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By Bob Callander

Top Five Questions to Ask before Financing Medical Equipment

Top Five Questions to Ask Before Financing Medical Equipment

Starting a medical practice or any other healthcare business is tough. Running it successfully over several years can be even tougher, especially given the slow pace of government and insurance company payments. With unpredictable cash flow, there’s very little forgiveness if a new business stumbles out of the gate. Everything must be right, including the equipment financing.  Here are the top questions to ask your financing provider…before agreeing to terms and conditions of an agreement:

  1. As the owner of the business or practice, am I personally responsible for this debt?

Typically, the answer is YES you are.  However, once your business experiences several years of confirmed profitability, liquidity inside the company, accumulated unencumbered assets, and good credit history, owner guarantees will become less important to lenders.

  1. Must new debt be secured with business and/or personal assets other than the financed equipment itself?

Maybe. While this is often a requirement, it doesn’t have to be. The strength of your personal credit and your business’s historical profitability will come into play. Also, while bank loans are more often approved based on the value of all business assets, equipment leases tend to be secured only by the assets included in the lease.

  1. If my business fails before the equipment debt is paid off, will I still owe the entire balance or will the equipment’s resale value cover what is owed?

Banks do not want to be in the used equipment business. Neither are they venture capitalists. Prepare to pay off equipment loans and leases in full. If the equipment is worth more than owed, sell it after paying off the debt, not before.  In short, don’t make selling the equipment your banker’s responsibility.

  1.  If my business takes off, will I likely qualify for additional financing to expand?

Maybe. Once you show a proven and profitable business concept and a good payment history, financing will become easier. Lenders want to see you do well. And, they want you to come back often, if you can show steady and profitable growth. Expect the financing doors to open wider over time.

  1. When loan and/or lease payments are not made on time, should I expect added fees, interest assessments, late penalties, etc.?

Financing contracts typically contain fees, penalties and additional interest if you don’t live up to the payment terms. This should be expected, and can get quite expensive. Don’t take missed and late payments lightly. Your personal credit score will be affected along with your business credit.  Avoid this!  It’s best to make payments on time.

Equipment financing and leasing for any business can be a great way to leverage your capital, but know what to expect. Ask these questions before agreeing to any non-cancelable agreements and don’t sign until you have the answers. You’ll be glad you did.

small business advice louisville

By The Leasing Group

Kindness is a Choice

The internet is thick with memorable quotes from wise, successful and recognizable business leaders.  They’re easy to find too.  For a quick look, Google search:

 

  • 5 quotes from Mark Cuban to inspire entrepreneurs
  • 25 business lessons from Jack Welch
  • Warren Buffett’s 15 most memorable quotes
  • Jeff Bozos’ 7 secrets of success

 

Much of this wisdom is a bit too obvious and not very original.  But one business quote recently captured my attention…

It’s harder to be kind than clever.  Cleverness is a gift, but kindness is a choice.”

 

As an entrepreneur who never received the gift of cleverness, I was relieved to find out I wasn’t to blame.  Simply put, my gene pool came up short.

 

More importantly, this quote gave me an opportunity to see kindness in a new light, as a choice.  Just imagine all the choices we make every day.

 

Kindness doesn’t require a high IQ, an exceptional work ethic or a quick wit.  Neither does it reside only with the high-achievers and creative thinkers.  It doesn’t care about our race, our residence, who we know, how much we know or what car we drive.  Kindness doesn’t discriminate in any way.

 

No matter our birth, our circumstances, or our fortunes and misfortunes, we can choose to be kind, or not.  It’s up to us.  There are no excuses.

 

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By The Leasing Group

Malcolm’s Greatest Achievement

Malcolm’s life changed the day he strolled into a Barnes & Noble looking for something to read.  On that fateful day, he met Kathy Rackley near the “Best Seller” shelf with an arm-full of books.  Thinking she might be able to help him select something interesting, Malcolm struck up a conversation. Kathy did more than help.  She offered him an invitation.  Two weeks later she introduced Malcolm as the newest member of her book club…a club of all middle-aged women, each one older than Malcolm’s mother.

 

Recently, this African-American University of Georgia football star spoke openly about his new passion for reading with a USA TODAY sports reporter. Specifically, the reporter asked Malcolm to talk about his greatest achievement, the one thing that made him most proud.  Malcolm’s response was characteristically honest.

 

“That’s easy.  I just finished the Hunger Games books in just two days.”

 

“But what about last season’s touchdown catches for the Georgia Bulldogs,” asked the reporter?

 

“I’ve been a very fortunate athlete and I love football.  But football has always come easy for me.  Learning to read was really hard.  I guess as a kid I spent too much time playing outside.”

 

What is your greatest achievement in life?  Is it what you were born to do?  Or, like Malcolm Mitchell, did it require more courage, more hard work and more determination than you ever thought possible?

 

Leasing Questions? (502) 456-2800

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By The Leasing Group

The Extra Mile – Land of Opportunity

The English Dictionary defines “going the extra mile” as…”doing more than expected or required to achieve something, expecting nothing extra in return.”

 

Who doesn’t love having an “extra mile” person on the team?  We might even think of ourselves as “extra mile” people from time to time.

 

So, why is going the extra mile such a rare occurrence?  Maybe it’s because extra mile effort is simply too demanding.  Maybe it’s because going the extra mile requires extreme thoughtfulness, superior creativity, unrelenting determination, personal sacrifice and self discipline.

 

Extra mile people are those who solve customer problems without waiting to be asked.  They look for ways to serve and then follow through when others have long since left the building.  Their hands shoot up when called to volunteer and they don’t leave until the job is completely done.  They do what’s necessary, not just what’s required, even on their own time.

 

Going beyond the expected can be a very lonely place and few accept the challenge.  But the “extra mile” is a magical place too, a place filled with opportunity for those with the courage and determination to go there.

 

Leasing Questions? (502) 456-2800

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business leasing louisville

By The Leasing Group

Leasing…Give Me the Facts not the Myths

Businesses often tell us how surprised they are to discover how quick, easy and flexible lease financing can be.  They also comment on rates, asset encumbrances, purchase options and other variables related to equipment financing.

 

Here’s what they say about leasing after they discover the facts:

 

Lease End Purchase Options – “With a lease we can choose either a $1 purchase option or a stated purchase amount approximating fair value.  It’s nice to know the exact cost of either option before we make a decision.”

 

Encumbrances – “Bank loans come with strings attached, specifically covenants and UCC filings against everything we own.  Leases are typically secured only by the leased equipment, no other company assets.”

 

Soft Costs – “It’s good to know our lease can include IT software, equipment delivery, installation, sales taxes and other soft costs.    We wish we had known this sooner.”

 

Rates – “Manufacturers and suppliers provide quick and easy equipment financing, but often at high rates coupled with a variety of fees.  Local leasing companies are much more competitive.”

 

Simplicity – “We want quick response to our questions from knowledgeable people who care.  We’re much too busy to fool around with inefficient and unresponsive long-distant voice mail systems.  That just creates another hassle.”

 

These businesses are correct.  That’s why they stick with The leasing Group.

 

“The Leasing Group partners only with local community banks, so rates are always reasonable.  They cap purchase options, include all associated costs, respond quickly to questions and concerns and never tie up other company assets.  We’re sticking with them.”

 

 

Leasing Questions? (502) 456-2800

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business leasing success approved

By The Leasing Group

“We’ve Got Cash to Lend”

We haven’t heard a banker say that in a while, at least not in the last five difficult years.  But that quote comes directly from a recent article in our local business newspaper.  The quoted banker was trying to make a point.  Once crushed by bad real estate loans, his bank has emerged stronger than ever with money available for lending, including loans to small and mid-sized businesses.

 

Public perception would tell you that banks are still reeling from the financial crisis; that bank examiners continue to place barriers between banks and their customers; that banks remain hunkered down for fear of making many of the same lending “mistakes” and getting penalized for risky underwriting.

 

In reality, we find this perception only partially true.  Yes, examiners are difficult, sometimes even unreasonable, and yes, there is still a fear of repeating questionable lending practices of the past.  But there is also a realization by bankers that loan growth must again lead them to profitability, only this time growth will extend beyond real estate lending to business equipment loans and leasing.  This is great news!  The path to loan diversification leads directly through small and mid-sized entrepreneurial companies.

 

As the economy continues to recover and business owners regain confidence, they will pull delayed growth plans from their shelves.  When they do, banks stand ready and willing to again loan idle funds.

 

In the future, we can expect more banks to scream “Come see us.  We’ve got cash to lend.”

 

Leasing Questions? (502) 456-2800

Business Leasing Application Online

More Experience, More Sources, More Approvals

small business advice

By The Leasing Group

“Character Doesn’t Matter Anymore”

Really!  I was surprised to hear this from my banker friend, but he seemed so certain.

 

He went on…

I’m serious.  Today’s bank examiners don’t have much interest in a borrower’s character.  They only focus on the numbers.  Look, I’ve been a community banker for over thirty years.  I know my customers.  I know their families, their birthdays, their golf handicaps, if they honor their commitments, their favorite restaurants, even where they go to church.  Most of them have never missed a loan payment, even in bad times.”

 

I was immediately reminded of the “Five C’s” every bank lender learns in his or her first week of training.  Capacity, collateral, conditions, capital, and of course…character.

 

Capacity is a measure of the borrower’s ability to take on additional debt.  Collateral represents the assets used to secure the debt.  Conditions are the loan terms, such as interest rate and repayment schedule.  Capital is the money provided by the borrower; sometimes known as the down payment.  All four of these “C’s” are very easily quantified.

 

Character, is different.  Measuring character is like trying to nail Jello to a wall.  It’s hard to do.  Character refers to a borrower’s reputation.  Honesty, reliability, integrity, and responsibility aren’t found anywhere on a balance sheet or income statement, but they’re just as real.

 

Maybe those who make today’s rules should first spend time behind the lending desk.   They might learn that a borrower’s character is more important than ever.

 

Four C’s are okay, but Five C’s are better.

 

best business funding leasing

By The Leasing Group

#1 Best Idea for Business Expansion

#1 Best Idea:   Allow businesses an option to write-off 100% of the cost of new equipment purchases in the year of purchase.  Good idea, right?

 

Oops, we had that already.  It was known as IRS depreciation “Section 179” and allowed a 2013 deduction up to $500,000 plus a 50% bonus depreciation on purchases over $500,000.

 

What an incredible windfall! 

 

Unfortunately this super generous tax code provision all but expired completely on December 31st last year.  Party over!  It died without as much as a whimper.  The new limit is now only $25,000, a paltry sum by any standard and hardly worth mentioning.  Bonus depreciation is gone too.

 

So what’s a business to do?  Gifts from the IRS don’t come around that often.  Sometimes we appreciate them most after they’re gone.

 

Leasing to the rescue! 

 

Businesses can still deduct 100% of their leased equipment over the lease term, provided they request a “true lease.”  Yes, it’s true, even when leases are capitalized for book accounting purposes (and most are), they can still be 100% tax deductable

 

Who stands to benefit most?  Profitable proprietorships, partnerships, sub S companies and LLC’s, where taxable profits flow through to individual owners in high tax brackets. 

 

Don’t delay…this popular tax break might expire soon too! 

 

Leasing Questions? (502) 456-2800

Business Leasing Application Online

More Experience, More Sources, More Approvals

By The Leasing Group

Cultivating Mutual Trust

The typical lease agreement is six pages long, laced with legal terms and conditions spelling out the obligations of each party! This document is the product of a team of lawyers determined to disclose every suffocating detail.  Like so many legal contracts, a lease is best read late at night by those in search of sleep.   

 

Our lease is no exception.  It is well-crafted, specific and thorough, as it should be.  But, in spite of its importance, I can’t remember more than a handful of clients having ever read it. 

 

Do our clients lack the qualifications to read and ask clarifying questions?  Do they lack the time and energy to study our lease before they sign?  Are they intimidated by the legal detail?  With so much at stake, wouldn’t it make sense to have an attorney review every paragraph?  Instead, our clients typically flip through the pages in a matter of seconds, and then ask…“Is there anything in here I need to worry about?” 

 

Here is why:

 

  • Our clients know we will honor the terms we agreed to verbally.

 

  • Our clients know we will not add hidden fees and charges that change the economics of the transaction.

 

  • Our clients know we will not place liens or encumbrances on unrelated business assets.

 

  • Our clients know our early buyout provisions are fair and without penalty.

 

Trust takes time and effort to build over years of doing what we say we will do.  In the short term building trust can be costly.  But, long term nothing matters more.   Trust strengthens every relationship, while reducing the time and energy spent on doubt, fear and suspicion.  Cultivating mutual trust is the only way to do business. 

By The Leasing Group

“Know it alls” Not Wanted Here

Jack Welch retired as General Electric’s Chairman and CEO in 2001 after a twenty year run, over which GE enjoyed unparalleled profitability and diversified growth.  During his tenure Welch was notoriously known for pruning the company of 10% of its lowest performing managers each year.  Investors and peers alike considered his bold honesty and decisive courage his greatest leadership qualities. 

Today Welch continues to write, teach and advise managers on the subject of leadership.  Below are the most destructive qualities he finds in POOR leaders: 

  1. A “know it all” attitude coupled with failure to listen to other points of view.
  2. Distant and detached behavior, often remote and un-engaging.
  3. Insensitive, hurtful and bullying comments directed to subordinates.
  4. A reluctance to make difficult decisions for fear of making mistakes.

On the flipside, Welch points to the shared traits of SUCCESSFUL leaders, qualities worth learning.  This list includes good listening skills, sensitivity, personal engagement, courage without arrogance and continuous self awareness. 

I’ve never seen or heard Welch include an Ivy League education, a high IQ, charismatic speaking ability, uncompromising personal ambition, overflowing self-confidence, or a blue-blood pedigree?  These qualities seem conspicuous by their absence.

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Top Five Questions to Ask before Financing Medical Equipment
small business advice louisville
Kindness is a Choice
buisness advice lexington
Malcolm’s Greatest Achievement
business leasing company
The Extra Mile – Land of Opportunity
business leasing louisville
Leasing…Give Me the Facts not the Myths
business leasing success approved
“We’ve Got Cash to Lend”
small business advice
“Character Doesn’t Matter Anymore”
best business funding leasing
#1 Best Idea for Business Expansion