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Archive : May 2013

By The Leasing Group

Business financing: How it has changed since 2008

The 2008 big bank scandal and ensuing financial crisis brought on a widespread lending freeze that cut off many entrepreneurs from business lease financing. Small to medium companies could get only partial funding for equipment loans or none at all.

Community banks that had done nothing wrong were penalized by the big banks’ mistakes. And all financial institutions became reluctant to lend money for fear of penalties and lawsuits. The effect this lending freeze had on small to medium-size businesses was devastating.

The Huffington Post reported in August 2012 that this consequence of the economic downturn trampled the dreams of many entrepreneurs. More than 170,000 U.S. small businesses closed up shop between 2008 and 2010. A myriad others couldn’t get the financing to get started at all.

Large and small banks alike have been hammered by regulatory and compliance laws during the past five years. The mountain of paperwork required to fund a loan has many bankers’ hands tied.

Fortunately, banking industry leaders are starting to recognize that they can’t make money if they aren’t making loans. As of 2012, borrowers are winning again as banks find ways to loan money in spite excessive regulation.

According to a 2012 report by Thomson Reuters, small business financing is on the rise for the first time since 2008. The demand for business loans is increasing in tandem with increasing sales, and businesses are gaining back some footing on their credit scores.

More freedom to lend in the banking industry means more freedom to grow your business. Now is a good time to consider applying for equipment lease financing. Contact The Leasing Group at (502) 547-2773 for more information about how we can help you.

By The Leasing Group

Business equipment leasing: Six weird items you can lease

When it comes to business equipment leasing, you already know you can rent all the desks, chairs, computers and copiers you’ll ever need. Other common leases might include vehicles, conveyor systems, and construction equipment.

That’s just a small sample of equipment you might be smart to lease instead of buy. Take it from us, we’ve been in business for a long time, and we’ve seen it all.

Here are six items for lease you might not expect:

1. Fitness equipment
Did you know that the Cybex machine you keep meaning to use at your local gym is probably leased? Treadmills, elliptical trainers, stair-steppers and weight machines are expensive. They need regular maintenance and frequent replacement as a result of heavy daily use. We often advocate our fitness center clients lease their machines rather than purchase them.

2. Laundry equipment
Like a gym, other businesses that rely on their equipment to generate revenue are public laundromats, multifamily housing laundry rooms or commercial linen service firms. Have you priced a new washer and dryer for your home lately? A top-of the-line model is not cheap, so multiply that several times over and you have the cost of just one industrial-size washer, dryer or flatwork ironer. Total equipment for these businesses could cost anywhere from $75,000 to $250,000. Leasing makes a lot of sense when you don’t have the liquid cash to make a large, upfront investment.

3. Cleaning equipment
We’re not talking about mops and buckets here. Commercial cleaning companies whose customers are large office facilities, hotels or stadiums have to keep on hand an array of floor buffers, steam cleaners, pressure washers and carpet shampooers. Each of these devices can cost thousands of dollars. We advise these companies to weigh total investment and ongoing maintenance when deciding to lease or own.

4. Fire Trucks, Police Cars, and Ambulances
Many people just assume that cites and municipalities purchase things like fire trucks outright, but in many instances it makes more financial sense to lease first-responder vehicles. Leasing allows local governments to better manage cash flow, plus they can usually get low interest rates and flexible terms. So remember – make sure you give the fire trucks in your town plenty of room on the roads. They just might not be paid for yet.

5. Art
Fine art is a luxury. Many businesses want to incorporate paintings and photography into their office décor. Or maybe they need art to spice up an event or corporate outing. We think it’s a great idea to lease artwork instead of buy it, not only because it saves money, but also because it allows for changes in taste. Many artwork dealers let you lease art like you rent a movie from Netflix – keep it for as long as you like, then return it for something fresh and new.

6. Barges
Being located in a river town gives us plenty of opportunity to see barges dutifully traveling up and down the Ohio River. Many wouldn’t give a second thought about who owns the barge or how it’s financed, so it might surprise you to know that companies often lease their barges so that they can maintain their cash flow advantages.

The Leasing Group can help you with financing for all the above, as well as for any standard business equipment lease. Contact us at (502) 547-2773.

By The Leasing Group

Six lease terms that can make your life miserable

When it comes time to lease equipment for your business, most of us start shopping for the equipment we need before we think about how we’re going to pay for it. Often, when you finally find that perfect machine or piece of furniture, you’re ready to sign on the dotted line so you can start using it today.

Equipment vendors can smell that sense of urgency from a mile away. And that’s when they reel you in by offering quick, sometimes automatic, approval if you sign up for their financing right then.Sure, their “fast and easy” process is awfully enticing. But do yourself a favor and shop around for financing, or you’re liable to get burned.
Approval might be painless, but the terms of vendor or dealer financing is not. If any of the following are in your financing agreement, don’t sign.

1. High interest rate
This is one of the first “gotchas” to look out for. If you have questionable credit or just need the equipment yesterday, the quick approval process is especially attractive. But an exorbitant rate can be literally the price you pay for a speedy transaction.

2. Early payoff penalties
If you sign up for five-year financing, but know you won’t need that much time to pay it off, don’t count on getting off free and clear before the fives years are up. If you’re able to pay off the lease in three years, for example, you might get stuck with a penalty that costs you more than if you’d just waited out the remaining two years.

3. Hidden fees
Hidden fees can take many forms, but two of the most common are restocking fees and forced place insurance. If you chose to cancel your lease and return the equipment, you may get stuck with a restocking fee that adds up to more than all your remaining payments combined. Also, some lease terms require the borrower to maintain insurance on the leased item. If that happens the lender can protect his or her investment by purchasing a policy and billing the lease. The new premiums can be much higher than the policy they replaced.

4. Deposit
Some vendors will finance only a portion of the total cost of equipment and require you to make a substantial deposit at signing.

5. Excessive late fees applied early
Many vendors or dealers impose a hefty penalty for late payments, even if you are only one day past due. Don’t expect any grace period or notification at all. Late fees can be as high as ten percent.

6. Evergreen provisions
These clauses state that if you don’t notify the leasing company within a certain amount of time (usually 90 days) before the contract expires that you don’t want to re-up, the lease is automatically renewed for another full term. After several years of making monthly payments, it’s easy to forget that it’s your responsibility to cancel the lease.

The Leasing Group is here to help you avoid these pitfalls by securing the equipment lease financing that best suits your needs through one of our partner lenders. Contact us today at (502) 547-2773.