sales growth (as opposed to significant gains in lease penetration).
-- Over the past five years the average annual rate of lease financing market growth in healthcare has been 7 percent.
-- Healthcare equipment leasing is primarily a "middle-market" business, with most transactions in the $250,000 to $5 million range.
-- The hospital market represents a growth market for IT systems (e.g., digital radiology systems that store, retrieve, distribute and display medical images in digital format).
-- The outpatient care market, especially the ambulatory surgery center segment, also continues to grow as a market for lease financing.
-- When investment in all healthcare equipment is considered, lease financing penetration is relatively low and appears to be stabilizing due, in part, to reimbursement reductions, regulations affecting physician referrals, and a lack of awareness of leasing as a tool for equipment acquisitions. However, the upside potential remains substantial although leasing companies will continue to see challenges in realizing the potential opportunities.
"Equipment leasing continues to represent a fundamental source of capital financing for healthcare providers," said Richard S. Carmichael, managing director of R.S. Carmichael & Co., Inc., which conducted the study. "Healthcare industry conditions such as steady growth, capital budget constraints and rapid technological changes create opportunities for equipment leasing to make greater inroads."
The Equipment Leasing and Finance Foundation report features an overview of healthcare industry trends, a statistical analysis of leasing transactions and implications for leasing and finance organizations.
Among the study findings:
-- The healthcare industry in 2004 represented a $1.8 trillion annual market that accounted for 15.4 percent of total gross domestic product (GDP).
-- Healthcare's share of GDP is expected to continue to increase every year to 2014 as healthcare expenditures growth are expected to outpace GDP growth.
-- Small, professional firms are the most significant business form in the healthcare sector, followed by not-for profit organizations.
-- The critical element in improving the productivity of the healthcare industry and reducing its cost growth is capital investment in productivity improving technology that will substitute capital for labor.
"Knowledge of both historical and future trends in the healthcare industry is key to participating in this marketplace," said Lisa Levine, executive director of the Foundation. "The Foundation study on long-term healthcare trends provides those and other critical perspectives on the healthcare industry."
Source: Equipment Leasing Association (ELA) and R.S. Carmichael & Co., Inc.
iSECUREtrac Reports Record 3rd Quarter Revenues: Financial News
OMAHA, Neb., Nov. 9 /PRNewswire-FirstCall/iSECUREtrac(TM) Corp. an industry leader in offender monitoring solutions utilizing global positioning systems (GPS) and wireless technologies, reported third quarter 2005 revenues of $1.37 million, a 6% increase over the third quarter of 2004. Recurring revenues from the leasing and hosting of monitoring systems were $1.18 million for the third quarter, an increase of 24% over the comparable period last year.
Year to date, total revenues were $3.83 million, a 13% increase over the same period a year ago. The Company reported net loss of $1.02 million and $3.05 million, respectively, for the three and nine months ending September 30, 2005, compared to net losses of $1.61 and $7.78 million for the same periods last year.
'The successful completion in June of our strategic initiative has allowed us to concentrate efforts on growing our recurring revenue stream. It is paying off as evidenced by October billings in excess of $500,000,' said David Vana, CFO of iSECUREtrac. 'This growth is continuing at an accelerated pace and we expect $1.7 million of revenues for the 4th quarter, a 24% increase over the 3rd quarter. For the year, we project revenues in excess of $5.5 million primarily on the strength of offender monitoring devices in the field under lease agreements which should top out at over 3,800 units by December 31st.'
'We are proud to be taking over the leading role of offender monitoring in the USA,' said Tom Wharton, CEO of iSECUREtrac. 'As the demand for GPS monitoring continues to grow from sex offender monitoring legislation, domestic violence programs, methamphetamine user supervision programs, and critical federal and state offender re-entry initiatives, specialized community supervision programs are developing that require our state of the art GPS monitoring systems,'
'We are pleased to have recently won contracts with the most sophisticated EM users in the country, each requiring GPS systems that demand the critical features that our system has to offer. Market momentum continues to build, and state legislation for sex offender monitoring will produce a record number of GPS monitoring requirements for years to come,' continued Wharton."
U.S. Equipment Leasing & Finance Foundation Publishes Groundbreaking White Paper on China
Tuesday, November 08, 2005
ARLINGTON, Va., Nov. 8 /PRNewswire/ -- A growing number of lessors exhibiting cautious optimism are slowly, but successfully, knocking down the great wall that separates them from turning lease financing into a mainstream financial product in China to help companies acquire critical equipment.This sentiment is summarized in a white paper on China today released by
the Equipment Leasing & Finance Foundation.
Like any new market, China presents a number of formidable -- sometimes
daunting -- challenges for lessors. Overcoming them as the country moves
toward a market-based economy makes the job that much more compelling. Careful
planning and execution, however, are leading to success for early entrants.
"The penetration rate of leasing in China is less than one-half of one
percent, as compared to the prevailing level of 30 percent in the United
States and other mature markets," said Foundation Executive Director Lisa
Levine. "Obviously there is tremendous growth potential for the Chinese
leasing industry. As the Chinese economy continues to evolve, learning from
the experiences of early entrants -- both good and bad -- could determine the
chances of success or failure for new lessors."
The Foundation commissioned The Alta Group consultancy to develop the
white paper entitled, "Knocking Down the (Great) Walls: Identifying Factors
for Success in the Chinese Equipment Leasing Market," available through the
ELA.
"To many people in our industry and business in general, China represents
this big morass of unknowns," said Alta Group Managing Principal John Deane.
"This white paper helps companies secure a better understanding of the Chinese
market and determine the minimum requirements for operating there, including
risks that must be addressed to be successful.
"Many of the lessons learned by lease finance providers in China and
discussed in the paper can actually be transferred to companies in other
industries who are evaluating such a move to this burgeoning market."
Content for the white paper was derived largely through extensive
interviews with a number of lessors currently operating in China. The document
includes case study overviews of each of their experiences.
The interviewed lessors include, among others:
* A captive lessor whose parent is a large, United States-based
manufacturer of industrial equipment;
* An international technology company whose China leasing activities are
conducted by a joint venture leasing company with a Chinese lessor
partner;
* A Hong Kong-based bank that writes offshore leases into China;
* A local Chinese-owned lessor; and,
* An international bank-owned equipment lessor that has studied the China
equipment leasing market carefully, but has chosen not to enter the
market yet.
"Our research indicated that the infrastructure needed for a viable
equipment leasing industry in China is not fully in place," Deane said. "As a
result, it's critical that lessors be armed with adequate and accurate
information regarding the opportunities and pitfalls in this market. Many of
the risks in China are the same as those in other markets, except they are
compounded by time and distance. There also are some uniquely Chinese beyond
differing tax and accounting rules."
Key findings discussed in the white paper include:
* There are plenty of risks in doing business in China, but nothing that
cannot be overcome through diligence and careful planning. Of greatest
concern are credit reporting and the legal environment in China, both of
which are extremely challenging -- as are the regulatory process and tax
system. The understanding and acceptance of leasing is improving,
however, helping lessors carefully maneuver through these obstacles.
"Central databases of credit histories just don't exist in China, so you
can't run your business there like other markets," Alta principal and
co-author Jonathan Fales said. "Consequently, you need to know your
customers on a personal basis. Local lessors and those with Chinese
partners have this knowledge and advantage. Over time, this process will
become more westernized, but this is still several years away."
* Unless there is a customer-driven need, most foreign lessors should not
enter the market just yet. Given the risks involved, waiting until the
market is better prepared for modern lease financing is prudent. But, if
it appears a customer or parent company will need lease finance support
in any way, there should be no hesitancy to move into China and
establish operations.
"When the timing is right, the sooner a lessor enters this market the
better chance they have at grabbing a foothold of business," Fales said.
"There are some risks to be sure, but the sooner you get to China and
establish your operation, the better shape you will be with a few years
of experience before the expected rush into the market later this
decade."
* More than one business model seems to work for lessors in China. Wholly
foreign-owned enterprise (WFOE), joint venture, offshore and Chinese-
owned onshore lessor arrangements all seem successful, depending on the
specific needs of the lessor and customer. Partnerships with Chinese
lessors can shorten the time to market, but it can be difficult to find
a suitable partner due to a variety of cultural differences and control
issues.
"Based on our analysis of the leasing industry and benchmarking of other
industries where foreign investors have ventured into China, we've found
it advantageous for a foreign lessor to team with a Chinese partner,"
Alta Principal Rafael Castillo-Triana said. "Finding such a partner with
financial stability and significant experience in leasing can be a
challenge but, if the right one is found, this can ease a lessor's
entrance into the Chinese market."
* Business plans must account for an acute shortage of local talent in
China. Across the globe, the leasing industry is insular and has had to
largely train its own people. This situation is surprisingly even more
exaggerated in China. Most executives come from the traditional banking
and finance industries, with little if any exposure to the practice of
lease financing. Significant recruiting and training resources must be
dedicated to address this situation.
"At this point, if you talk to the major lessors in China and ask them
who the key people are in the industry, you hear the same set of names
from each," Fales said. "The talent pool to service the market needs to
grow significantly before leasing will become a mainstream industry in
China."
* Leasing is still a new concept for many Chinese businesspeople. There is
a surprisingly low level of understanding of basic lease finance
concepts in China, even among vendor and reseller executives.
Significant marketing and training resources must be dedicated to
overcome this issue.
"Virtually all of the lessors we interviewed were amazed by the fact
that leasing is not a well understood concept in China, despite the
emerging market economy," Castillo-Triana said. "They realize time and
effort are needed to educate this evolving market on the advantages of
leasing."
* The used equipment market in China is largely undeveloped. Chinese
businesses have historically avoided used equipment due to a combination
of reliability concerns and negative connotations associated with the
purchase of used equipment. There is great potential to build a strong
used equipment market for some assets, including IT and telecom
equipment.
"Perceptions toward used equipment are slowly changing, especially as
foreign manufacturers with better quality equipment enter China," Fales
said. "People are starting to realize, for example, that a piece of
machinery or construction equipment three or four years old may actually
be in good shape and worth buying on the used-equipment market. This is
another cultural issue that is going to take some time to overcome."
* Patience is critical in establishing any business in China. Little
happens fast in this country. Both Chinese and foreign lessors have
painfully experienced the lengthy process of securing government
approvals. Just trying to secure a signature on a simple document
sometimes takes months. As a general rule of thumb, plan double the time
needed when working in this market place.
"When it comes to business, anything the Chinese government touches
takes a lot longer to get done than other countries, but this is true
for virtually every industry in the country," Fales said. "This
certainly increases the time needed to get into the market. Once a
lessor decides to enter China, it takes at least 6-9 months, probably
longer to get everything in place to do business."
Farmers in split decision over fraudulent equipment lease
(Associated Press) LITTLE ROCK - A federal court should not have granted a farm-equipment company's credit arm a complete victory in a dispute with farmers whose signatures were forged on purchase agreements and credit card applications, an appeals court says.While an Arkansas federal judge ruled properly that a local farm equipment dealer wasn't an agent for the Racine, Wis.-based Case Credit Corp., limiting Case's liability on a fraud claim, the judge should not have rewritten the forged contracts in an attempt to settle the dispute, according to the decision handed down Monday.
The 8th Circuit Court of Appeals in St. Louis sent the case back for more proceedings.
Six farmers sued Case Credit Corp., alleging they had oral agreements with a Case International Harvester dealer in Arkansas to purchase or lease equipment between 1996 and 1998. Written agreements, prepared later, did not match the oral agreements, the court said.
According to the court, the dealer inflated prices, forged signatures and obtained thousands of dollars in overpayments. The dealer also forged signatures on credit card accounts to cover repairs and warranty work he had agreed to provide under the oral agreements.
Case discovered the fraud and asked the farmers to sign 'Account Verification' forms to show which equipment they were using. The farmers refused to sign, saying the documents had overstated price figures. Case said the forms would be used only to affirm possession of the equipment, but later tried to use the documents to enforce the forged agreements.
The farmers offered to meet the terms of their oral agreements with the deal, but Case refused, prompting the court fight. The farmers said Case was trying to use the verification forms to accomplish what the dealer's false documents could not - and that that was a claim that the court must consider further.
The 8th Circuit agreed with Case that it shouldn't be held liable for the dealer's alleged fraud because the dealer wasn't authorized to enter contracts on Case's behalf.
The court did, however, say Case couldn't enforce any provision of the forged contracts - even after the lower court modified them - because forged documents, under the law, are void from their inception as though they never existed.
'The district court could no more reform the nonexistent written contracts than Case could seek to enforce them,' the court wrote."
Truck, Construction Repossessions Show Increase in Q3
Thursday, November 03, 2005
WESTBURY, N.Y., Nov. 3 /PRNewswire/ -- Equipment repossessions and liquidations nationwide continued to rise during the third quarter, most notably for trucks and construction machinery, reports Nassau Asset Management. Nassau's NasTrac Quarterly Index (NQI) reveals trends in repossessions and orderly liquidations based upon the company's internal activity.Nassau (http://www.nasset.com/) provides asset recovery, appraisal, collections, liquidation and remarketing services for equipment finance companies across the nation. The company earlier this year noted that repossessions and liquidations during the first two quarters increased significantly for the first time since 2002.
Nassau's latest NQI shows repossessions and liquidations during third quarter (Q3) 2005 compared with Q3 2004 increased in four of five categories: trucks/trailers ( 188%); construction equipment ( 126%); printing presses ( 49%); and machine tools ( 22%). Repossessions and liquidations of medical devices decreased for the first time in 2005 (-24%).
Edward Castagna, Nassau's president, says several factors appear to be influencing the upswing in some repossessions and liquidations.
'The obvious answer is that adverse economic conditions are driving up some repossessions. This is true, but not the whole story,' Castagna explains.
'Fuel costs are among the adverse economic conditions affecting repossessions. There is no question that rising fuel costs earlier this year made it harder for truckers, construction companies and other firms to do business,' Castagna says. A September 2005 Duke University/CFO Magazine Business Outlook survey cited high fuel costs as the top concern for U.S. firms polled.
'Yet part of the increase in repossessions and liquidations may also be attributed to greater leasing activity,' Castagna adds. For example, if lease volume is up, even if delinquencies are as low as 1%, liquidations and repossessions will rise.
The Equipment Leasing Association's (ELA) annual volume chart shows overall leasing volume peaked at $247 billion in 2000, then decreased to a lowpoint of $194 billion by 2003. The most recent chart estimates that 2004 volume would increase to $220 billion, with 2005 volume potentially topping the industry's $247 billion peak.
The ELA recently reported that new business volume in September reached $5.06 billion, the highest for any month in 2005 and an increase of 18.1% over August."
Romania: Leasing market reaches EUR 1.6 bln
03 November 2005The leasing market reached a value of EUR 1.6 bln in the first nine months of the year, representing 90 percent of the value registered in 2004, according to an estimate of the Romanian Leasing Companies Association (ASLR), 'ACT Media News Agency' informs.
The contracts concluded in the first nine months of the year reached a value of EUR 860 M, the ASLR press release states. The ASLR member companies have reached 84 percent of the total value of leasing contracts concluded in 2004. ASLR has 49 members and holds over 54 percent of the Romanian leasing market.
In the period of January to September, goods worth EUR 706.5 M have been financed, and out of these automobiles held a share of 90.5 per cent. Equipment represented 6.2 per cent of the total portfolio while the real estate sector was financed only in a proportion of 0.47 per cent. However, this year real estate registered a growth of 80 percent as compared with 2004. Vehicles registered a decrease of 2 percent as compared with last year but the deficit was “compensated by the positive weight of financing industrial equipment, where a growth from 4 to 6 percent was registered in sales,” the press release reads.
Contracts with foreign suppliers represented 60 percent of the total value of goods financed through leasing in the first three quarters of the year. In regard to the maturity, the vast majority of clients, approximately 85 percent, prefer contracts with a medium term maturity of 3-5 years, as compared to a maturity of 1-2 years. The cross-border operations have a share of 1.5 percent in the total of operations conducted by ASLR members, keeping within the range of 2 percent which has been common so far. Operational leasing is constantly losing ground to financial leasing, losing in the past period 4 percent from the 7 percent registered at the end of 2004.
The value of the goods financed through leasing held a share of 63 percent of the contracts, while the public sector and the NGO held 26 percent and individuals 11 percent. Porsche Leasing Romania is the leader within the ASLR, having a market share of 22.2 percent. BCR Leasing follows up by 20.1 percent, Afin leasing by 10.4 percent and RCI Leasing Romania by 9.5 percent.
Source: 'ACT Media News Agency'"
Marlin Business Services Corp. Reports Third Quarter 2005 Earnings
Marlin Business Services Corp. (Nasdaq: MRLN) today reported net income of $3.4 million for the third quarter ended September 30, 2005, consistent with net income of $3.4 million for the same period in 2004.Diluted net income per share was $0.29 for both the third quarters of 2005 and 2004. Net income in the third quarter of 2005 was impacted by a $753,000 after tax charge, or $0.06 net income per diluted share, for expected losses related to Hurricane Katrina.
Excluding the impact of Hurricane Katrina, net income for the quarter ended September 30, 2005 would have been $4.2 million, or a 23.6% increase over the $3.4 million of net income reported for the quarter ended September 30, 2004.
For the nine months ended September 30, 2005 net income was $11.9 million compared to $9.9 million for the same period in 2004. Diluted net income per share for the nine-month period ended September 30, 2005 was $0.99 compared to $0.84 per diluted share reported for the same period in 2004. Net income in the nine-month period ended September 30, 2005 was impacted by the same $753,000 after tax charge, or $0.06 net income per diluted share, for expected losses related to Hurricane Katrina. Excluding the impact of Hurricane Katrina, net income for the nine-month period ended September 30, 2005 would have been $12.6 million, or a 28.0% increase over the $9.9 million of net income reported for the nine-month period ended September 30, 2004. 'Overall, I'm pleased to report another solid quarter of earnings performance led by strong asset originations and exceptional asset quality,' said Daniel P. Dyer, Chairman and CEO of Marlin Business Services Corp."
Highlights for the quarter ended September 30, 2005 include:
-- Net charge-offs were 1.46% of average net investment in leases during
the third quarter of 2005 compared to 1.74% for the second quarter of
2005 and 1.99% for the full year ended December 31, 2004.
-- Marlin successfully completed its seventh term asset backed
securitization in August totaling $340.6 million, including
approximately $109 million in pre-funding which will provide
attractive fixed rate funding into the fourth quarter of 2005.
-- The Company filed an application for an Industrial Bank Charter with
the FDIC and the State of Utah Department of Financial Institutions
on October 6, 2005.
Asset Origination
-- Based on initial equipment cost, lease production was $79.6 million
in the third quarter of 2005 compared to $85.0 million in the second
quarter of 2005 and $68.9 million in the third quarter of 2004. Net
investment in leases was $557.9 million at September 30, 2005.
-- Our end user customer base grew to more than 81,000 at September 30,
2005 compared with 80,000 at June 30, 2005 and 75,000 at
September 30, 2004. The number of active leases in our portfolio was
approximately 102,000 at September 30, 2005.
Credit Quality
-- The provision and allowance for credit losses was increased in the
third quarter of 2005 by an incremental $1.25 million related to
Hurricane Katrina.
-- Net charge-offs totaled $2.0 million for the quarter ended
September 30, 2005 compared with $2.2 million for second quarter of
2005.
-- On an annualized basis, net charge-offs were 1.46% of average net
investment in leases during the third quarter of 2005 compared to
1.74% for the second quarter of 2005 and 1.99% for the full year
ended December 31, 2004.
-- As of September 30, 2005, 0.72% of our total lease portfolio was
60 or more days delinquent, compared to 0.57% as of June 30, 2005 and
0.78% as of December 31, 2004.
-- Allowance for credit losses was $7.9 million as of September 30,
2005, compared to $6.3 million as of June 30, 2005. Allowance for
credit losses as a percentage of net investment in leases was 1.44%
at September 30, 2005 compared to 1.21% at June 30, 2005. The
allowance for credit losses was increased in the third quarter by an
additional $1.25 million, or 0.22% as a percentage of net investment
in leases, related to Hurricane Katrina.
-- At September 30, 2005, the allowance for credit losses was 169.7% of
leases 60 or more days delinquent compared to 179.8% at June 30,
2005.
-- In conjunction with this release, static pool loss statistics have
been updated as supplemental information on the investor relations
section of our website at http://www.marlincorp.com.
Net Interest and Fee Margin and Cost of Funds
-- The net interest and fee margin was 11.99% as a percentage of average
net investment in leases for the quarter ended September 30, 2005, a
decrease of 61 basis points compared to 12.60% for the quarter ended
June 30, 2005. The decrease in margin is principally attributed to a
decline in fee income and to additional interest expense attributed
to the 2005 term securitization transaction, which included a
$109 million pre-funding amount.
-- The average implicit yield on new business was 12.61% for the quarter
ended September 30, 2005 compared to 12.70% for the quarter ended
June 30, 2005.
-- Fee income as a percentage of average net investment in leases was
3.15% for the quarter ended September 30, 2005 compared to 3.57% for
the quarter ended June 30, 2005. The decrease in fee income is
primarily attributed to lower net residual income on disposed
equipment in the current quarter compared to the second quarter of
2005. Net residual income from disposed equipment was a net loss of
$111,000 in the third quarter ended September 30, 2005 compared to a
net gain of $165,000 in the second quarter ended June 30, 2005.
-- The average cost of funds as a percentage of net investment in leases
was 4.19% for the quarter ended September 30, 2005. This was a 46
basis point increase from the 3.73% for the quarter ended June 30,
2005. The Company normally sees an increase in its cost of funds in
the quarter it completes a term securitization transaction as it
generally refinances lower cost variable rate warehouse borrowings
with higher cost fixed rate term borrowings. In addition, the
Company increased its available financing through a pre-funding
feature in the recent term securitization transaction. The
pre-funding proceeds of $109 million will be used to finance new
lease production into the fourth quarter of 2005. The pre-funding
amount increased cost of funds as a percentage of net investment in
leases by approximately 10 basis points in the current quarter.
Operating Expenses
-- Salaries and benefits expense was $4.6 million in the third quarter
of 2005 compared to $4.4 million in the second quarter. Salaries and
benefits expense was 3.4% as an annualized percentage of average net
investment in leases for both the second and third quarters of 2005
compared to 3.1% in the third quarter of 2004. In the third quarter
of 2005, the Company incurred approximately $60,000 of salaries and
benefits expense associated with the hiring of management related to
its planned Marlin Business Bank.
-- Other general and administrative expenses were $3.1 million for the
third quarter of 2005, an increase of $100,000 from $3.0 million for
the second quarter of 2005. Other general and administrative
expenses as an annualized percentage of average net investment in
leases was 2.3% for both the second and third quarters of 2005
compared to 2.2% in the third quarter of 2004. The Company incurred
approximately $89,000 of legal, accounting and filing fees in the
third quarter of 2005 associated with shelf registration statements
filed with the SEC.
Funding and Liquidity
-- On August 18, 2005, we completed our seventh term asset-backed
securitization transaction at a weighted average fixed borrowing cost
of 4.5% over the term of the transaction. The securitization
amounted to $340.6 million, and the note classes were rated P-1/A-1+,
Aaa/AAA, A2/A, and Baa2/BBB by Moody's Investors Service, Inc. and
Standard & Poor's Ratings Services. Proceeds from the transaction
were used to repay the Company's revolving warehouse credit
facilities and provide additional liquidity for future lease
production.
-- On August 15, 2005, the Company elected to exercise its call option
and pay off its 2002-1 term securitization when the remaining note
balances outstanding were approximately $26.5 million at a coupon
rate of approximately 4.4%.
-- On August 26, 2005, the Company extended its $40 million revolving
bank facility. The facility now expires on August 31, 2007.
-- Capital increased an additional $384,000 through the exercise of
employee stock options and the related tax benefits during the third
quarter of 2005.
-- Our debt to equity ratio was 5.42:1 at September 30, 2005 compared to
4.55:1 at June 30, 2005. The increase in this ratio is primarily
attributed to the additional borrowings associated with
$109.0 million pre-funding feature of our 2005 term securitization.
Our debt to equity ratio was a similar 5.59:1 at September 30, 2004
following our 2004 securitization.
Forsythe Technology Inc.: With Interest Rates Inching up, Some Companies Rethinking How to Acquire Needed IT Equipment
Wednesday, November 02, 2005
SKOKIE, Ill.--(BUSINESS WIRE)--Nov. 2, 2005--U.S. organizations plan to increase IT expenditures by 5.5 percent in 2006, according to preliminary results from a recent Gartner, Inc., survey. Yet, with interest rates on the rise, finance and IT managers may be beginning to rethink their IT budgeting and acquisition strategies, according to one industry expert.'We are now fielding a number of inquiries from customers concerned about how they can better manage their critical IT portfolios in the evolving economic climate,' said John Carcone, senior vice president of financial services at Forsythe Technology Inc., a provider of information technology infrastructure and leasing solutions. 'As interest rates increase and money gets more expensive, it's important to determine the best method for acquiring and financing needed IT equipment.'
Carcone believes this may signal an uptick in interest in leasing as an alternative.
'Our experience over the years in every type of economic cycle shows that leasing becomes a more popular and attractive option when interest rates escalate,' he said. 'Even companies with substantial cash reserves discover there are better ways to use that cash than tying it up in depreciating assets such as IT equipment.
The recently released Equipment Leasing Association Monthly Leasing Index for September confirms Carcone's observation. The index shows that leasing new business volume increased 18.1 percent in September, the highest reported new business volume number of any month this year.
'Leasing provides fixed, scheduled payments to simplify expense budgets and provides a hedge against rising interest rates,' said Carcone. 'This tactic both protects businesses from inflation and allows them to project future cash outlays with greater accuracy.'
According to Carcone, leasing IT equipment can:
-- Conserve Capital. Leasing offers a low initial investment because large capital outlays are avoided and working capital is preserved.
-- Preserve Credit. Leasing IT equipment frees your line of credit for short-term operating capital or other unanticipated expenses.
-- Offer Flexibility. Leasing is flexible and can be structured for your company's particular needs. Payments may be set up to match your cash flow. Shipping, installation and other 'soft' costs may be included in your lease.
-- Refresh Technology. Leasing your equipment can help you keep up with technology. Your vendor can replace or upgrade equipment either mid-term or at the end of the lease.
-- Save Taxes. Qualified leases may allow payments to be written off for operating expenses, reducing short-term taxable income.
-- Simplify Procurement. Leasing simplifies IT procurement by eliminating worries about the logistics and liability issues of equipment disposal.
-- Bring Convenience. Simple application by phone or fax, fast decisions, and personal service will make leasing convenient.
'As with all aspects of IT acquisition and management, organizations make the decision to lease based on an evaluation of internal needs and circumstances as well as external economic factors such as interest rates,' adds Carcone."
Third Quarter 2005 Net Income up 16.9 Percent at Evans Bancorp; Solid Loan and Insurance Revenue Growth over Prior Year
Tuesday, November 01, 2005
ANGOLA, N.Y.--(BUSINESS WIRE)--Nov. 1, 2005--Evans Bancorp, Inc. (Nasdaq: EVBN) today reported strong net income and loan growth for the quarter ended September 30, 2005. Evans Bancorp, Inc. is the holding company for Evans National Bank, a commercial bank with 10 Western New York branches, and approximately $459.5 million in assets. It is also the holding company for Evans National Financial Services, Inc., whose subsidiary, ENB Insurance Agency, Inc., has 12 office locations in Erie, Niagara, Cattaraugus and Chautauqua counties.Third Quarter Performance Highlights:
-- Net income grew by 16.9 percent, or $182 thousand, over the third quarter 2004
-- Average earning assets grew by 15.9 percent, or $57.6 million, in comparison to the third quarter 2004
-- Net loans grew by $8.3 million, or an annualized 13.7 percent in the third quarter 2005
-- Insurance service and fees increased by 31.9 percent, or $0.4 million, in comparison to the third quarter 2004
-- Net interest income grew by 15.7 percent, or $0.5 million, in comparison to the third quarter 2004
'We are pleased with the strong results in our third quarter that are driven from a number of strategic initiatives,' said President & Chief Executive Officer James Tilley. 'The Bank continues to experience strong loan demand which has caused a redeployment of assets into higher-yielding loans. We believe this quarter reflects the continued successful execution of our strategic initiatives.'
Net Income
Net income was $1.3 million or $0.48 per basic and diluted share for the quarter ended September 30, 2005 as compared to $1.1 million or $0.41 per basic and diluted share for the quarter ended September 30, 2004. On a year-to-date basis, net income was $3.7 million or $1.42 per basic and diluted share for the nine months ended September 30, 2005, as compared to $3.3 million or $1.28 per basic and diluted share for the nine months ended September 30, 2004.
All September 30, 2004 share and per share data included in this press release have been adjusted for the five percent stock dividend paid in December 2004, but not for the recently announced five percent stock dividend payable in December 2005.
Financial Position
Total assets at September 30, 2005 were $459.5 million, a decrease of $3.0 million or 0.7 percent in comparison to June 30, 2005.
Total deposits for the quarter decreased 2.0 percent to $354.9 million at September 30, 2005 from $362.0 million at June 30, 2005, due to the seasonally anticipated outflow of municipal deposits. Muni-Vest deposits decreased 14.7 percent or $8.1 million during the quarter, due to the normal outflow of municipal funds which occurs during the second and third quarters of the calendar year, prior to school tax collections in the fourth quarter. The decrease in Muni-Vest deposits was partially offset by growth in demand deposits, which increased 4.0 percent or $2.5 million, from the quarter ended June 30, 2005.
Non-performing loans as a percentage of total loans outstanding were 0.84 percent at September 30, 2005 as compared to 0.73 percent at June 30, 2005. Net charge-offs totaled $55 thousand in the third quarter 2005, as compared to net charge-offs of $202 thousand in the second quarter 2005. The allowance for loan losses totaled $3.3 million, or 1.32 percent of gross loans outstanding, at September 30, 2005, as compared to $3.2 million or 1.30 percent of gross loans outstanding at June 30, 2005.
Loan growth in the third quarter was funded partially with maturities and sales of securities of $7.8 million. At September 30, 2005, total net loans outstanding were $248.7 million, or 54.1 percent of total assets, as compared to $240.5 million or 52.0 percent of total assets at June 30, 2005. Commercial loan growth was bolstered by solid core lending to the Bank's target market, as well as continued success in equipment leasing by the Bank's wholly-owned subsidiary, Evans National Leasing, which was acquired in December 2004 and now accounts for 5.2% of total loans outstanding."
Commercial loan growth was bolstered by solid core lending to the Bank's target market, as well as continued success in equipment leasing by the Bank's wholly-owned subsidiary, Evans National Leasing, which was acquired in December 2004 and now accounts for 5.2% of total loans outstanding.
Operational Results
Net interest income for the three month period ended September 30, 2005 was $3.8 million, an increase of $0.5 million over the same period in 2004, and is primarily a result of growth in interest-earning assets and the Company's entry into the small ticket leasing business through Evans National Leasing.
Equipment Leasing Association's Monthly Leasing Index
Sunday, October 30, 2005
ARLINGTON, Va.--(BUSINESS WIRE)--Oct. 31, 2005--The Equipment Leasing Association (ELA) today released the ELA Monthly Leasing Index (MLI), which indicates a significant upturn to end the third quarter. In September, new business volume increased from August's $4.28 billion to $5.06 billion, representing an 18.1 percent increase. This is also the highest reported amount of new business volume for any month this year. Approximately 20 major equipment leasing and finance companies are surveyed on a monthly basis for the MLI.Noting the strong monthly performance indicated by the September MLI, Ralph Petta, Vice President of Industry Services, stated, 'Despite the hiccup in portfolio quality, the September numbers show a robust leasing business, which is surprisingly strong given the weather events and high energy prices that occurred during the quarter.'
Delinquencies (net of unearned income billed but not yet received) remained virtually unchanged from August, coming in at 97.92 percent. However, this remains below March's high of 98.46 percent. Credit approval ratios increased very slightly to 82 percent compared with 81.7 percent in August. Average charge-offs, however, increased significantly, coming in at 0.69 percent, up from August's 0.43 percent. Petta noted, 'This is due to a couple of outliers resulting from two respondents who reported very significant increases in that statistic for September.'
The total number of employees increased slightly to 9,001 compared to 8,939 in August. Although off from April's high of 9,259, this puts total FTEs back over the 9,000 mark.
The MLI is issued on the 30th of every month(1) and provides trend analysis across all major performance areas of lessors, including new business volume, aging of receivables, average loss, credit approval ratios and number of employees.
Because the same companies participate in the study each month, the MLI provides a fairly reliable and consistent trend analysis of current industry activity. Results of each MLI are posted on the ELA website and in Equipment Leasing Today magazine.
Charts and graphs are available for reprint to members of the accredited media. The illustrations reflect the data provided by those companies responding to that particular question. Typically, not every company polled responds to every question.
In addition to the MLI, ELA provides a variety of data, including customized market analyses, to ELA members and organizations involved in the forecasted $248 billion equipment leasing industry. To access this and other industry information, visit the ELA website at http://www.elaonline.com/IndustryData/ or contact Dean Frutiger at (703) 516-8380.
(1) Should the 30th of the month fall on a non-business day or holiday, the ELA Monthly Leasing Index will be issued on the next business day closest to the 30th."
Two New Healthcare Equipment Leasing Studies Provide Comprehensive Overview and Details of Healthcare Financing Marketplace
Friday, October 28, 2005
ARLINGTON, Va.--(BUSINESS WIRE)--Oct. 28, 2005--$15 Billion In New Business Projected Over Next Two Years As Healthcare Equipment Sales in IT Systems, Outpatient Care Grow
Two new studies were released today which provide complementary macroeconomic overview and market-specific details for use by the equipment leasing industry. The Equipment Leasing Association (ELA), the non-profit association representing companies involved in the forecasted $248 billion equipment leasing and finance industry, and R.S. Carmichael & Co., Inc., a marketing research and management consulting firm, White Plains, New York, have released a new report, Healthcare Equipment Leasing: U.S. Market Dynamics and Outlook 2005-2006. The Equipment Leasing and Finance Foundation, a non-profit organization dedicated to enhancing recognition and understanding of equipment lease financing, released its study researched by the University of Virginia Darden School, Long-Term Trends In Healthcare: Implications for the Leasing Industry. Together, The Healthcare Financing Compendium provides the most comprehensive information currently available on the dynamic healthcare market and its implications for the equipment leasing and finance industry.
'These two studies provide thorough insights into the drivers of healthcare equipment leasing,' said Ralph Petta, Vice President of Industry Services for the Equipment Leasing Association. 'This is a tremendous resource for organizations in healthcare and equipment leasing to understand how the healthcare marketplace is financed and why.'
The ELA/Carmichael market study focuses on the leasing practices of healthcare providers, including hospitals, outpatient centers and physicians' offices. It also examines the market from the standpoint of healthcare equipment vendors and lease financing competitors.
Highlights from the report include:
-- The estimated size of the U.S. healthcare equipment leasing market in 2005 is at least $7.0 billion in terms of new volume.
-- The healthcare equipment leasing market is projected to exceed $8 billion in volume by 2007, attributable mainly to forecasted equipment sales growth (as opposed to significant gains in lease penetration).
-- Over the past five years the average annual rate of lease financing market growth in healthcare has been seven percent.
-- Healthcare equipment leasing is primarily a 'middle-market' business, with most transactions in the $250,000 to $5 million range.
-- The hospital market represents a growth market for IT systems (e.g., digital radiology systems that store, retrieve, distribute and display medical images in digital format).
-- The outpatient care market, especially the ambulatory surgery center segment, also continues to grow as a market for lease financing.
-- When investment in all healthcare equipment is considered, lease financing penetration is relatively low and appears to be stabilizing due, in part, to reimbursement reductions, regulations affecting physician referrals, and a lack of awareness of leasing as a tool for equipment acquisitions. However, the upside potential remains substantial although leasing companies will continue to see challenges in realizing the potential opportunities.
'Equipment leasing continues to represent a fundamental source of capital financing for healthcare providers,' said Richard S. Carmichael, Managing Director of R.S. Carmichael & Co., Inc., which conducted the study. 'Healthcare industry conditions such as steady growth, capital budget constraints and rapid technological changes create opportunities for equipment leasing to make greater inroads.'
The Equipment Leasing and Finance Foundation report features an overview of healthcare industry trends, a statistical analysis of leasing transactions and implications for leasing and finance organizations.
Among the study findings:
-- The healthcare industry in 2004 represented a $1.8 trillion annual market that accounted for 15.4 percent of total gross domestic product (GDP).
-- Healthcare's share of GDP is expected to continue to increase every year to 2014 as healthcare expenditures growth are expected to outpace GDP growth.
-- Small, professional firms are the most significant business form in the healthcare sector, followed by not-for profit organizations.
-- The critical element in improving the productivity of the healthcare industry and reducing its cost growth is capital investment in productivity improving technology that will substitute capital for labor.
'Knowledge of both historical and future trends in the healthcare industry is key to participating in this marketplace,' said Lisa Levine, Executive Director of the Foundation. 'The Foundation study on long-term healthcare trends provides those and other critical perspectives on the healthcare industry.'"
Strengthening Leasing Finance in Slovenia
Friday, October 21, 2005
Slovenia Oct. 21 2005Press Release - European Bank for Reconstruction and Development
The EBRD is extending a €5 million loan to Bank Austria Creditanstalt Leasing d.o.o. (BACA Leasing), a leasing company operating in Slovenia and owned by Bank Austria Creditanstalt AG. The financing, which comes under the leasing window of the EU/EBRD SME Finance Facility, will be used exclusively for leases to micro- and small-enterprises not exceeding €125,000. The loan will be complemented with €700,000 from the European Commission for staff training and institution building.
The Slovenian leasing market is particularly competitive with the ten largest companies accounting for almost 90 per cent of the total new leasing volume in previous years. BACA Leasing has been gaining a strong market presence in equipment leasing and covers leasing in a wide area from manufacturing and services to trading. The company also sees strong potential in the real-estate market.
Francois Lecavalier, Head of the EBRD’s Slovenia office, said the loan will help further facilitate the financing of Slovenian small and medium-sized enterprises, the growth of which is key for the successful development of the country’s economy. Widening its costumer base among this segment will allow BACA Leasing to grow its leasing volume and strengthen its market position.
Alfred Taul and Boris Bobek, Managing Directors of BACA Leasing, said the loan was an opportunity to further boost Bank Austria Leasing’s support for SMEs in Slovenia, which represent the most progressive and fast growing business segment and the backbone of the country’s economy. Bank Austria Group has a very good track record in financing SME’s and wants to further strengthen its involvement in this sector in Slovenia.
The EU/EBRD SME Finance Facility, a joint programme of the European Commission and the EBRD, supports the development and growth of entrepreneurs by facilitating their access to finance. The Bank will make available funding of €1.1 billion, of which €830 million has been committed to signed projects. The EC has been contributing €156.75 million in grant financing and for technical assistance since the launch of the programme in 1999."
Computerworld Singapore - Cisco bets a billion dollars on India
Saturday, October 08, 2005
By Phil Hochmuth, Network World (US online)Updated: Oct 21, 2005 10:28 AM
Cisco has said it will invest US$1.1 billion in India over the next several years, with new projects in R&D, venture capital, equipment financing, and customer support targeted for the world’s second-largest country.
Cisco has said it will invest US$1.1 billion in India over the next several years, with new projects in R&D, venture capital, equipment financing, and customer support targeted for the world’s second-largest country.
Cisco Chief Executive Officer John Chambers said the move is to address the rapidly growing economy and IT needs of India. “India has rapidly risen to become a major force in the global economy. As Indian companies strive to be globally competitive, they have realised the importance of investing in information technology and networking.”
According to the World Bank, India’s IT sector accounted for approximately 4 per cent of its GDP between 2003 and 2004, with almost a million employed in the sector. More than 100 multinational corporations have set up R&D centres in India.
Cisco will invest $750 million for R&D activities, including training and development of engineering staff, as well as partnerships with local companies in R&D. (This equals about a quarter of Cisco’s estimated total R&D budget of $3 billion in 2004). Cisco’s financing arm, Cisco Systems Capital, will invest $150 million to support product leasing and financing for customers in India. Meanwhile, $100 million will be invested in venture capital for India-based start-ups and investments in customer support. Another $100 million will go to support investments, including channel partner and technical services areas."
So bad that MFP has to change its name (Canadian Union of Public Employees)
On Sept. 29, Toronto City Council voted 42 to 1 to ask Toronto police to forward their inquiry efforts and findings to another force for a more independent inquiry. That same day, lawyers for the city advised that Toronto should pay out $9.65 million to settle a lawsuit with MFP Financial Services Ltd.Enormous public resources were spent on MFP, the inquiry and on a lawsuit against the former private financial services company. To add to the costs is MFP’s counterclaim stating the city still owes it money under the leasing agreement for computer equipment.
Here is a recap of the MFP scandal of inflated billing and unaccountability:
* The initial $40 million computer leasing contract ballooned to just over $100 million.
* Dash Domi, former salesman for MFP, secured a bonus of $1.2 million for getting the contract.
* Justice Denise Bellamy, who oversaw the two judicial inquiries looking into computer leasing and other contracts, found “credible evidence” that Domi gave then councillor and budget chief Tom Jakobek a $25,000 payoff.
* Jeff Lyons, a lobbyist who was involved in the MFP scandal, was under investigation by the Ontario Provincial Police for allegedly accepting a $150,000 bribe from two Dell Financial Services salesmen. The OPP also investigated Lyons over whether he ordered an aide to deposit $15,000 into her own account and use the money to write personal cheques to 29 candidates for municipal council. No charges were laid against Lyons by the OPP.
* The inquiry itself cost the city $19.2 million and lasted nearly three years.
MFP, now known as Clearlink Capital Corp., is familiar with the halls of justice. Several cities in Ontario have had similar issues as those in Toronto.
In August, Clearlink settled a lawsuit with the City of Windsor and Essex County for an undisclosed sum. Windsor filed a $305 million lawsuit in 2002. The city claimed irregularities dating back to 1995 with leasing arrangements on communication devices, firefighting equipment and a host of other supplies for the city.
MFP financed RIM Park, a 500-acre park and recreation facility in Waterloo. The cost of the park more than doubled to $227 million without city council approval. A settlement brought the cost down to $145 million.
In July 2005, Clearlink decided to mothball its main operation of equipment leasing. Clearlink now cites its main activity as the equipment trading business. Municipalities beware.
Clearlink, a company with shares on the Toronto Stock Exchange, issued a statement in July that addressed its situation: “The substantial amount of time and focus on litigation matters with resulting negative publicity, together with worsening economics in its technology leasing area, has resulted in a substantial erosion of the corporation’s prospects in its traditional core business.”
Public financing and leasing arrangements would have saved Toronto, Windsor and Waterloo millions of dollars, lots of headaches and the public trust."
Ready to Sign that Lease Agreement?
Wednesday, October 05, 2005
The real estate market is booming across the United States, especially in select areas of California as well as Las Vegas. Even the sleepy town of Boise, Idaho is experiencing record breaking primary residential development. Where ever you happen to live, you have probably noticed it’s not so easy to get into that coveted house you have always dreamed of, despite the favorable mortgage rates. So what should you do?Lessons Learned from the Past
With such uncertainty around the real estate market, perhaps it is best to stay away from owning your own property. Many so called experts predict the housing market in the US has finally reach bubble status, and expect that bubble to burst in the near future. They may have submitted their predictions a bit early, but their advice should be considered. If we learned anything from the stock market bubble and subsequent crash of 2000, we realized frequently a conservative approach to investing serves us well when uncertainty surrounds the market.
Protect yourself and consider the advantages of renting or leasing versus buying your own home. A renter assumes far less risk by signing his/her name to a lease agreement than when closing on a house. Typically a rental agreement locks you into a contract for a short period of time, relatively speaking, during which the rental rate is locked as well. Such a contract can protect you from the downswings of the real estate market, especially the volatility frequently demonstrated by adjustable rate mortgages. Granted, as a renter you don’t stand to gain any equity in the house should the market turn up. However, you also don’t expose yourself to the violent downswings in housing values wrought by an oversaturated market. Should you buy a house now and a year later need to move to pursue a new job opportunity, what happens when your realize those inflated prices you paid for your house are not so inflated anymore, and suddenly you owe more on your house than it is worth? That is called negative equity, and instinctively you realize no good can come of such a situation. Hence renting offers flexibility, both financially and physically speaking.
Avoiding the Headaches of Ownership
By agreeing only to rent the dwelling, you manage to avoid many of the disadvantages associated with owning a house. Normally the landlord is responsible for general maintenance of the flat. Many home owners are quick to offer their stories of frustration, disappointment, and even anger when things go wrong in the house. Pipes burst, flooding occurs, air conditioning units break during the scorching summer days of July, and heating systems fail in the dead of winter. All these things can and will happen, setting homeowners back considerably. Thus, as a renter you can avoid many of the major financial investments owners must make to maintain the comfort and livability provided by a dwelling. Agreeing to a lease agreement helps mitigate the risks of living in a home or apartment.
Weighing your Options
A rental or lease agreement can offer many advantages to those of you looking for a place to live. Ultimately, each individual must decide what is right for them. Some are more than willing to bear the risk inherent to the housing market because they have a strong positive cash flow and are in a position to endure the twists and turns of the market.
Don’t be afraid to weigh your options and consider the risks of owning versus renting. For many, playing the game conservatively and waiting for housing prices to come back down to Earth will prove to be a successful strategy. There is no shame in signing that lease agreement, living in an apartment for a year or two before moving on to that house you have wanted so badly."
Adam Smith is a client account specialist with http://www.10xMarketing.com – More Visitors. More Buyers. More Revenue. For more information about lease agreements, including real estate advice and strategies, please visit http://www.oneminutemillionaire.com/affiliate/glossary/lease-agreement.asp
Article Source: http://EzineArticles.com/
IT Equipment Financing: A Model Purchase? - IT Week
Monday, September 19, 2005
by Sarah Perrin, Best PracticeModels for IT financing are evolving all the time, and companies are no longer restricted to either buying or leasing equipment
Making decisions about how to finance IT involves far more these days than comparing the upsides and downsides of cash purchases versus loans, and hire purchase against leasing. As an alternative to obtaining in-house software and systems, new IT models are emerging under names such as ‘on-demand computing’ or ‘software-as-service’, offering a different method of procuring and paying for IT.
When it comes to financing traditional IT resources, companies seem to be moving away from bank loans. According to a survey by Siemens Financial Services, 43% of medium-sized UK businesses use leasing to finance IT projects, compared to 20% using loans."
Just 1% opted for hire purchase, reflecting the fact that the pace of technology change is now so fast that ownership of technology is seen as less important than ‘in-use’ benefits.
Robert May, managing director of Ramsac, a generic reseller servicing the SME industry, firmly believes in using lease finance whenever possible. ‘Presumably the advice that accountants are giving to their clients is around good cash management,’ he says. ‘On that basis, don’t spend your cash on something that’s going to depreciate. Treat the equipment you are using like gas or electricity and rent it.’
With a traditional lease, at the end of the term, the ownership of the equipment can often, if desired, be transferred to the company for as little as one more payment period.
Financing options continue to develop. As May points out, five or six years ago finance was generally only available against items that could be reclaimed if the lessee defaulted, that is, hardware. ‘Now it’s very easy to finance entire IT projects, for example, training and support as well,’ he says.
May adds that it is also possible to include equipment already purchased in the financing agreement. For example, a firm seeking finance for new accounting software could include its existing photocopiers in the agreement, allowing it to get cash back from the deal.
Finance packages are widely available from all the major IT companies. IBM, for example, will finance IBM and non-IBM hardware, software, training and support costs. Jens Teichelmann, director of channel and SMB (small and medium business) financing at IBM Global Finance, sees some big advantages from leasing IT.
‘Businesses can deduct the cost from income, which can potentially reduce tax. Secondly they don’t have to pay over the length of the lease the full amount, as they would if they were buying it upfront,’ Teichelmann says. This is because IBM can estimate relatively accurately the IT equipment’s residual value at the end of the lease term, reducing the total lease cost.
At the end of the lease term (three years on average), if the business no longer wants the IT equipment, IBM will take it back and potentially refurbish it ready for selling or leasing to new clients. For SMBs who do not require the most up-to-date technology, this can also be an attractive way of gaining cost-effective technology.
IBM’s financing arm also tries to adapt its finance offering to individual business needs. ‘When SMEs invest in IT, there are usually a lot of upfront costs before they receive the benefits,’ Teichelmann says.
‘We are able to structure the lease in such a way that it overlaps with the benefit. If a SAP implementation takes three or four months, we can say that in the first three or four months you won’t pay anything, but start the lease payments from then on.’
When considering the financing options for new IT systems, it’s also worth taking a broad view and looking at some of the new ways that IT services can be delivered. Take the ASP (application service provider) model. This essentially involves an IT company supplying software applications and services on a pay-per-use basis.
The ASP hosts, manages and maintains the applications at its own website and makes them available to users via the internet. The great advantage for small companies is that they have access to the latest software without having to invest large sums. Such ‘on-demand computing’ or ‘software-as-service’ models are becoming increasingly common.
Dr Paul Booth, technical manager at the ICAEW’s IT faculty, says the ASP model now seems to be taking off. ‘It does look to be a model that is coming into its own after unjustified hype a few years ago, before broadband became common,’ he says. The fact that telecoms technology is now available to support the IT has made a big difference to the practicability of such online IT models.
There has been plenty of ASP product development in the accountancy sector. ‘There are a number of accounting products that are being sold into accountancy practices as a means for them in turn to offer what would have been called bureau or bookkeeping services in the past, but are now much more sophisticated,’ Booth says.
‘They enable the client and the accountant to have access as appropriate to the system.’
Clients access the software online to enter the usual accounting data, such as invoices, while the accountancy firm can access it to run reports that support advisory work. ‘That’s what makes the ASP model that much more attractive to an accountancy practice,’ Booth explains. ‘It enables them to provide the means to do the low-level work, the basic bookkeeping, and gives them entry into more value-added work.’ (See box above for three such products available today.)
ASP models are best suited to stand-alone applications, such as accounting software, office productivity suites, sales force and customer relationship management (CRM) applications, and HR packages. Major IT players such as Siebel, Oracle, SAP and Sun Microsystems have online offerings, as do newer entrants to the market such as salesforce.com, a leader in the online CRM field.
The cost of Siebel’s CRM OnDemand service in the UK starts at £50 per user per month, and is applicable to sales, marketing and service personnel.
There are now 40,000 users of the service, and an average of 20 users per company. Although primarily aimed at SMEs, large companies have also been signing up in order to provide cost-effective CRM software to staff who may only need to use it occasionally.
Using the system is simple. There is no need to invest in servers or networking. Once a company has loaded up its data, it can access it from anywhere in the world.
A small company with 20 people wanting to use the system could realistically have Siebel’s CRM OnDemand up and running within a week, according to Neil Morgan, Siebel’s EMEA vice-president for marketing.
‘For big procurement, companies have always had the option of leasing and so paying over time,’ Morgan says. ‘Now this pay-as-you-go model for hosted software gives that to anyone. We have people [customers] with one or two users in a 10-man company.’
Morgan sees three key benefits arising from the model. ‘One is that you can spread the cost over a long period of time. Secondly, it completely changes the risk profile of the IT programme because there is no upfront investment and you can stop it at any time.
Thirdly, it comes out of expenses rather than capital budget, and that has changed the nature of procurement.’
Sarah Perrin is a freelance journalist
Abu Dhabi Investment House announces 1st equity investment; Acquires stake in Bahrain's First Leasing Bank
Saturday, September 17, 2005
The newly formed Abu Dhabi based financial institution, Abu Dhabi Investment House (ADIH), Tuesday announced that it had acquired a stake in Bahrain’s First Leasing Bank (FLB), contributing to its capital.Incorporated in 2004, FLB is the first bank in Bahrain dedicated exclusively to the introduction and expansion of equipment leasing throughout the GCC. The company’s primary leasing products are Finance Leases and Operating Leases, to the commercial and government sectors in the region.
With this development ADIH, which was incorporated in September this year, joins Bahrain based institutions, Gulf Finance House & Ithmaar Bank; the US-based Overland Capital Group, and the Kuwait based Gulf Investment House, as the principal institutional shareholders of FLB.
Announcing ADIH’s equity acquisition in FLB, Mr. Rashad Yusuf Janahi, member of the Founder’s Committee and Chief Executive Officer, ADIH said: “ADIH has been set up with the aim of providing diligent investors a variety of high-yielding investment opportunities in the region. We have identified equipment leasing as one such business sector that has potential for tremendous growth.”
Promoted by a group of prominent businessmen, leading institutions, and investors from the UAE and the Gulf region, ADIH focuses on existing as well as emerging potential for investments in private equity, capital markets, asset management and investment placement.
Mr. Janahi added: “Economic liberalization in the region, which is reflected in an increased focus on privatization initiatives, enhanced government spending on infrastructure and employment programs, and the growth of sophisticated financial investments are all sure signs of economies ready to move beyond cash and term loans in order to build capital infrastructure.
As one of the pioneers in the area of equipment leasing in the region, FLB has in the short period since its launch succeeded in making leasing an integral and sophisticated force in the capital formation structure of GCC companies and institutions through a series of innovative products and services for lessees, investors and vendor partners.
“Our decision to partner with FLB was made after a thorough due diligence exercise, which included a careful study of both the market and the existing players within the equipment leasing sector. We firmly belive that as a provider of high-quality asset based financing, FLB effectively combines sound local knowledge, with a strong management team that has substanial international experience in lease-financing,” added Mr. Janahi.
Welcoming ADIH’s equity particpation in FLB, Mr. James A Cracco, Chief Executive Officer (CEO), FLB said: “Our partnership with ADIH will provide us with added bandwidth, resources and reach to aggresively pursue our core objectives of serving the business community in the region through leasing and other investment tools and thus enhance both productivity and profitability.”
“We at First Leasing Bank are especially looking forward to working closely with ADIH and their contacts to increase our economic presence in the UAE and the GCC,” added Mr. Cracco."
BASICS OF LEVERAGED LEASING
Thursday, September 15, 2005
BASICS OF LEVERAGED LEASINGBy Richard Contino
What Is the Concept of Leveraged Leasing?
The leveraged lease can be one of the most complex and sophisticated vehicles for financing capital equipment in today's financial marketplace. The individuals and firms in the leveraged leasing industry are aggressive and creative. As a result, the environment is one of innovation and intense competition.
Is the concept of a leveraged lease complex? Not really. It is simply a lease transaction in which the lessor puts in only a portion, usually 20% to 40%, of the funds necessary to buy the equipment and a third-party lender supplies the remainder. Because the benefits available to the lessor are generally based on the entire equipment cost, the lessor's investment is said to be "leveraged" with third-party debt. Generally, the third-party loan is on a nonrecourse-to-the-lessor basis and ranges from 60% to 80% of the equipment's cost. The nonrecourse nature means the lender can only look to the lessee, the stream of rental payments that have been assigned to it, and the equipment for repayment. The lessor has no repayment responsibility even if the lessee defaults and the loan becomes uncollectible.
The fact that a nonrecourse lender cannot look to the lessor for the loan repayment if there is a problem is not as bad as it seems for two reasons:
1. The lender will not make a nonrecourse loan unless the lessee is considered creditworthy, and,
2. The lender's rights to any proceeds coming from a sale or re-release of the equipment comes ahead of any of the lessor's rights in the equipment and lease. The lessor's equity investment is subordinated to the loan repayment obligation. If a lender only contributed, for example, 70% of the funds necessary, the subordination arrangement would put it in an over-collateralized loan position that, in turn, would decrease its lending risk.
Although the third-party loan is usually made on a nonrecourse basis, this is not always so. If the lessee's financial condition is weak, a lender may only be willing to make a recourse loan. Under this type of loan the lender can look to, or has recourse against, the lessor for repayment if it cannot be satisfied through the lessee or the equipment. The lessor still, however, has the economic advantage of a leveraged investment.
Although the concept of leveraging a lease investment is simple, the mechanics of putting one together is often complex. Leveraged lease transactions, particularly ones involving major dollar commitments, frequently involve many parties brought together through intricate arrangements. The "lessor" is typically a group of investors joined together by a partnership or trust structure. The partnership or trust is the legal owner, or "titleholder," of the equipment. The "lender" is often a group of lenders usually acting through a trust arrangement. This is further complicated by the fact that each participant will be represented by counsel with varying views. As a result, the job of organizing, drafting, and negotiating the necessary documents is generally very difficult.
Observation: Because the expenses involved in documenting a leveraged lease can be substantial, transactions involving less than $2 million worth of equipment can be economically difficult to structure as a leveraged lease. If, however, documentation fees (such as counsel fees) can be kept within reason, smaller equipment amounts can be financed in this manner. In many cases a prospective lessor or underwriter has an in-house legal staff with the ability to originate and negotiate the required documents. If so, this will help keep costs down. Generally, leveraged lease financings are arranged for prospective lessees by companies or individuals who specialize in structuring and negotiating these types of leases. These individuals and firms are referred to as lease underwriters. Essentially, their function is to structure the lease economics, find the lessor-investors, and provide the necessary expertise to ensure that the transaction will get done. In a limited number of situations, they also find the debt participants. They do not generally participate as an investor in the equipment.
Underwriting
Because the vast majority of leveraged leases are brought about with the assistance of lease underwriters, lease underwriting has become synonymous with leveraged leasing. The premise on which lease underwriting services are provided by an underwriter (that is, on a "best efforts" or "firm" basis) varies significantly. It is, therefore, worthwhile at this stage to explore the two types of underwriter offers: "best efforts" and "firm commitment" underwriting arrangements.
A 'Best Efforts' Underwriting Arrangement Can Be Risky
Lease underwriting transactions are frequently bid on a "best efforts" basis. This type of bid is an offer by the underwriter to do the best it can to put a transaction together under the terms set out in its proposal letter. There are no guarantees of performance. As a result, a prospective lessee accepting the offer may not know for some time whether it has the financing. In practice, a best efforts underwriting is not as risky as it appears. Most reputable underwriters have a good feel for the market when bidding on this basis and usually can deliver what they propose. Thus, there is a good chance they will be able to get "firm commitments" from one or more prospective lessor-investors to participate on the basis offered.
Recommendations:
A prospective lessee must always keep in mind that a best efforts underwriting proposal gives no guarantee the transaction can be completed under the terms proposed. Thus, it must give careful consideration to the experience and reputation of an underwriter proposing on this basis before awarding a transaction to it. An inability to perform as presented can result in the loss of valuable time. When there is adequate equipment delivery lead time, a prospective lessee may be inclined to award a transaction to an unknown underwriter who has submitted an unusually low bid. There is, however, a risk that must be considered. If the transaction is so underpriced that it cannot be sold in the "equity" market, it may meet resistance when it is reoffered on more attractive investor terms. This can happen merely because it has been seen, or "shopped," too much. It is an unfortunate fact that when an investor is presented with a transaction that it knows has been shopped, even if the terms are favorable, it may refuse to consider it. A prospective lessee, thus, should not be too eager to accept a "low ball" best efforts bid unless it has taken a hard look at the underwriter's ability to perform. Best efforts underwriters sometimes submit proposals that are substantially below the market. At times this happens by mistake. For example, transactions may have been priced in good faith based on acceptable investor market yields, but by the time the award is made the market has moved upward. At other times, an underwriter may intentionally underprice a transaction to make sure it wins it. If it cannot be placed as proposed, the underwriter will go back and attempt to get the prospective lessee to agree to a higher rental rate. With its competitors no longer involved, it may be in a good position to do this. A prospective lessee with near-term deliveries must be particularly careful in recognizing this possibility. Otherwise, it may have little choice but to be pushed into a less favorable deal.
A prospective lessee can control the risk of nonperformance under a best efforts proposal by putting a time limit on the award, for example, by requiring the underwriter to come up with, or "circle," interested parties within one week following the award and securing formal commitments by the second week. It is not unheard of for a prospective lessee to make a time limit award to an unusually low bidding, or unknown, underwriter without telling the remaining bidders. The purpose is to try to keep them around just in case the underwriter cannot perform. This can be unfair to an underwriter who, in good faith, is continuing to spend time and money on the transaction in the hope of winning it. Doing this can also hurt a prospective lessee in the long run. Reason: It is likely that the other underwriters will find out that this happened. Once the word gets around that a company does business in this manner, reputable underwriters may refuse to participate in future biddings. Even if they do participate, they may quote rates that have not been as finely tuned as possible. Reason: They will not spend the time or money necessary in situations in which they may not be treated fairly. Thus, this tactic is not recommended because a prospective lessee may, as a result, not see the best possible market rates.
A 'Firm Commitment' Underwriting Arrangement Is Often the Best
From a prospective lessee's viewpoint, a "firm commitment" underwriting proposal is generally the preferred type of offer. When an underwriter has "come in firm" it is guaranteeing to put the proposed lease financing together. Typically, before an underwriter submits this type of proposal, it has solid commitments from lessor-investors to enter into the transaction on the terms presented. This, however, is not always the case. The underwriter's firm bid may only represent its willingness to be the lessor if it cannot find a third-party lessor.
Recommendations:
If an underwriter proposing on a firm basis does not have "committed equity" at the time its proposal is submitted, a prospective lessee may be subject to certain risks. Unless the underwriter is in a strong financial position, its commitment may be worthless if a third-party lessor cannot be found. Thus, a prospective lessee must always investigate whether an underwriter has lined up one or more lessor-investors. If not, the underwriter's financial condition must be reviewed to determine, before making the award, whether it has the financial ability to stand behind it. Underwriters sometimes state they have firm "equity" even through they have nothing more than a verbal indication from a prospective lessor-investor's contact that it will recommend the transaction to its approving committee. Thus, a prospective lessee must ask to be put in touch with each lessor-investor to confirm its position. Doing this will also ensure that there are no misunderstandings as to the transaction terms.
Richard M. Contino, author of several books on equipment leasing, is an internationally reputed expert on leasing. Richard Contino is the managing partner of Contino & Partners, a practising attorney firm based in New York. http://www.continopartners.com/
Lease or Buy? That is Always the Question with Car Financing
Sunday, September 04, 2005
Leasing is a perfectly viable and legitimate way to finance a new car. Although leasing offers attractive benefits, it is somewhat more complex than buying with a loan. This means there can be pitfalls if a decision to lease is made for the wrong reasons.Therefore, a comparison of leasing versus buying is always a useful exercise when considering automobile financing. One option will generally be decidedly better than the other in any specific situation.
Let's first look at the financial side of the analysis.
Leasing always results in lower monthly payments than a conventional automobile loan, assuming the same vehicle, same down payment, same interest rate, and same term. Lease payments will be as much as 60% less than loan payments. Therefore, if monthly payments are your most important consideration, leasing is a good financial option (although there may be other reasons you shouldn't lease -- see below).
However, in the long term, leasing actually costs more than buying assuming that the buyer keeps his/her vehicle for a long time after the loan has been paid. It doesn't take rocket science to figure out that leasing a new car every two or three years costs more than buying one car and keeping it until it falls apart. So if long-term cost is your highest priority, then leasing is not for you.
Even if leasing makes financial sense to you, there may be reasons that it won't work for you.
If you drive more than about 15,000 miles a year, leasing is not a good option for you. The reason is that leasing is designed for people who typically drive only average miles and don't want to pay for the entire value of a vehicle. They only pay for the relatively small part of the value of the vehicle that they actually use.
Leasing may not be a good option, too, if you don't typically maintain your vehicles well, carry only minimum insurance, like to modify your vehicles, or prefer the idea of ownership.
Furthermore, if you expect lifestyle changes (marriage, divorce, job change) that might cause you to want to end your lease before its normal end date, don't lease. Leases are designed in a way that makes it both troublesome and expensive to terminate early.
Al Hearn is owner and operator of LeaseGuide.com (http://www.LeaseGuide.com), a popular web site for automotive consumers interested in leasing. The web site has helped thousands of visitors since 1995.
Article Source: http://EzineArticles.com/
Advantages to Leasing Office and Technical Equipment | Starting a Business > Saving on Expenses
Wednesday, August 17, 2005
Advantages to Leasing Office and Technical EquipmentWhen you´re starting or growing a business, cash is often in short supply. One way to spend less is to lease essential office equipment instead of buying it. Unlike renting, which is much too expensive to consider as a long-term alternative, leasing computers, fax machines or furniture offers a number of critical advantages:
1. Leasing improves your cash flow. The main advantage of leasing is that it frees up cash. Equipment leases rarely require down payments, though you may have to set aside some cash for a refundable security deposit. By contrast, loans to finance the purchase of equipment typically require down payments of up to 25 percent or more.
2. Leases are easier to finance than purchases. Before extending a capital equipment loan, banks will usually want to see two to three years of financial records -- which most new companies do not have. Leasing companies, on the other hand, usually require only six months to a year of credit history before approving a furniture or office equipment lease.
3. Leasing makes it easier to keep pace with technology. Leasing is especially attractive if your business relies upon cutting-edge technology such as the latest computers, communications devices or other equipment. A series of short-term leases will cost you less than buying new equipment every year or two. Some office equipment leases even have yearly computer upgrades built into them -- eliminating that difficult decision of whether you can afford to upgrade or not.
4. Leasing allows you to afford more. While you might not be able to afford to purchase those pricey ergonomic chairs your employees are asking for, you may be able to lease them. Better furniture and equipment can create a more professional image and boost morale and productivity.
5. Leasing has balance sheet benefits. You may be able to exclude some leased assets and related obligations from your balance sheet. Such moves might improve financial indicators such as your firm´s debt-to-equity ratio or earnings-to-fixed-assets ratio. Bear in mind, however, that accounting rules do require your balance sheet to report assets leased under certain types of agreements.
Related Articles
If you do decide to lease equipment, keep the term short -- two years is ideal. Try to negotiate a "modern equipment substitution clause" that lets you update or exchange your equipment so you don´t end up paying for obsolete technology. And insist upon a cancellation clause that lets you pay a fee to cancel the lease. Note the cost of any cancellation penalty.
Finally, if you think you might want to purchase the equipment after the term of the lease has ended, look for a lessor that offers an option to buy.
Article Source:
http://www.allbusiness.com/articles/StartingBusiness/1013-25-1840.html
Equipment Leasing: Should You?
Monday, August 15, 2005
Like any other product that is out there, you should consider the benefits of owning versus equipment leasing. The difference is that in leasing you do not out right own the equipment but use it and pay for it on a daily, weekly, monthly or yearly basis. The fact that you do not own the equipment means that you do not have to fork over a large sum of money to make the purchase. Yet, is this the right choice for you and your business? It is important to weigh the pros and cons of equipment leasing in your individual situation to determine this.To help you, here are some things that you should consider.
• What is the overall cost of the equipment if you purchased it? If you lease it, how long will it take you to pay this sum? If equipment will cost you a good deal more in the long run, you may not want to work with this. Yet, there are many instances where it can save you money as well.
• Determine your equipment need. What is the value of the investment and is this something that your company can even afford at this point?
• Who will maintain the equipment in the long run? If this is the owner’s responsibility, it may be wise to lease from them because they will cover those costs.
• Is there an option to lease the equipment for a certain period of time and then to purchase it at a lower price later? Because the equipment will be worth far less in just a few years, you may be able to get a better, more affordable price at that point.
Equipment leasing has many advantages especially for those who only need it for a short period of time. Yet, making the right decision of your company should be done carefully."
For more information please see http://www.equipment-leasing-deals.co.uk
Article Source: http://EzineArticles.com/
Should You Lease or Buy Your Tech Equipment?
Saturday, August 13, 2005
Find out which option is right for your business with this in-depth look into the pros and cons of each.By Peter Alexander
The next time your business needs new computers, networking equipment or other technology, should you buy it or lease it? If you don't know, read on. This month we'll take a look at the benefits--and downsides--of both leasing and buying technology equipment, plus the questions you should ask to ensure you get the best deal.
Leasing: The Benefits
* Leasing keeps your equipment up-to-date. Computers and other tech equipment eventually become obsolete. With a lease, you pass the financial burden of obsolescence to the equipment leasing company. For example, let's say you have a two-year lease on a copy machine. After that lease expires, you're free to lease whatever equipment is newer, faster and cheaper. (This is also a reason some people prefer to lease their cars.) In fact, 65 percent of respondents to a 2005 Equipment Leasing Association survey said the ability to have the latest equipment was leasing's number-one perceived benefit.
* You'll have predictable monthly expenses. With a lease, you have a pre-determined monthly line item, which can help you budget more effectively. Thirty-five percent of respondents to the Equipment Leasing Association's survey said this was leasing's second-highest benefit.
* You pay nothing up front. Many small businesses struggle with cash flow and must keep their coffers as full as possible. Because leases rarely require a down payment, you can acquire new equipment without tapping much-needed funds.
* You're able to more easily keep up with your competitors. Leasing can enable your small business to acquire sophisticated technology, such as a voice over internet protocol (VoIP) phone system, that might be otherwise unaffordable. The result: You're better able to keep up with your larger competitors without draining your financial resources.
Leasing: The Downsides
* You'll pay more in the long run. Ultimately, leasing is almost always more expensive than purchasing. For example, a $4,000 computer would cost a total of $5,760 if leased for three years at $160 per month but only $4,000 (plus sales tax) if purchased outright.
* You're obligated to keep paying even if you stop using the equipment. Depending on the lease terms, you may have to make payments for the entire lease period, even if you no longer need the equipment, which can happen if your business changes.
Buying: The Benefits
* It's easier than leasing. Buying equipment is easy--you decide what you need, then go out and buy it. Taking out a lease, however, involves at least some paperwork, as leasing companies often ask for detailed, updated financial information. They may also ask how and where the leased equipment will be used. Also, lease terms can be complicated to negotiate. And if you don't negotiate properly, you could end up paying more than you should or receiving unfavorable terms.
* You call the shots regarding maintenance. Equipment leases often require you to maintain equipment according to the leasing company's specifications, and that can get expensive. When you buy the equipment outright, you determine the maintenance schedule yourself.
* Your equipment is deductible. Section 179 of the IRS code lets you deduct the full cost of newly purchased assets, such as computer equipment, in the first year. With most leases favored by small businesses--called operating leases--you can only deduct the monthly payment.
Buying: The Downsides
* The initial outlay for needed equipment may be too much. Your business may have to tie up lines of credit or cough up a hefty sum to acquire the equipment it needs. Those lines of credit and funds could be used elsewhere for marketing, advertising or other functions that can help grow your business.
* Eventually, you're stuck with outdated equipment. As I mentioned earlier, computer technology becomes outdated quickly. A growing small business may need to refresh its technology in some areas every 18 months. That means you're eventually stuck with outdated equipment that you must donate, sell or recycle.
Asking the Right Questions
If you're thinking about leasing equipment, you'll need to do your homework to ensure you get the most favorable terms. Here are a few questions that'll help you get started:
* What type of lease are you being asked to sign--a capital lease or an operating lease? A capital lease is similar to a loan. With this type of lease, the equipment is considered an asset on your balance sheet, and you get the benefits--such as tax depreciation--and risks--including obsolescence--of ownership. Capital leases are often for as long as five years.
* With an operating lease, the leasing company retains ownership, and for tax purposes, the equipment is considered a monthly operating expense rather than a depreciable asset. Operating leases are generally more popular among small businesses because they don't tie up funds and are usually short-term--three years or less.
* Is there a buyout option? You may have a choice between a fair-market value (FMV) option and a $1 buyout option. FMV means you can buy the equipment at the lease's end for its fair-market value, which could be hundreds of dollars. In contrast, a $1 buyout option means the equipment is yours for $1 when the lease expires. And while that sounds like the best option, keep in mind that monthly payments on FMV leases are usually lower than $1 buyout leases. If you're fairly certain you'll want to upgrade to new technology when your lease expires, go with the FMV option.
* How long is the lease for? Usually, leases for computer equipment run 24, 36 or 48 months. The longer your lease, the lower your monthly payments--but you're also likely to pay more over time with a longer lease.
* Does the equipment have to be insured? Some leasing companies require you to insure the leased equipment. If you don't, fees may be added to your monthly payment to cover insurance.
* Can I add to the lease? Most leasing companies don't mind if you add equipment to an existing lease. Your lease payment will be recalculated accordingly; lease terms don't usually change.
* Can I terminate the lease early? What if you no longer need the equipment you're leasing or you want to upgrade to newer technology sooner than you expected? Find out in advance if you can pay off your lease early, and if there's a prepayment penalty (and if so, how much?).
Ultimately, a few simple rules of thumb may help you decide to lease or buy. If your equipment requirements are relatively small and you have the money--or can get a low-interest loan--then just buy it. You'll save money in the long run. However, if you require a substantial amount of equipment, such as computers for your new company's 10 employees, leasing may be a better option. After all, why tie up a large amount of cash--especially when you could use that money to establish or grow your business?
Article Source:
http://www.entrepreneur.com/article/0,4621,323760,00.html
Peter Alexander is Entrepreneur.com's "Tech Trends" columnist and vice president of worldwide commercial marketing at Cisco Systems Inc., the leading supplier of networking equipment and network management for the internet.
Non Status Car Leasing for the UK Marketplace
Sunday, August 07, 2005
Shopping for a new car should be an exciting and rewarding experience, but it can be all gloom and doom if you have non status credit. What could be worse than finding the exact car of your dreams, in just the right colour, with all of the right options, and then getting turned down by the dealer, bank, or finance company because of your credit history or some other circumstance that makes you non status?Well, if you were the only person that this has ever happened to, then it would be fair to say that you are well and truly hosed. But, the fact is, there are millions of people in the U.K. who have less than perfect credit, or find themselves classified as non status because of a recent divorce, being self employed, or just simply not having any credit history to rely on. And yes, these people still can get into a new car. Want to know how they do it? Here's the secret.
Non Status Car Leasing Options
There are U.K. car financing companies who specialize in helping people who are classified as non status. These automobile loan companies realize that credit problems happen to good people, and the chances are that you will make your payments on time if someone would just give you a chance to prove it.
Here's how it works for Non Status Car Leasing
Typically you go about your business shopping for a car just like you normally would. Once you determine the make and model you want, and what options you want to order, you contact your non status car leasing loan provider and give them all of the details.
You'll have to fill out a credit application, but don't panic! They already know that you have non status credit or you wouldn't be coming to them. The application process is a legal requirement for any legitimate car loan provider. Once the application is completed, and the lender approves you for the amount you need, their expert car financing staff goes to work for you.
The way that it works is the non status car loan company will usually buy the car themselves and then lease it to you for a pre-determined period of time. You simply make the monthly payments just as if you leased it through a more traditional lender. As you make each payment you are building your good credit which will go a long way towards helping you when you are ready to get your next car. All you need to do is keep up with your payments. Should you ever find yourself in a position where you just can't make a payment when it is due, contact your non status lender right away. Being honest and up front will keep the relationship running smoothly, and the chances are they will be able to help you over the occasional rough spot. One last word: Be absolutely sure that you deal with a legitimate, licensed lender who specializes in providing non status car leasing alternatives. The last thing that you want to do is end up signing a car leasing deal with a company that's running a scam!"
Article Source: http://EzineArticles.com/
Equipment Lease Financing | Loans > Business Loan Options
Thursday, August 04, 2005
"Cash-starved businesses may want to consider leasing, rather than buying, equipment. Leasing gives you access to many types of equipment: computers, copy machines, fax machines, trucks and more. And while leasing doesn't bring cash in the door, it does reduce the amount of cash you'll need to raise for your business.When you lease equipment, a manufacturer, dealer or lender either buys or already owns the equipment you want. In exchange, you make monthly payments to the owner (lessor). The monthly payment structure typically allows you to treat the payments as tax-deductible business expenses.
Leasing also makes it easier to keep pace with technology... This is especially important if your business relies upon cutting-edge technology such as the latest computers, communications devices or other equipment. A series of short-term leases will cost you less than buying new equipment every year or two. Some leases even have yearly computer upgrades built into them -- eliminating the difficult decision of whether you can afford to upgrade or not.
If you need equipment right away, leases are approved much more quickly than loans and typically involve less paperwork and more relaxed credit requirements. Many equipment vendors provide lease financing, as do a number of banks. For early stage businesses, equipment lease financing is more easily obtained from a vendor than a bank.
Ultimately, leasing equipment will likely prove more costly than buying, but if cash flow is an important issue, then leasing is an attractive alternative.
When leasing, be sure to consider the following points:"
* Lease term. What is the lease term? The length of the lease will affect the amount of your monthly payment, with a longer lease term usually meaning a lower monthly rent.
* Upfront payment. What is the size of any upfront payment? Can you reduce the upfront payment and amortize it over the life of the lease?
* Monthly payments. Are the monthly payments reasonable? You can analyze the amount of the payment by determining the interest factor associated with the lease.
* Return rights. For vendor-leased equipment, under what circumstances can you return the equipment if there are problems?
* Early termination. Do you have the right to terminate the lease early? Most lessors will be reluctant to do this, but you may be able to negotiate an early termination right in exchange for payment of a fee.
* Option to purchase. Try to negotiate a right to buy the equipment. Equipment lessors will often give you this right at the end of the lease term, usually for a fixed price (e.g., 10 percent of the purchase price of the equipment) or at fair market value.
If you decide to lease equipment, keep the term short -- two years is ideal. Try to negotiate a "modern equipment substitution clause" that lets you update or exchange your equipment so you don't end up paying for obsolete technology. And insist on a cancellation clause that lets you pay a fee to cancel the lease. Be sure to note the cost of any cancellation penalty.
Article Reference
http://www.allbusiness.com/articles/Loans/982-3891-3893.html
Office World News: Making the case for equipment leasing
Tuesday, August 02, 2005
We've all heard that old adage, it takes money to make money. We all need equipment to do our jobs and deliver our products or services - and that equipment costs money... or does it.As businesses continue to compete in the new economy, many are searching for proven new ways to address their equipment financing challenges. The choice for many businesses is clear: equipment leasing. Equipment leasing affords companies the ability to leverage their capital, control cash flow and acquire needed equipment.
According to Equipment Leasing Association (ELA) research, eight out of 10 U.S. companies lease their equipment. Leasing as a strategic financing option continues to grow. Between 1998 and 1999, overall U.S. leasing volume grew more than 15 percent, from $207 billion to $226 billion - the forecast for 2000 promises to bring greater growth.
But why do companies lease equipment? There are a variety of reasons: leasing offers a valuable financing package that allows companies to maximize their purchasing power; factoring all benefits in, leasing is often the least expensive financing method; and leasing equipment transfers the risk of technological obsolesence from the lessee to the lessor.
Every company must consider different options for procuring equipment based on its business model and business environment. Following are two real world case studies which illustrate how companies have used equipment leasing as a strategic means to fulfill a business need."
LEASING ALLOWS EXPANSION
Schmitt Marble, Inc. of Cincinnati, Ohio, is a privately held, marble production company that produces cultured marble countertops, tiles and other marble products. Schmitt Marble has been in business for 30 years, has revenue just shy of $5 million and has 85 employees. In 2000, Schmitt Marble began an expansion and opened a new operation in Columbus, Ohio.
Schmitt Marble was looking for strategic financing methods to fund its expansion. Through business forecasting, Schmitt Marble recognized that the expansion would increase its business by 50 percent. Prior to April 2000, Schmitt Marble did not lease any of its equipment. All company assets were owned. All new equipment procured through the expansion process was leased by Schmitt Marble.
Schmitt Marble realized it had an opportunity to grow its business by 50 percent with the addition of a new production plant. Schmitt Marble had a need for a complete line of marble production equipment such as molds, autocasting equipment and spray booths. Schmitt Marble wanted to lease 40 percent of its overall equipment. Interested in preserving capital and controlling monthly costs, leasing its equipment afforded Schmitt Marble a "total package solution" for financing both the new facility and acquiring the required equipment.
Schmitt Marble considered a loan or a line of credit, but when the company weighed the opportunity costs of a straight out purchase against a lease, leasing offered a better solution. Leasing the equipment provided Schmitt Marble with a payment structure that would match the revenue stream of the new facility.
Key Equipment Finance Group, an equipment leasing company, structured Schmitt Marble's lease as a finance lease with step payments. This structure allowed the lease payments to match Schmitt Marble's cash flow. This greatly benefited the company because as its new operation was ramping up, cash flow could be managed and budgeted to meet the payments.
"As a small company, we live on cash. Leasing allows small businesses to creatively control their `cash out' and keep their costs low while building a company up and expanding to generate new revenue streams," said Paul Pendergast, president and chief executive officer of Schmitt Marble.
Equipment financing afforded Schmitt Marble the ability to leverage its capital, increase cash flow and maintain more funds for expansion expenditures. Key Equipment Finance Group provided one-to-one service and a total package solution that would enable Schmitt Marble to reach its double-digit growth goal. Key Equipment Finance Group customized a program to meet both Schmitt Marble's financial and equipment needs.
Equipment leasing offers a variety of benefits which enable companies to meet different business goals. Whereas Schmitt Marble used equipment leasing as a means to expand its business, East Texas Copy Systems used leasing because of the flexibility in terms that leasing offered.
LEASING AFFORDS FLEXIBILITY
East Texas Copy Systems (ETCS) of Tyler, Texas, is an authorized Canon Dealer of digital networked office equipment. With 15 employees, ETCS services large quantity accounts, such as hospitals, school districts, city and county governments and major industries.
One of ETCS' largest customers, a non-profit health system, wanted to take advantage of leasing equipment as a means to minimize cash outlay and acquire 400 copiers and facsimile machines, as well as to structure a deal that would satisfy the health systems' billing needs.
ETCS recognized that having the hospital lease copiers from Canon Financial Services would offer more flexible leasing terms, reduce its costs in procuring the equipment and enable the company to pay for the equipment as it is being used.
ETCS needed a flexible, all-cost included leasing program in order to meet its customer's requirements. When considering financing options, the health system also looked at acquiring the copiers using a bank line of credit; however, leasing the equipment from Canon Financial proved to be a more flexible and process-efficient solution.
The challenge of meeting the customer's billing needs was to integrate an aggregate cost-per-copy billing cycle with individual cost center reporting. Canon Financial structured the lease to meet the billing needs defined by the health system. Each copier was billed with individual reporting to its own cost center. Aggregate pricing was based on lease volume within a 60-day period; thereby, lowering the lease price as the hospital continued to order copiers.
Canon Financial Services' flexible invoicing accommodated the hospital's payment terms, thus avoiding administrative delinquency, which had been a problem with the hospital's previous financing source.
The flexible lease that ETCS developed with Canon Financial Services afforded the hospital the ability to lease six to 10 copiers per month; reducing monthly capital outlay while affording the hospital the equipment needed to supply its growing demand for copiers. This arrangement allowed ETCS to win the hospital's business and steadily increase its volume leased through Canon Financial Services based on equipment demand.
"Canon Financial Services structured the billing cycle to the individual cost centers, making it more convenient for the hospital's different invoicing needs," said Greg Walker, ETCS president. "Canon Financial Services really proved to be extremely customer service-oriented, just as we like to be at ETCS."
Leasing their copiers afforded the health system the ability to both leverage its capital in addition to, protecting itself from technical obsolescence.
LEASING IS GOOD BUSINESS
The benefits Schmitt Marble and East Texas Copy Services reaped by leasing their equipment are not the only benefits that leasing offers companies looking to grow their businesses. Leasing offers numerous advantages: Flexibility and customized solutions
In today's business environment, you need the flexibility to manage your business income efficiently and profitably. Companies have different needs, cash flow patterns, and, sometimes irregular streams of income. With leasing, you can design a program to address your cash flow and budget requirements. You get the equipment you need and the flexibility you want.
Increased purchasing power.
Lease financing allows you to acquire better equipment, often more top-of-the line, than you could with cash.
Clean balance sheet.
Leasing helps conserve your operating capital. Your working capital and bank credit lines remain available for inventory, expansion and emergencies. Leasing helps you better manage your balance sheet.
100 percent financing.
With leasing, you avoid costly down payments. The term of the lease can be matched with the useful life of the equipment.
Convenience.
To survive today, you often need to move fast. Leasing can allow you to respond quickly with minimal documentation and red tape.
Hedge against inflation.
A lease provides the use of equipment for specific periods of time at fixed payments. This fixed-rate pricing protects against inflation. You get today's equipment with tomorrow's dollars.
Tax advantages.
Some lease programs allow you to make the lease payment and deduct it as a business expense. An operating lease allows a company to potentially accelerate the expense or "write-off' of equipment. This can result in a significant tax advantage by decreasing net income.
Upgraded technology.
Leasing allows you to keep pace with technology. Your risk of getting caught with obsolete equipment is lower because you can upgrade or add equipment to meet your ever-changing needs.
THE BOTTOM LINE
Identifying flexible financing options is an ever-present challenge for most businesses. For many, leasing is part of the solution. Leasing offers many advantages over traditional financing options - from flexibility and convenience to a clean balance sheet and a technological edge. To learn more about leasing, visit EL-Ns LeaseAssistant Web site at www.LeaseAssistant.org/.
EDITOR'S NOTES: Michael J. Fleming is the president of the Equipment Leasing Association of America (ELA). ELA, a nonprofit organization headquartered in Arlington, VA., representing over 800 member companies, which provide a variety of asset-based financial products, primarily equipment leasing.
BY MICHAEL FLEMING, PRESIDENT EQUIPMENT LEASING ASSOCIATION
Copyright B U S Publishing Group, Inc. Sep 2000
Provided by ProQuest Information and Learning Company. All rights Reserved
Equipment Leasing
Short on cash, but need new equipment to grow? Lease what you need.What It Is: Equipment leasing is basically a loan in which the lender buys and owns equipment and then "rents" it to a business at a flat monthly rate for a specified number of months. At the end of the lease, the business may purchase the equipment for its fair market value (or a fixed or predetermined amount), continue leasing, lease new equipment or return it.
Appropriate for: Any business at any stage of development. For start-up businesses with no revenues, "small ticket" leases, those of $150,000 or less, are feasible on the personal credit of the founders or owners—if they are willing to make the monthly payments.
Best Use: Financing equipment purchases. Leasing can also finance the soft costs often associated with equipment purchases, such as installation and training services.
Cost and Funds Typically Available: Lease financing is generally more expensive than bank finances, but in most instances it's more easily obtained. The range of funds available is unlimited.
Ease of Acquisition: Easy for leases of less than $150,000. An application for a small-ticket lease is generally no more complex than a credit card application. Leases for more than $150,000 require detailed financial information from the business, and the leasing company conducts the same credit analysis a conventional bank would.
First Steps
Finding an equipment-leasing company is easy. Almost any equipment a business could conceivably need offers a lease option. Thought it's not apparent at first glance, the company offering the lease financing is not the same one that is selling the equipment. The company selling the equipment simply makes a direct referral to a leasing company with which it does business.
It's a good idea to get a quote from the leasing firm referred by the company that wants to sell you the equipment. The quote should be competitive. After all, the co selling products wants to sell as many as possible, and it surely doesn't win any points by referring a leasing company that gouges its customers. But it also pays to get another quote. Usually, the company selling the equipment has more than one leasing company on hand. Or, ask a friend or a business associate.
As a final point, when looking for a leasing company you should understand whether you are talking to a broker—the person who simply structures deals, then gets them financed through any of the leasing companies he or she works with—or a leasing company that is actually putting its own funds on the line.
There's nothing wrong with brokers. The situation is analogous to working with an independent insurance agent. He or she might have intimate knowledge of the marketplace and know where to go to get the kind of insurance, or lease, you need. In theory, this generates savings in excess of his or her fees. But with brokers, the same advice applies: Buyer beware.
Full Article here
http://www.entrepreneur.com/article/0,4621,300783,00.html
Buy Versus Lease: What You Need to Know
Thursday, July 28, 2005
By Jennifer SchiffJuly 28, 2005
When does it make more sense to buy computers? When does it make more sense to lease? Small Business Computing talked to two fast-growing small businesses, one that made the buy decision, one that decided to lease, to find out. We also spoke with executives at Dell Financial Services and HP Financial Services to find out the latest trends in small business computer purchasing and to get their take on buying versus leasing.
When your business is all about cutting-edge technology, buying can make good sense
Founded in 2000, with the current ownership taking over mid-2002, Small Business Television Network, or SBTV, is the first television network on the Web devoted to the small business market. The free service is available 24/7 on the Internet. Because of the high-tech nature of the business, having the latest technology is critical.
As the company's Chief Operating Officer, Michael Kelley, explains, "Before we went and purchased anything, we developed a business plan with a three-year outlook on what we thought we needed for the business. During the planning process, we knew that we were going to have to make a change within a three-year period [the typical length of a lease]. So that was an 'x' on the side of 'reasons not to lease,' because we new we might have to change our technology — probably in less than two-years. As it turned out, it was about 14 months, and we had to make a lot of changes and reconfigurations."
Another important aspect of SBTV's decision to buy was a need to look "asset strong" to outside investors. "Our technology platform and our content are our two most important assets," says Kelley. "We didn't want to look to an outside investor as not having built our assets — the critical [components] of our corporation — correctly."
Ultimately, after weighing the buy-versus-lease decision and talking to a number of vendors, SBTV chose Dell for its servers and workstations, "because they offered us the ability to have cutting-edge technology without making a prohibitive capital investment upfront," says Kelley.
And while it paid in full, upfront, for its servers, SBTV took advantage of a 90-day, interest-free grace period for purchasing its 40 workstations, a combination of desktops and notebooks. They also took advantage of the immediate write-off allowed by the IRS, which Kelley — and many small business owners — would like to see increased.
As for words of advice to fellow small business owners, Kelley offers this: "It's very compelling to lease. But your decision needs to fit the critical values of your organization. Make sure you are not just thinking about cash flow but where you want, or need, your company to be in as little as 12 months."
When controlling cash flow is critical and you don't have time to worry about your equipment, leasing can be a great option
One of the fastest-growing wineries in California, with 80 years of experience growing high-quality grapes in the foothills of the Sierra Nevada Mountains, Delicato Family Vineyards may not seem like a high-tech operation, but it is.
"A lot of our operations here at Delicato are computer based," explains Michael Strohmaier, the company's director of IT. "You have the sales force that needs mobile devices and laptops. You have your front office that needs to do orders, invoicing and compliance. And then you have production that needs PCs to produce wine."
In all, Delicato employs about 200 PCs in its wine operations — a potentially very expensive capital outlay.
"The budgeting was a real challenge," says Strohmaier. He had to figure out which of their computers needed replacing, as well as determine how many new computers, and types of computers, they would need. After carefully assessing the situation, Strohmaier made the decision to lease.
Instead of worrying about a hefty upfront capital outlay, Delicato would have pre-set monthly lease payments, which "helped us smooth out our budget," says Strohmaier. "So now we have a more predictable budgeting process than we had previously. And that helps our cash flow management. Also one of the big things was reducing our risk of getting caught with obsolete technology."
Delicato chose HP as its vendor and leasing company, mainly for the outstanding customer support, says Strohmaier. HP helped Delicato set up a variety of leases, some two-year, some three-year, allowing for maximum flexibility. And while HP does offer bundled software as an option on all of their PCs (as do Dell and most other vendors), Delicato opted to just get the machines.
To date, Strohmaier and Delicato are very pleased with their decisions.
"The type of automation that we have here at Delicato gives us a competitive advantage," explains Strohmaier. "And to keep things running smoothly is very important to us. We also have a limited IT staff. And to be constantly working on fixing older PCs, that diverts you from the real goal, making great wine."
Expert advice from the experts at Dell and HP
As Keith Kendall, managing director for HP Financial Services, explains it, the buy-versus-lease rule "goes something like this: If it's an appreciating asset, something that gains value over time, then you invest cash in it. If it's an asset that loses value over time, you invest somebody else's cash in it. And since IT equipment typically loses its value over time, and in fact loses its value a lot faster than a lot of other fixed assets — like trucks or punch presses — IT assets are a prime candidate for leasing in any company, large or small."
Suneet Paul, vice-president and general manager at Dell Financial Services, concurs. "It depends on how much cash outflow you can afford upfront. Small businesses are so tied to cash flow."
That is why Paul, Kendall, and others like them in the equipment finance business make it a point of asking small businesses what their cash flow situation is and determining whether it make sense to pay, say, $4,000 upfront or pay $45 a month over a fixed period.
Besides helping to manage cash flow, leasing can provide small businesses with obsolescence protection and a safe way to dispose of old equipment, something that has taken on increasing importance in light of stringent EPA and local guidelines for proper equipment disposal.
HP's Kendall also considers leasing a risk-management tool. "If you've invested $100,000 in equipment and it's not quite working the way you want, you don't want to invest or can't always find another $100,000 to buy another set of equipment.
"When you enter into a lease, the ability to progress from one generation of technology to the next, to expand your technology solution, to rid yourself of obsolete equipment is far easier and far smoother, because of the way a lease is structured for small and medium businesses," he says.
Currently, the most popular lease term is 36 months, typically for desktop workstations. However, many companies take out shorter leases, for 24 or 30 months, for laptops, which tend to get outdated faster and abused more.
But despite the many seeming advantages, is leasing right for you?
"What we have seen in the marketplace is a trend where the average pricing of desktop and laptop technology has been declining," says Dell's Paul. "Customers are looking for options other than traditional leasing, looking for the flexibility to do different kinds of financing. Many customers just want to pay outright or get a revolving line of credit [which Dell offers in the form of the Dell Business Credit] rather than lease."
"As the customer, you choose the equipment, software and services you need for your business," says Kendall. "What we provide is the flexibility to buy what you need, manage it financially and also manage the risk over the period of time that you use that equipment."
The tax implications of buying versus leasing
Before you make the decision to buy or lease your computer equipment, you should also carefully weigh the tax considerations. We asked a small-business accounting expert, Thomas Reynolds, a CPA and a founding partner in Ridgefield, Conn.-based Reynolds & Rowella, LLP, what small business owners should be aware of when making the buy versus lease decision.
As Reynolds explains, "There are two kinds of leases: operating and capital leases.A capital lease is basically a purchase, and all you are doing is financing the purchase through a leasing company. At the end of the lease, you have fully paid for the item, and there is either nothing due at the end, or some nominal amount, like a dollar.
"Operating leases, on the other hand, are basically a rental arrangement. You are paying for the use of the equipment over time. If you want to buy it at the end of lease term, you pay some stipulated amount, which presumably approximates fair market value at that time. Under an operating lease, you get to deduct the full cost of the lease as the lease payments are made.
"If a business buys equipment, it must then depreciate the cost of the equipment over a life defined by the IRS. For most equipment, other than passenger vehicles, that life is seven years. The cost of the asset is thus written off over that period on basically a straight-line basis (equal amount each year). However, several years ago, Congress changed the laws to allow for a special write off in the year of acquisition. Currently, the amount of fixed-asset cost that a company can immediately write off by is $105,000. This limitation applies to the company or individual taxpayer, not to each piece of equipment.
"So in the year of acquisition, the company gets to decide whether to use the IRS depreciation life or take the immediate write off. If electing the immediate write off, the company can deduct up to the limit of $105,000, or any amount less than that limit.So if the company has $35,000 in taxable profit before depreciation, the company may elect to write off only enough to bring income down to zero.
"Leasing tends to cost the company a bit more, since the effective interest rate is usually higher. On the other hand, it is often easier to enter into a lease than to obtain an equipment loan from a bank.
"In terms of tax issues, you have the ability to write off quicker under a purchase, assuming you elect the immediate write-off. Under either a lease or a purchase, you are still writing off every dollar you spend. It's just a matter of timing as to when you get the write-off."
Equipment Leasing VIPs Set to Meet at the Ritz-Carlton in Atlanta
Tuesday, July 26, 2005
Lessors Network Annual Showcase scheduled August 24-25 from the Ritz-Carlton, Buckhead in Atlanta, GA.ATLANTA, GA (PRWEB) July 26, 2005 -- Once again, the beautiful Ritz-Carlton, Buckhead in Atlanta plays host to the Lessors Network Annual Showcase where an exclusive group of VIPs representing equipment lease funding sources and service providers will meet August 24-25.
Unlike traditional industry events, the Lessors Network doesn't just showcase exhibitors and speakers. The Network provides a showcase for every registered Attendee's company, product and service, making this the most productive cross-marketing event in the equipment leasing industry.
ROUNDTABLE FORUMS
An elite group of senior level business executives, representing the top tier companies in the equipment leasing industry will deliver new ideas, convictions, strategies, and tactics that directly affect how lessors do business.
OPEN MIC SHOWCASE
Gone are the tired old exhibit booths and breakout sessions as an innovative Open Mic Showcase invites every attendee from the audience to the microphone to introduce their company, products and services, enabling other attendees to quickly identify and evaluate prospective resources for their leasing enterprise.
• Origination Sources - Attendees, representing Brokers, Intermediaries and Lessor Syndicators, describe the type of business they originate for external funding sources in attendance. Brief generic presentations of actual transactions and/or portfolios are also presented with detailed Term Sheets distributed to qualified funding sources later in the Networking Suite.
• Funding Sources - The buy/sell investment strategies of lease funding sources are constantly changing, influenced by credit exposure, tax legislation, interest rates and market opportunities. Attendees, representing funding sources, will outline their current buy/sell investment strategies. Now you know!
• Technology Companies - Finding the right technology product can take a lot of time and cost a lot of money. But lessors no longer have to sit through long-winded, boring technology presentations when they’ve decided after the first 10 minutes this isn't for them. Attendees, representing technology companies, will introduce innovative technology solutions for your business in 5 minutes. If interested, lessors can schedule follow-up meetings in the Networking Suite.
• Service Providers - How do you begin to identify external resources enhancing your lease origination, funding, administrative and distribution networks? Attendees, representing service providers, have 5 minutes to describe outsourcing services guaranteed to enhance your equipment leasing enterprise.
After everyone has been introduced the audience moves into the Networking Suite where all attendees exchange copies of their Attendee Profiles and schedule private follow-up meetings.
Additional information about the Lessors Network and the Lessors Network Annual Showcase is available at http://www.lessors.com/
ABOUT THE LESSORS NETWORK
The Lessors Network serves as a networking enterprise for companies active in the equipment leasing and finance markets. Additional information can be viewed at www.lessors.com."
Webcast Alert: Marlin Business Services Corp. Announces a Conference Call to Discuss Second Quarter 2005 Earnings
Monday, July 25, 2005
MOUNT LAUREL, N.J., July 26 /PRNewswire-FirstCall/ -- Marlin Business Services Corp. (Nasdaq: MRLN - News) announces the following Webcast:What: Marlin Business Services Corp. Webcast - Second Quarter 2005
Earnings Conference Call
When: August 5, 2005 @ 9:00 AM ET
Where: http://www.marlincorp.com/
How: Live over the Internet -- Simply log on to the web at the
address above or you can dial in to our teleconference at
800-894-5910, (International) 785-424-1052 and your passcode is
'Earnings.'
Contact: Bruce E. Sickel, CFO, 888-479-9111 X4108
If you are unable to participate during the live webcast, the call will be archived on the Web site http://www.marlincorp.com for approximately 90 days.
Marlin Business Services Corp. is a nationwide provider of equipment leasing solutions primarily to small businesses. The company's principal operating subsidiary, Marlin Leasing Corporation, finances over 60 equipment categories in a segment of the market generally referred to as 'small-ticket' leasing (i.e. transactions less than $250,000). The company was founded in 1997 and completed its initial public offering of common stock November 12, 2003. In addition to Mount Laurel, NJ, Marlin also has regional offices in or near Atlanta, Chicago, Denver and Philadelphia. For more information, visit http://www.marlincorp.com or call toll free at (888) 479-9111.
Minimum Requirements to listen to broadcast:
The Windows Media Player software, downloadable free from http://www.microsoft.com/windows/windowsmedia/default.aspx and at least a 28.8Kbps connection to the Internet. If you experience problems listening to the broadcast, send an E-mail to: webcast@multivu.com.
Access to the Latest Equipment Cited by SBA State Small Business Winners as Top Benefit of Leasing, According to New Equipment Leasing Association Sur
Wednesday, July 20, 2005
ARLINGTON, Va.--(BUSINESS WIRE)--July 20, 2005--The Equipment Leasing Association (ELA) today released the results of its annual survey of the Small Business Administration's (SBA) State Small Business Person of the Year winners about their habits and reasons for leasing equipment.The top benefit of leasing cited by respondents this year was the ability to have the latest equipment. Of the 20 respondents (from among the 50 eligible state winners), 70 percent currently lease equipment while 40 percent said they have leased in the past. Eighty percent agree that leasing equipment is a good business strategy for meeting the demands of small businesses.
'This year's survey results reiterate the role lease financing consistently plays as a resource for small businesses,' said ELA President Michael Fleming. 'Since small businesses are traditionally under capitalized, leasing provides a flexible option for them to access the equipment they need to be competitive and grow their business.'
Office equipment is the top equipment type leased, followed by trucks/vehicles and materials handling equipment, both reported by 25 percent of respondents. Forty-five percent of respondents reported their need for technology equipment increased disproportionately to other equipment needs, while an equal percentage reported it had not.
Other key findings:
-- Nearly three-quarters (73%) of respondents lease 15% or less of their equipment assets.
-- The ability to have the latest equipment was the top reported perceived benefit of equipment leasing with 65% of the respondents selecting this attribute. Consistent expenses in budget planning followed as the second highest perceived benefit with 35% of respondents noting this attribute. Help managing company growth and no down payment were the two next most reported benefits, with each cited by 30% of respondents.
-- Office equipment has been the top equipment type leased for the last three years.
-- When evaluating financing options for equipment procurement, cash is the number one competitor with 70% of survey participants considering this method. More than half (55%) consider a bank loan, followed by 35% evaluating a line of credit for equipment acquisition.
-- 65% of the respondents stated that the economic climate does not affect their equipment acquisition decisions.
-- The percentage of respondents who currently lease (70%) decreased over 2004's percentage of respondents who were leasing (86%), but was higher than in 2003 (65%).
Members of the accredited media may obtain a copy of charts and graphs for publishing by contacting Suzanne Jackson at 434-972-7278 or sj@FourLeafPR.com.
To review the top line report, visit http://www.chooseleasing.org/market/sba/ELASBA2005.pdf"
Equipment Leasing Association's Monthly Leasing Index For May Shows Slight Decrease in New Business Volume Compared to April's Robust Showing
Thursday, June 30, 2005
ARLINGTON, Va.--(BUSINESS WIRE)--June 30, 2005--The Equipment Leasing Association (ELA) today released the Monthly Leasing Index (MLI), which surveys approximately 20 major equipment leasing companies on a monthly basis. Results of the May 2005 MLI show a very slight downturn for the month. New business volume decreased from April's $4.7 billion to $4.04 billion in May.'Business remains good for equipment leasing companies even with volume being down slightly,' said Ralph Petta, ELA's Vice President of Industry Services. 'April had robust growth in volume, so we're not surprised to see slightly less business volume in May.'
Delinquencies (net of unearned income billed but not yet received) remained virtually unchanged in May. Credit approval ratios also decreased very slightly to 76.0 percent over April's 76.3 percent. Average charge-offs increased, coming in at 0.42 percent from April's 0.36 percent. The total number of employees also decreased very slightly, dropping 0.2 percent in May to 9,243 compared to 9,259 in April.
The MLI is issued on the 30th of every month(1) and provides trend analysis across all major performance areas of lessors, including new business volume, aging of receivables, average loss, credit approval ratios and number of employees.
Because the same companies participate in the study each month, the MLI provides a fairly reliable and consistent trend analysis of current industry activity. Results of each MLI are posted on the ELA website and in Equipment Leasing Today magazine.
Charts and graphs are available for reprint to members of the accredited media. The illustrations reflect the data provided by those companies responding to that particular question. Typically, not every company polled responds to every question.
In addition to the MLI, ELA provides a variety of data, including customized market analyses, to ELA members and organizations involved in the forecasted $248 billion equipment leasing industry. To access this and other industry information, visit the ELA website at http://www.elaonline.com/IndustryData/ or contact Dean Frutiger at (703) 516-8380.
(1) Should the 30th of the month fall on a non-business day or holiday, the ELA Monthly Leasing Index will be issued on the next business day closest to the 30th."
New Magazine Targets Home Leasing Market
Wednesday, June 15, 2005
While we mostly lease business equipment and FF&E for hotels, it's always fascinating to see what is going on in the industry at large. This article was related more towards the consumer market but interesting nonetheless.I found this article on BizJournals which is a very informative site. Here's the rest of the article...
Memphis is getting a new magazine and accompanying Web site aimed at helping those looking to lease a home or for homeowners looking to lease a property.
Homesfor-Lease magazine is a free monthly publication that will enable individuals and businesses to advertise available homes for lease to the public.
ELJ Enterprises, the founding company of Homesfor-Lease, released a test issue in March and it was well received in the real estate community.
"The magazine is great. People are walking in my office with the magazine in their hand requesting to see the homes," says Don Brasfield with Rental Homes of America.
The interactive Web site, www.homesfor-lease.com, allows users to save personal profiles and receive reminders when a property that fits their requirements becomes available. Homesfor-Lease magazine will be available at Kroger stores on June 24 throughout the Memphis area.
IT Equipment: Buying vs. Leasing
I found this great article on ITEdge which agains highlights some of the great options leasing offers.With Chuck Thomas, director of Worldwide SMB Sales and Marketing for IBM Global Financing, the world's largest information technology financier, and a member of the board of directors of the Equipment Leasing Association.
Question: What are the primary advantages to leasing technical equipment vs. buying?
Thomas' Answer: Leasing is especially attractive for information technology equipment. IT assets are usually at the heart of business operations and a key enabler for growth and innovation. Today's attractive IT lease rates make it possible for companies to acquire the IT tools they need to be competitive in their marketplace while still preserving capital and credit lines for other core investments. In addition, leasing can provide important other benefits to protect and manage IT investments such as attractive technology upgrade options, Web tools for asset tracking and management, and safe and secure asset and data disposal.
Question: Is leasing generally the best alternative? Or are there situations where buying is clearly a better option?
Thomas' Answer : Leasing, especially a Fair Market Value lease based on residual value, is often the most attractive acquisition alternative, but there are situations where outright ownership may be preferred. It usually comes down to simple economics. Are there competitive lease offerings available from reputable lessors? An example where purchase might be favored could be equipment that will be used, with certainty, by a company over a very long period of time (seven to 10 years) when the usual market term is much shorter. Another example could be specialty assets that have a limited secondary market. In these instances, lessors may not be able to offer as compelling an economic benefit as purchase.
Question: What are the primary items companies should consider when evaluating lease financing arrangements?
Thomas' Answer: Selecting the right lessor is as important as the lease vs. purchase decision itself. Unfortunately, some companies choose one lessor over another based solely on the monthly cost, or lease rate factor. Their theory is that the lower the cost, the better the deal. This isn't always the case. Obviously, monthly cost is important, but companies need to remember that they are not just buying a rate; they are buying a contract and a relationship that could extend for several years through technology upgrades, extensions and additional equipment.
Some important contract factors companies should consider include: fair and straightforward contract terms and business practices, documented mid-term and end-of-lease options and responsibilities, and no hidden charges. The contract should completely document the lease or financing transaction. Companies also need to consider a lessor's reputation for integrity, honesty and reliability; their IT asset financing knowledge; and the skill and availability of their sales and customer support personnel. Global companies also need to consider the lessor's capabilities to provide consistent financing offerings, processes and support around the world."
If you are looking for help getting your hands on some new IT Equipment with Equipment Leasing, contact GCR Capital. We'd be delighted to help you.
Equipment Leasing Industry Shows 24 Percent Increase in New Business Volume
Equipment leasing is a $200 billion dollar industry in the US and 80% of US businesses use equipment leasing.The Equipment Leasing Association (ELA) on May 31, 2005 released the Monthly Leasing Index (MLI), which surveys approximately 20 major equipment leasing companies on a monthly basis. Results of the April 2005 MLI show new business volume increased from March's $3.8 billion to $4.7 billion in April, an increase of 24%.
Delinquencies (net of unearned income billed but not yet received) decreased very slightly for the under-30 days category to 98.0% in April compared to 98.46% in March.
Credit approval ratios, however, decreased to 76.3% over March's 83.2%.
Average charge-offs also decreased, coming in at 0.36% from March's 0.53%.
The total number of employees increased 2.1% in April to 9,259 compared to 9,072 in March, continuing the upward trend in employment.
Leasing Associations
Here are a couple of the main Equipment Leasing Organizations in our Industry.Equipment Leasing Association
An online hub for the equipment leasing and finance industry. The Association exists to promote and serve the general interests of the equipment leasing and finance industry.
Equipment Leasing and Finance Foundation
The Equipment Leasing and Finance Foundation, the premiere developer and disseminator of the body of knowledge for the equipment lease financing industry, since 1989. A non-profit, tax deductible organization. The Foundation, provides its publications and resources free to those studying and researching in the equipment lease financing industry and to industry professionals]
National Association of Equipment Leasing BrokersThe NAELB is an organization formed to promote the interests of equipment leasing brokers through education, advocacy, improved communication with funders and programs designed to upgrade the professionalism and profitability of brokers, funders and others engaged in the business of equipment lease financing.
Equipment Leasing Industry Facing Challenges
Like all industries, as competition heats up service providers need to continue to focus on improving their services. GCR Equipment Leasing makes it a point to constantly strive to be unique and offer you, the end user a unique experience.Read this snippet to find out more about how the leasing industry is shifting and adjusting.
PR Newswire June 14th, 2005
"Many companies in the equipment leasing industry follow the same lead. That is, when one organization does something that seems to work, many others follow suit. In today's tough market, some lessors think they need to model themselves after GE Capital to survive. Successful smaller, niche players in the industry, however, are wary of such an approach, wondering if it is in their best interest.
Companies in the airline business, for example, have tried to pattern themselves after Southwest Airlines and its no frills, cheap seats business model. Some airlines have struggled to realize the success of Southwest, due to the much different structures of their organizations. Niche lessors recognize the risk of falling into the same trap, forgetting what made them unique.
"Based on our observations working with a number of successful equipment leasing and finance companies, it is clear they leverage what makes them special," Deane said. "While copying someone else's success may be a sincere form of flattery, it is very difficult to execute someone else's uniqueness."
More Equipment Leasing Books
Tuesday, June 14, 2005
Here are a few more books on Equipment LeasingTitle | Author |
| Complete Book of Equipment Leasing Agreements, Forms, Worksheets & Checklists | Richard M. Contino |
| Equipment Leasing | Nevitt, Fabozzi |
| Equipment Leasing Guide for Lessees | Albert R. McMeen |
| Handbook of Equipment Leasing : A Deal Maker's Guide | Contino, Vlamis |
LEASING UP 18 PCT IN 2004 IN ITALY, THIRD LARGEST MARKET IN EU
Monday, June 13, 2005
Again some fascinating numbers for Rome in the leasing sector. The leasing numbers are staggering. AGI online posted this article.(AGI) - Rome, June 13 - Leasing closed the year in Italy with an increase of 18 percent, with a total stipulation above 38 billion euro.
The two figure increase continued in the first quarter of 2005, during which the leasing sector saw a gain of 18.6 percent with a total stipulation of more than 12.2 billion (10.3 billion in the first quarter 2004).
The growth characterised all sub sectors, but above all in real estate (up 19 percent in 2004, up 45 percent in the first quarter of 2005), which represents 44 percent of the Italian leasing.
The best performances were seen in large operations (above 2.5 million) on already built building, showing that companies use leasing to balance their debt in the medium term, increasing the operational spectrum of leasing.
The instrumental sector, the second most important (with 27 percent of products) is the most directly connected to the dynamics of companies, which closed the year with more than 11 billion (up 16 percent), while in the first quarter of 2005, it registered a gain of 2.73 percent, showing a weak economic situation.
Auto leasing increased 8.5 billion euro in 2004 (up 13 percent), while in the first four months of 2005, it substantially reconfirmed quarterly dynamics of last year (up 1.2 percent), a result that is positive seen the weakness in car sales. It should be said that in this sector, there was an increasing confirmation of medium to long term rentals by leasing companies.
The strong increase in the yachting sector was also seen (up 54 percent in 2004, up 32 percent in the first quarter of 2005), where yacht leasing increased in a few years from a market share below 1 percent to the current 3.3 percent. (AGI).
Bank RI buys N.Y. firm, expands lease services
Thursday, May 19, 2005
Bank Rhode Island is aiming to bolster its array of commercial banking products with its first major acquisition, recently buying a New York-based equipment leaser, the bank’s chief executive officer says.Bancorp Rhode Island announced May 16 the purchase of Plainview, N.Y.-based Macrolease International amid continued openings of BankRI branches in the Ocean State.
“We are a commercial bank first and foremost, and typical of the services that commercial banks offer is equipment leasing,” said Merrill W. Sherman, president and CEO of holding company Bancorp Rhode Island.
The business-model strategy of acquiring Macrolease, Sherman said, is threefold.
First, it enables BankRI to offer its own product to customers that lease equipment. It also gives the bank a vehicle to provide financing for its clients in the business of leasing manufactured items to their customers. Lastly, Sherman noted, the leasing company adds $20 million to $25 million in leased assets – which bring earnings – to Bancorp Rhode Island’s balance sheet.
Macrolease financed some $20.4 million in leases in 2004, according to the bank.
Sherman explained during a recent interview why BancorpRI chose to purchase the out-of-state company rather than opening a new equipment-leasing division here.
“There was not enough commercial leasing business in Rhode Island to support a company,” she said, adding that the bank also lacked in-house expertise of equipment leasing to launch a local operation.
Macrolease adds to the bank’s portfolio a firm with a proven track record in commercial leasing, as well as the people with the necessary skills, Sherman said. The company’s market encompasses much of the Northeast and beyond, she added.
Daniel W. West, who has served as CEO of Macrolease, will continue to run the company he founded in 1969 as president. BankRI executives will remain in Rhode Island, and none will assume roles at Macrolease, which will continue to operate in New York, Sherman said.
Bancorp Rhode Island reached a non-binding agreement with Macrolease in January to purchase the leasing company for an aggregate sum of $1.9 million, to be paid in shares of the corporation’s common stock in three allotments over five years, the bank said.
Sherman declined to comment on how the addition of Macrolease would impact stock performance or profit projections for 2005, which she said have not been made public in accordance with securities regulations.
David W. Darst, a research analyst of commercial banking stocks for Nashville, Tenn.-based FTN Midwest Research Securities Corp., said it would be two to three years before the bank capitalizes on the purchase of Macrolease, but the investment should have no adverse impact on profits this year.
“It’s a longer-term growth prospect for (BankRI), rather than something they will see (profits from) in the short-term,” Darst said.
The potential benefit of growth, naturally, would be that the bank’s stock becomes a higher yielding investment, Darst noted.
“I think it’s a good decision,” he said. “It gives (BankRI) the opportunity to increase their non-interest income by selling leases.”
Though Bancorp is now an interstate operation, Sherman said plans are to keep expanding BankRI in-state, where it plans to open five more branches (which would bring its total to 20) over the next two to four years.
The bank brought its total number of branches to 15 this month with the opening of a branch in Lincoln. Next month a 16th branch is slated to open in East Greenwich, and the next planned banking outlet to open in early 2006 is under construction in Pawtucket, the bank said.
To establish the bank as a statewide operation, Sherman said, it plans to build three more branches among the towns of Barrington, Narragansett and South Kingstown.
Since BankRI opened shop in 1996 with 12 branches (acquired through a deal with Fleet Financial Group to purchase Shawmut banking houses) it has increased assets from $465 million to $1.3 billion and deposits from $421.1 million to $901.1 million as of March 31, the bank said.
Earlier this month, the bank raised $21.5 million in capital through the sale of 628,418 shares of common stock. Sherman confirmed that the Macrolease deal precluded the stock sale, which had no bearing on the decision to purchase the leasing company.
Facts About Leasing Your Equipment --The Benefits & Pitfalls
Sunday, March 06, 2005
While 80% of all US businesses have leased equipment at one time or another, some may not be aware of the benefits, nor of the hidden costs involved with leasing.
Benefits of Leasing Equipment
Leasing is Flexible.
Companies have different needs, different cash flow patterns, different and sometimes irregular streams of income. For example, startup companies typically are characterized by little cash and limited debt lines. Mature companies might have other needs - to keep debt lines free, to comply with debt covenants, and to avoid committing to equipment that may quickly become obsolete. Therefore, your business conditions - cash flow, specific equipment needs, and tax situation may help define the terms of your lease. Moreover, a lease provides the use of equipment for specific periods of time at fixed rental payments. Therefore, leasing allows you to be more flexible in the management of your equipment.
Leasing is Cost-Effective.
Equipment is costly and some of the costs are unexpected. When you lease, your risk of getting caught with obsolete equipment is lower because you can upgrade or add equipment to best meet your needs. Further, your equipment needs can change over time due to changes to your company, such as diversification. Leasing allows you to stay on the cutting edge of technology.
Leasing Has Tax Advantages.
Rather than deal with depreciation schedules and Alternative Minimum Tax (AMT) problems, you, the lessee, simply make the lease payment and deduct it as a business expense.
Leasing Helps Conserve Your Operating Capital.
Leasing keeps your lines of credit open. You don’t tie up your cash in equity. Also, you avoid costly down payments. With other advantages such as off-balance sheet financing, leasing helps you better manage your balance sheet.
Although leasing does provide benefits to business owners, there are other attendant costs that business owners need to be aware of. Learn more by reading the full article at the Small Business Administration.
Benefits of Leasing Equipment
Leasing is Flexible.
Companies have different needs, different cash flow patterns, different and sometimes irregular streams of income. For example, startup companies typically are characterized by little cash and limited debt lines. Mature companies might have other needs - to keep debt lines free, to comply with debt covenants, and to avoid committing to equipment that may quickly become obsolete. Therefore, your business conditions - cash flow, specific equipment needs, and tax situation may help define the terms of your lease. Moreover, a lease provides the use of equipment for specific periods of time at fixed rental payments. Therefore, leasing allows you to be more flexible in the management of your equipment.
Leasing is Cost-Effective.
Equipment is costly and some of the costs are unexpected. When you lease, your risk of getting caught with obsolete equipment is lower because you can upgrade or add equipment to best meet your needs. Further, your equipment needs can change over time due to changes to your company, such as diversification. Leasing allows you to stay on the cutting edge of technology.
Leasing Has Tax Advantages.
Rather than deal with depreciation schedules and Alternative Minimum Tax (AMT) problems, you, the lessee, simply make the lease payment and deduct it as a business expense.
Leasing Helps Conserve Your Operating Capital.
Leasing keeps your lines of credit open. You don’t tie up your cash in equity. Also, you avoid costly down payments. With other advantages such as off-balance sheet financing, leasing helps you better manage your balance sheet.
Although leasing does provide benefits to business owners, there are other attendant costs that business owners need to be aware of. Learn more by reading the full article at the Small Business Administration.
Business Leasing For Dummies
Thursday, March 03, 2005
Want to gain a basic understanding of the terminology of leasing? Need to introduce your staff to the basic concepts? This out-of-print book might be a great introduction. While the book is out-of-print, books like this can usually be found used at Amazon.com. Try this search for Business Leasing for DummiesA reviewer had this to say,
"For anyone in the leasing business, this is a wonderful book to own. It is a complete training course in equipment leasing. The author has the only good explanation I could ever find of concepts such as leveraged leases. This book is a _must_ for anyone in the equipment leasing industry.
I wish that the author had worked out a few examples with the reader on cash flows and pricing of leases. There is some math that is not very clear to the first time reader. I also wish that there was some more information about vendor leasing and lease origination.
Regardless, this is one heck of a training course in leasing for under 20 dollars. If you are in any way involved with leasing, this is money well spent."
Market Value of Hotels Owned by AAHOA Members Totals Nearly $40 billion
Tuesday, March 01, 2005
"According to the Asian American Hotel Owners Association (AAHOA), a premier hospitality organisation, Indian American hoteliers own more than 20,000 hotels, which have one million rooms representing over 50 percent of the economies' lodging properties and nearly 37 percent of all hotel properties in the United States." The market value of hotels owned by AAHOA members totals nearly $40 billion. AAHOA members create over one million jobs. Read the full article here.In addition to serving the equipment leasing industry, GCR Capital also works with many hoteliers to help them with their furniture, fixtures and equipment (FF&E) purchases and upgrades.
One of the organizations that we are proud to be members of is AAHOA. AAHOA, American Hotel Owners Association, is a premier hospitality organization and we are looking forward to being with them at their event in Ft Lauderdale, Florida in March 2005. We hope to see you there.
Equipment Leasing Fraud
Wednesday, February 23, 2005
Associated PressCLEVELAND - A businessman who went to jail after lying about having money to buy the New York Islanders in 1997 now is being accused of defrauding clients in several states.
John A. Spano Jr., 40, appeared Wednesday before Magistrate William H. Baughman in the Cleveland federal court. Spano is charged with mail fraud and remains jailed without bond pending another hearing.
Spano was charged after Steve Bolz, a U.S. Postal Service inspector in Cleveland, accused him in a sworn complaint of failing to complete lease deals or using bad checks for purchases involving clients in Wisconsin, Florida, Mississippi and Tennessee.
The affidavit alleges that from February to September last year, Spano used his business, Commercial Financial Group Inc., to defraud as many as 14 clients. Only four were idnentified in the complaint.
Bolz described Spano's Westlake-based company as a leasing company for industrial machinery. The complaint said Spano bounced one check for $117,000 to buy equipment that he wanted to lease and failed to supply equipment after accepting thousands of dollars in various rental deals.
The complaint said Spano rented a jet he claimed he owned to impress victims.
Spano has a nonpublished telephone number in Madison, about 30 miles east of Cleveland.
Spano's lawyer, Jerome Emoff, said Thursday that Spano intends to plead innocent and will seek release on bond at a detention hearing Tuesday.
"There are some people who claim he owed them money, and one or more of these people apparently have the ear of postal authorities, and he was charged criminally for what is essentially a civil case in each instance," Emoff said.
Assistant U.S. Attorney Jim Lynch in Cleveland said Spano was involved with the failed purchase of the National Hockey League's Islanders eight years ago. Authorities say that although he did not have the money, Spano convinced bank officials and then Islanders owner John Pickett that he had the resources to fund a $165 million deal to by the team. He persuaded Fleet Bank to help finance the deal.
Spano pleaded guilty to fraud charges in October 1997. On Jan. 28, 2000, he was sentenced in a Long Island courtroom to 71 months for bank and wire fraud charges, with eligibility for parole after 30 months. The judge ordered Spano to pay back $11.9 million.
Are There any Benefits to Leasing Equipment?
Wednesday, February 09, 2005
Most small business owners want to understand what the benefits are to leasing and how these benefits will actually help them.I recently came across this article which discusses leasing generally and thought you might find it useful.
The article starts out, "Equipment leasing is one way a small business can avoid tying up large amounts of capital. All types of machinery, equipment, furniture, computers and vehicles can be leased from or through banks, commercial finance companies or leasing firms..."
Want to read the full article? Go here --> benefits of equipment leasing.
Books about Equipment Leasing
Yes, believe it or not there are even books about this wonderful financing vehicle called equipment leasing.Let's take a look at the author's summary for "Equipment Leasing, 4th Edition"
"Equipment Leasing" is a practical reference for financial managers who need background information, and an understanding of how leasing can be utilized as a cost-effective means of equipment financing–especially under the new tax law in the United States. It explores various types of leases, including single investor leases, leveraged leases, tax requirements for true leases’ and lease-buy economic analysis. This invaluable resource includes the background and basics of equipment leasing, history of leasing, synthetic leases, financial reporting of lease transactions by lessees, operating a leasing company, and much more."
Feel free to visit Wiley Publishers and read more about this equipment leasing book
While it's a little pricey and may not immediately appeal to your average small business, this book could prove invaluable to larger companies whose internal bean counters are looking for solid unbiased information about the benefits of leasing.
If you don't feel like splurging for the book, feel free to contact us and we'd be happy to answer any questions you might have. Toll Free 1.877.735.1584
Cheers!
Protecting Your Credit Score
Friday, January 14, 2005
A Simple Benefit of Equipment LeasingWe get asked all the time about the advantages of leasing over traditional forms of financing.
There are simply many more cases where the advantages of leasing far outweigh traditional financing vehicles such as credit cards, personal lines of credit, etc.
Let's look at how traditional lines of credit affect one's credit score. Every time you take out a traditional loan, you are impacting your credit score. Why? Bankers carefully study an individual's debt to income ratio to determine how much to loan out. Bankers will gladly extend credit and financing... up to a very exact point. This point is a specific mathematical ratio, where they suddenly get nervous, typically as your debt ratios approach certain figures.
As your debt increases, it is very common for your personal credit score to take a hit, particulary if your balances are high relative to the amount of credit you have available.
For most small businesses, they end up maxing out far before they have aquired the financing they need.
Is there a solution? Welcome to the world of "leasing". Leasing quite simply is an asset based loan. The money being lended is being secured against what is being purchased. And guess what? This doesn't go on your credit score. And since the loan is tied to specific equipment, you can traditionally get more money/equipment than you would otherwise be able to using a non-secured line of credit.
It's a simple win-win situation. And yes this post has oversimplified the subject of equipment leasing. Our hope is that this new way to finance, piques your interest and motivates you to discover more about the benefits of leasing and how you can use it to grow your business.
Best of luck!
Learn more by visiting GCR Capital today.
GCR Capital Equipment Leasing
Thanks for stopping by the GCR Capital Equipment Leasing blog. Here we hope to provide you with insights into the world of commercial financing & equipment leasing.Here we hope to share with you tips and finance basics so that you can expand your business, acquire needed equipment financing and obtain working capital, etc.
Enjoy the show and if you would like to visit our full web site, feel free to click on over to GCR Capital.
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