Posts Tagged ‘Equipment’

Equipment Leasing & Finance Still Available When You Know Where to Look

Tuesday, December 29th, 2009

All you hear these days is that credit markets are tightening and small business is having a harder time financing equipment. That’s not always true, though. You just have to know where to look.

Financing equipment for your small business becomes an even more important strategy when the economy is down. As it may be harder to obtain any new lines of credit, it is important to preserve your current lines of credit and working capital.

Most businesses need some sort of equipment in order to operate. If you are looking to financing medical equipment, IT software and equipment, trucking or commercial, construction and heavy equipment, the needs may vary but the common goal is the same.

The primary goal of business equipment financing is to invest in capital while managing your cash flow and balance sheet. Financing comes in two basic forms: secured lending and leasing. In secured financing you own the equipment while the lender has a lien against it, and you make regular payments until the lien is paid off. In leasing, a lessor controls the asset, and transfers possession of that asset to the business for a specific time period in exchange for periodic payments.

So what are the advantages of financing?

Preserving your working capital is one such advantage. Paying cash for a large expenditure creates a risk on many levels, especially for a small business. What if your business equipment does not have the effects you hoped for, i.e. increased profits, efficiency, etc? If you paid cash, your cash flow can become tighter. Using your existing lines of credit can be risk as well; what if your lines of credit are maxed out by purchasing equipment and the bank is not willing to open any more lines for you?

You can even still find lenders that do not require a down payment. When you finance the full cost of equipment, it reduces your risk and transfers it to the lender.

Financing equipment also offers a hedge against inflation. When you finance equipment, the lender has a delayed use of funds because it does not get its money all at once. You pay over time. Your money loses value over time due to inflation. However, because you are locked in to a set payment, the risk of inflation is transferred to the lender.

Another thing to consider are the tax advantages. In addition to the usual tax advantages, from time to time Congress may vote for additional benefits as well, as they did for 2008. You lose certain tax advantages when you pay cash rather than finance your equipment.

You could also acquire more or better equipment by the use of equipment financing rather than dipping into your cash.

If you do your research, you can still find small business equipment financing loan options. The internet is a good source. There are still lenders who are willing to invest in your business, even in down times.

J. Roh writes on topics of interest to small business owners and offers business equipment financing. For more information or to apply online, visit www.profastbilling.com.

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Manufacturing Equipment Financing

Sunday, December 20th, 2009

Generally all manufacturing companies require some equipment for the smooth running of their processes. They may need to replace any outdated equipment or to buy new equipment at any point of time. Investing in equipment is therefore important for any manufacturing concern. In fact, investing in new manufacturing equipment to produce goods can increase the flow of revenue. Since the cost of such equipments is high, the need for manufacturing equipment financing arises.

Since various manufacturing companies produce different types of commodities, the manufacturing equipment financing options would vary accordingly. You can seek financial help of any of the reliable financing companies in order to acquire new manufacturing equipment that stretch the cash revenues.

Machine tool financing is one of the types of manufacturing equipment financing that is required for any machine shops or iron shops. Lathe machine, drilling machine, routers, roll forming, milling, punch press etc are some of the machine tools indispensable for the machine or iron shops. Computer control machine tools are the advancements in this field. However they are expensive and so seeking the financial assistance of any legitimate financing company are important to acquire such equipment.

Woodworking equipment financing is often desirable to acquire exceptional woodworking equipment. Panel saw machines, belt sander, door frame machine, wood shaper machine etc are some of the unique equipments used in this field. Since these equipments are special in nature, many financing companies may not be willing to provide help. These equipments are not only special but are also expensive. Hence manufacturing equipment financing is a must. There are few valid financing companies that offer financial assistance to buy these types of equipment.

Stone and glass cutting and fabrication equipment are really unique in nature. For instance, diamond cutting equipment can be used for that purpose only. This specialized nature of these types of equipments may raise complexity in getting financial help from the financial institutions. Yet there are some genuine financing companies that offer manufacturing equipment financing help to acquire stone and glass cutting and fabrication equipment. They also provide various options like edge polishing equipment financing, sandblasting equipment financing, glass cutting equipment financing and so on.

Rubber and plastic equipments are required by some manufacturing companies. Recycling equipment, rubber molding machine, thermoforming machine, rubber vulcanization machine, plastic molding machine etc are special in nature and so traditional finance lending institutions may not be ready to provide financial assistance. Hence a reliable financing company which is expert in dealing with manufacturing equipment is vitally important.

Embroidery equipments have undergone various advancements and so acquiring the computer control equipment is important for the companies that engage in embroidery making. Some financing companies offer manufacturing equipment financing help to acquire the embroidery equipment.

Manufacturing equipment financing is not an expense but a step towards greater revenues. Inefficient outdated manufacturing equipment would incur heavy loss to the company. Hence seeking the help of any genuine financial company that do not call for embarrassing procedures is really important. There are some finance companies that help manufacturing companies by approving the loan amount faster and in better terms.

Chris Fletcher is an Account Executive at a leading equipment financing company http://www.crestcapital.com/Catalog/ providing equipment leasing in all 50 states. Chris is a frequent contributor to print as well as online publications, and is the author of a blog on commercial financing topics.

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Smart Equipment Leasing: Comparing Bank Financing With Leasing Companies

Friday, December 18th, 2009

by Tom Williams

Savvy business owners who choose to lease business equipment can save themselves hard-earned cash, accumulated debt, and industrial-strength headaches by optimizing their relationships with lending entities.

Customers who are looking to lease equipment for their business most frequently seek financing from one of two sources – traditional bank financing programs, or specialized leasing companies like eLease. The following are four key differences to consider when comparing these programs.

1. Interest Rate Fluctuations

In a healthy economy, banks often choose to offer equipment leasing as a service for their business clients. In this way, banks foster economic growth in local communities by supporting expansion in growing industries. However, banks are not in the business of taking risks, and because of this, their programs are subject to change as current economic conditions falter.

An example of this is interest rates. Consistent with their conservative risk philosophy, banks do not entertain risk with interest rates. Typically, bank lines fluctuate on the Prime Rate — as the Federal Reserve raises or lowers the rate, so will your interest payment increase or decrease. These economic fluctuations can have financial impact on your business outside of your control.

The opposite is true for leasing companies, because they take 100% of the interest rate risk. Therefore, when industry rates decrease or increase, your lease payment stays the same. The payment on a lease will never change during its term regardless of interest rates and inflation. You know what you are getting from day one.

 

2. Impact on Additional Financing

The way that your financing source reports your leased business equipment with the Secretary of State can directly impact your ability to obtain additional financing for your business.

When your business equipment is financed by a third-party leasing company, that company files a UCC (Uniform Commercial Code) which specifies to the Secretary of State where the customer is located, and that the leased equipment is owned by the leasing company. For example, if your business makes the decision to lease an oven for your new restaurant, a leasing company would designate the oven itself as collateral.

In comparison, all property owned by the business is stated when a bank finances the lease. A Blanket UCC is usually filed, which includes the equipment as well as all assets. Therefore, not only would the oven for your new restaurant be considered collateral, but so would your entire business.

When a blanket UCC is in place, other banks will not want to provide overlapping financing with another lender. If, however, your financing is provided through a third-party leasing company, other lenders will see that only equipment is under consideration, and be favorable to loan financing because they will be able to Blanket UCC the rest of the business.

3. Access to Capital

Both banks and leasing companies evaluate exposure (the total amount of debt taken on by a company) when considering whether to offer financing. The difference in the way these entities look at total debt can have significant influence on their decision to finance your equipment, as well as other financed assets.

In most cases, banks have a borrowing threshold with a borrower. This may include the line of credit on the home, auto loans, credit cards, business debts and personal mortgage. If you get into an amount of debt that the bank sees as a risk, they may choose to end business with your company. Or, they may refuse you financing due to how much debt your already have.

Leasing companies deal with the same issue, but only consider the equipment financed for that customer. So, by using a third party leasing company, you can retain access to capital with your banker without tying up credit lines. A business can never have too much access to capital!

4. Flexibility in Terms

Most banks are highly structured and cautious in their leasing terms. Frequently, they require 10% to 20% down to finance equipment for a business, with a requirement of security such as a minimum amount in a CD, or reserve in a checking account.

While the primary objective of a bank is to protect its interests, a leasing company’s main goal is to generate cash flow. Therefore, leasing companies are highly creative in finding the easiest way for a business to get new equipment. It is not uncommon to terms that include seasonal payments, or no payments for 90 to 180 days.

 

In summary, a good rule of thumb is to use your bank for working capital, and equipment finance companies to finance equipment.

 

 

Tom Williams is President and CEO of eLease.com. eLease provides medical”>http://www.elease.com/3763/Medical-Equipment.html”>medical equipment leasing and financing, as well as equipment leasing and financing to a wide variety of businesses and industries. It can be found on the web at www.elease.com

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