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By The Leasing Group

What businesses need to know to qualify for credit

So, you’re considering an equipment lease for your business, and you’re starting to look into how the credit process might work. You probably know that your financial history plays a big part in qualifying you for lease financing. But did you know other factors can affect your credit and, in turn, your ability to get lease financing?

Consider the following before you apply for a lease.

First, do your financial statements show profitability? Banks want to see profitability over the course of several years. Banks also look for positive cash flow and a positive net worth on your balance sheet.

Sometimes a negative net worth can be offset by current profitability. The Leasing Group can help sort through any holes or discrepancies in your financial statements and present your company’s economic situation in the most favorable light.

Next, how long have you been in business? To have a viable credit history, it helps to have a business history of at least three years. However, if your business is relatively new, you might still be approved if you can show strong personal credit and liquid assets.

What about cash flow coverage? If you take your operating cash flow and divide that by existing debt payments, including principal and interest, is the result 1.25 or greater? If not, lenders might have a hard time justifying an addition to your debt load.

And finally, do you, as the business owner, have a credit score of more than 700? Are you sure? Have you checked your score recently? Small, unpaid or disputed medical bills often lower your score often unbeknownst to you. The Leasing Group can help you sort out personal credit problems before you apply for a lease.

If your company is a bit iffy on a couple of the above points, let The Leasing Group present your financials and increase your chances of approval. Our experienced advisors understand lease financing and can often find creative ways to enhance your chances of approval. For example, if you’re looking to lease a revenue-producing piece of equipment, we can demonstrate how it will positively impact your financial statements.

If your credit picture is a little blurry, let The Leasing Group take a new look at it through our expert eyes. Contact us at (502) 547-2773.

By The Leasing Group

Top seven most frequently leased items

In a previous post, we talked about some items that you might not expect to find in the realm of equipment leasing, but those aren’t the norm. Leasing equipment in general, however, is very common, especially when acquiring the following categories of equipment.

Here are the top 7 most popular items leased:

1. Commercial vehicles. Owning, running and maintaining a fleet of vehicles can cost you a lot of time and money. If your company uses passenger vans, delivery vans, box trucks, tractors and trailers, or any other vehicle to conduct daily business, leasing might be a solid option for you. From nursing homes that transport groups of residents to activities around town to trucking companies, commercial vehicle leasing is a popular financing option.

2. Medical and laboratory equipment. Most consumers have experienced the high cost of health care. Some of that cost can be attributed to the equipment doctors and dentists need to provide effective diagnosis and treatment. It’s expensive. For many practitioners, leasing items such as X-ray machines, lasers, MRI and CT scanners, and surgical tables enables them to keep their costs down. Medical and dental equipment leasing is very popular choice.

3. Restaurant and hospitality equipment. The restaurant business is risky. Many proprietors don’t have the initial capital at hand to purchase stoves, refrigerators, exhaust hoods, tables, seating, and a point-of-sale cash register system. That’s why leasing has been popular among restaurant operators for many years.

4. Construction equipment. Equipment leasing is often the first choice for general contractors, roofers, remodelers, home builders, and excavation companies. Heavy construction equipment can be extremely costly, so these companies often find success in leasing dump trucks, backhoes and other earth movers, survey equipment, loaders and more.

5. Information technology equipment. No matter what business you’re in, you will likely need an IT backbone to support your operations. So it’s no wonder that IT equipment is one of the most popular types of equipment leased. Computers, servers, software, phone systems, networking and cabling are smart to lease.

6. Municipal equipment. Cities and townships are always on a strict, often tight budget and are constantly looking for ways to save their taxpayers money, while ensuring citizens’ needs are properly met. The Leasing Group has assisted many municipalities with leasing everything from police cars and fire trucks to street sweepers and garbage trucks.

7. Manufacturing and industrial plant equipment. An especially costly category of equipment is in the manufacturing and industrial sector, making it a popular equipment leasing category as well. A manufacturer can lease revenue-producing equipment such as stamping and forming machinery, forklifts, welders and conveyor systems. Leasing is a popular choice when a company does not want to use up its operating cash.

The Leasing Group has years of experience with negotiating lease financing on all of the most popularly leased items. If you need to lease any of the above equipment, contact us at (502) 547-2773 to find out how we can help.

By The Leasing Group

Case Study

The Leasing Group works with hundreds of clients across all industries, including municipal governments. Earlier this year, we were contacted by a small city in Kentucky, needing help to obtain a new truck for its volunteer fire department.

The volunteer fire department covers the largest fire district in its county. The department has 23 active members and provides 24-hour coverage for fire, medical, search and rescue, and other emergencies. The department’s fleet includes four fire pumpers, one equipment truck, one utility/hose truck and one brush truck.

The city did not have adequate funds to purchase a new fire truck outright at a cost of $295,000. City officials considered turning to a bond issue to raise the money. However, bonds have a high cost of issue and require a bond counsel to prepare the extensive paperwork required. Also, the process can take several months to complete. In researching other options, city officials settled on leasing instead.
Under a special IRS provision, funds can be loaned to local governmental entities through a lease on a tax-free basis. Provisions are similar to a bond, but don’t have many of the disadvantages. With a municipal lease, fees are low, no bond counsel is required and the transaction can be completed quickly.

The Leasing Group was able to negotiate a favorable leasing contract with a local financial institution that resulted in a savings to the city of about $20,000. The city also was able to acquire the new fire truck in a fraction of the time it would have taken to obtain it through the bond process. 

City officials are happy with the terms of their lease contract. They are even more excited to be able to ensure the safety of their citizens by adding the new truck to the fire department’s fleet so quickly.

Call us at (502) 547-2773 today for help solving any of your equipment financing problems.

By The Leasing Group

6 ways your local leasing company can go the extra mile for you

You’re a manufacturer who needs to invest in a conveyor system. Or you’re a doctor who’s in the market for some refurbished medical equipment. In both cases, it might make more sense to lease than purchase these items for your business. Sure, you can navigate the complicated waters of lease financing on your own, but that takes times and brainpower that would be better spent serving your customers or treating your patients.

The Leasing Group wants you to know you’re not alone. We can ease the burden of equipment lease negotiation and let you get back to work.

Here are few ways we go above and beyond to help you lease the equipment that enables you to serve your customers.

1. Put your best face forward. The Leasing Group can analyze your financial statements and credit history and present them in a way that will maximize your success. In other words, we know what to look for in your financials that will cast you in the best light to our partner lenders. We know what banks want to see on paper, and we can highlight the most essential information when we plead your case for lease financing.

2. One size does not fit all. We use our years of expertise to determine the best type of lease that will best meet your company’s needs. For example, we can determine if you would best be suited to enter into a capital lease or an operating lease. For accounting purposes, these two types of leases are very different. Both types offer specific advantages and disadvantages. A capital lease works as if you own the asset, whereas in an operating lease, you have usage — but not ownership — rights to the equipment. We can also determine if there are other leasing options available to you that you may not even be aware of.

3. Get help with used equipment. Leasing used or refurbished equipment can be challenging. Financial institutions don’t like the liability involved in leasing items that are not brand new. The terms may be more complex, and the negotiations may be more difficult and involve a lengthier process. The Leasing Group has years of experience with used equipment leasing, and we are specially positioned to smooth out a potentially rocky journey.

4. Get a break on your payments. In our negotiations with lenders, we can work out skipped, seasonal or deferred payments during the term of your lease, which can help ease the financial ebbs and flows of your business. A skip lease, or seasonal payment structure allows you to make payments only during certain months of the calendar year. This option is great for businesses that have seasonal highs or are more cyclical in nature. In a deferred lease payment structure, your payments are deferred for a set period of time so you can generate some income through the use of the equipment you’ve leased. The Leasing Group can help you determine if one of these payment options is best for you.

5. Bundle small leases. If you need several small items from multiple vendors, The Leasing Group can negotiate one lease contract that has a single monthly payment. Bundling is a great option with its own unique benefits. We talked about bundling in an earlier article.

6. Leverage our relationships to your advantage. The Leasing Group’s finance experts have a combined 100+ years of experience, and these veterans have solid relationships with local banks. When The Leasing Group talks, banks listen because they trust us and our track record. We are delighted to be able to leverage those relationships to help you get the most competitive, advantageous equipment lease financing available.

The Leasing Group wants to be a partner for all your lease financing needs. Give us a call at (502) 547-2773 to find out how we can help guide your business through an equipment lease.

By The Leasing Group

4 reasons to diversify your relationships with financial institutions (Or why you’re not cheating on your banker)

If you’re a successful business owner or operator, chances are you have a good relationship with your bank. Perhaps you feel a certain allegiance to a particular financial institution, so it’s always going to be your first choice when your financing needs increase.

Loyalty to a single bank is great, but might hinder your long-term ability to grow.

Here’s why.

1. It makes you look good. Believe it or, spreading your eggs over several baskets helps build and strengthen your credit history and credibility, which actually improves your chances of getting the financing you need. Similar to diversifying your stock portfolio, extending your credit among multiple institutions reduces your risk. If you have a line of credit and established relationship with only one bank, what would you do if they turn you down for additional financing? It could happen if you’ve reached your ceiling with that particular bank. It’s better to diversify now rather than hit a wall later that could negatively impact your growth.

2. It prepares you for growth. Every bank has limits on the credit it can offer your company. Just like a child who outgrows his clothes as he gets bigger, you may outgrow one bank. But if you’ve diversified, it’s unlikely you’ll outgrow several banks at the same time. One bank may not be able to meet your needs on a particular equipment lease, but another one can. It might be a simple matter of timing. Your credit rating stays the same, but each financial institution looks at it through different eyes because they all have different parameters.

3. It helps you get the most competitive interest rates. Just like shopping around for the best price on the equipment you plan to lease, it makes sense to shop around for the best interest rates. Diversification inspires healthy competition among the financial institutions. You don’t need to navigate those waters alone. The Leasing Group can leverage its strong relationships with local banks to get you the best financing terms.

4. Your banker isn’t an “ol’ ball and chain.” Unlike a possessive spouse, a banker doesn’t want to tie you down and hamper your ability to spread your wings. In fact, it is to a financial institution’s benefit that their clients grow. And don’t worry about any jealousy. Lease financing is transactional; it is not representative of a comprehensive banking relationship. Kind of like a fling versus a marriage. Banks don’t get insulted if you have a few flings.

The Leasing Group can work with you to diversify your financing so you’re prepared to take your company to the next level of growth. Call us at (502) 547-2773 to find out how.

By The Leasing Group

5 ways bundling equipment into one lease will make your life easier

You own a company that’s been up and running for a few years, and business is humming along. You take a look around the office and notice you need to replace some, but not nearly all, of your basic office equipment. You have 10 copiers, but only two are on their last legs. Your conference room table is getting shabby, but the chairs are still in great shape. Your shared color printers are in good condition, but a few of your executives have burned up their black-and-white desktop HPs.

You already know you’d prefer to lease all of these items rather than purchase them outright, but on their own, each piece is valued at much less than $20,000.

Did you know that, with the help of The Leasing Group, you can package all of this financing under one equipment lease? Here’s why bundling can be a great solution for your equipment leasing needs.

1. One lease means one negotiation. You likely can’t get your conference room table from the same vendor who sells copiers, so you’d have to negotiate terms with each vendor, and/or the independent financial institutions that provide their lease financing. That can be a time-consuming hassle. A better solution would be to let The Leasing Group coordinate all of this for you. We can manage all leasing details with multiple vendors, negotiate with our partner banks to get you a competitive, single rate, and bundle all of the equipment you need under one leasing contract with a one set of terms. We’ll juggle purchase orders, invoicing and deliveries so you don’t have to.

2. A single payment. If you were to lease the four items you need individually, you would have four monthly payments to keep up with. Your financial statements are complicated enough. It’s a no brainer that if you bundle the four items under one equipment lease, you (or your bookkeeper) will need to worry about making only one additional payment per month.

3. Cost effectiveness. Another obvious benefit of a single, bundled lease is that you’ll save money in the long run. Basic math dictates that a single lease, with a single interest rate and a single payment, makes more sense than four leases, with four rates and four payments. One lease is a much more economical option.

4. One credit approval. If you are applying for lease financing for four separate equipment leases, you have to get four credit approvals. That’s a lot of time and paperwork. Wouldn’t you rather been spending that time cultivating your business? We thought so. If you work with The Leasing Group to bundle your small equipment leases into one contract, you’ll only have to go through the laborious credit approval process once. Less time wasted and fewer headaches means you can get back down to business faster.

5. Your credit stays intact. Every time a credit bureau is contacted by a vendor or financial institution to check up on your credit, your credit rating takes a ding. If you need credit approval for four leases, that’s four dings. Under a bundled lease, you only need one credit approval, which translates to only one credit check. One ding instead of four means your credit rating will be minimally affected.

If you think your equipment lease bundling might be a good solution for your business, contact The Leasing Group at (502) 547-2773 for more information about how we can help.

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.

By The Leasing Group

Four Reasons to Seek Local Financing for Your Business Equipment Lease

When you’re looking into leasing equipment for your business, your first inclination might be to apply for financing with a national bank. That’s an OK route to go if you’re a multi-million dollar firm, but if you’re a small to medium-sized business, a better bet would be to seek out local financing sources.

Here’s why:

  1. Community banks have a vested interest in lending to small businesses in their local area because their focus is on the needs of businesses in their own backyards. Their mission is to channel most of their loans to the neighborhoods where their customers live and work, to fuel local community growth.
  2. Community banks are willing to consider individual circumstances, character and discretionary spending when making loans. They understand issues that might contribute to lower credit scores and are less rigid in their requirements. Local financiers are sometimes less insistent that you have two-plus years of financial statements. Big, national banks are more stringent with their funding parameters and often laser their focus only on credit scoring.
  3. At local banks, financing approvals are made by people who live in your community, have face-to-face relationships with you (their customer) and really understand local needs. As a result, decision-making often happens much faster. Your local bank is also often more willing to up your financing as your business grows and your equipment financing needs increase.
  4.  You can get the same services at a lower cost through a local financing source. Most locally owned financial institutions offer the same array of services as their larger national counterparts. Average fees and interest rates at local banks are often substantially lower than at big banks. Community-based banks often offer better, more reasonable financing terms.

The Leasing Group has strong relationships with a wide selection of local banks and other financial institutions. Let us work with you on securing local financing for your business equipment leasing needs. Contact us at (502) 547-2773.

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