Equipment Leasing & Equipment Finance

Equipment Sale Leaseback

2012-03-02T07:18:00.000-05:00

A Sale Leaseback is a lease where the equipment is purchased from the Lessee instead of an equipment vendor. The Lessee retains the use of the equipment after the sale, but surrenders legal title and ownership to the Lessor. An appraisal of the equipment is necessary to show the Lessor is acquiring the asset(s) at its then Fair Market Value to avoid possible “fraudulent conveyance claims” from other creditors.

When the Asset is sold to the Lessor it must be free of liens. The Lessor must check for liens recorded on financing statements (UCC-1) in the State where the Lessee has registered his Charter papers. The Lessor should also require from the Lessee their proof of purchase from the original vendor to establish their clear ownership of the asset(s).

To complete the sale, it is recommended that the Lessor take possession of the asset(s) along with a “Bill of Sale”. If no possession is registered, a disgruntled creditor may argue that “no possession, no sale” because the equipment never left the customer’s facilities. Most states require possession to complete the sale.

The Lessee will have an accounting adjustment and an income tax consequence from a Sale Leaseback. In other words, because the IRS allows the Lessee to deduct the depreciation of an asset from the Lessee’s ordinary income, the Lessee has to report any gain from the sale of the asset(s) as ordinary income, not as a capital gain. Any gain over the original purchase price will be taxed as a capital gain.

The after tax cash result from the sale will improve the cash and the net worth positions on the Lessee’s Balance Sheet. In addition, the present value of the lease stream from a Sale Leaseback will be placed on the Balance Sheet as a leased asset and a lease liability.

A Sale Leaseback usually occurs for two reasons: First, the Lessee is an acceptable credit, but may be suffering from a bad economic year and needs to increase profits. The Sale Leaseback of assets that have a value greater than the book value will create a gain and may increase profits from negative earnings to positive earnings.

Second, a Lessee may want to sell or merge with a company that could increase its capabilities. The merger price may fail to recognize the true value of the depreciated asset(s). A Sale Leaseback brings the value of the asset(s) back on the books in the form of cash.

Finally, a Lessor should be concerned if the only reason the Lessee wants to do a Sale Leaseback is to raise cash. A cash strapped Lessee may be on the verge of bankruptcy. Needless to say, a bankruptcy filing would make it very difficult for a Lessor to recoup its investment.

How A Vendor Can Increase Sales and Profits By Offering Leasing

2012-02-01T23:06:00.000-05:00

Leasing Overcomes The Cost Objection
By quoting a lease option with every sale, you enable your customer to focus on a manageable monthly payment instead of one large total payment. Most businesses operate within tight budget constraints and, by quoting low monthly payments early in the sale, the cost of the equipment is provided in the least expensive terms which will help ease your customers' cost concerns. The customer will see the time and cost savings generated by the new equipment which in most cases will far exceed the low monthly lease payments.

Leasing Sales Are Bigger Sales
By offering leasing, you can increase the customer's purchasing power. Since the incremental monthly lease cost of a larger unit or additional features is so small customers are more inclined to increase the size of their purchase.

Leasing Gives You The Competitive Edge
You undoubtedly sell the features and price performance benefits of your equipment to give you a competitive edge with your customers. You can sharpen this edge by offering the option of a low monthly lease payment with each sales presentation. Besides just low monthly payments, you can offer such benefits as seasonal or deferred payment structures.

Leasing Means More Repeat Sales
Cash purchase customers are generally customers who expect to squeeze every ounce of life out of their equipment before they buy again; with sales quotas increasing every year, this just "raises the bar" even higher for you. Leasing customers are used to making monthly payments and will appreciate the ease with which new equipment add-ons or upgrades can be accommodated. Leasing supports the long-term relationship with the customer, giving you more and easier opportunities to sell equipment to existing customers.

Leasing Helps Close More Sales
Offering a choice is a proven technique for helping a customer make a buy decision. Identifying and discussing alternatives helps the customer make a decision and helps uncover hidden questions or concerns. When trying to determine a customer's budget, start with a 36-month term lease. If the customer hesitates, move to a longer term. Leasing's flexibility gives you more opportunities to close the sale with plans designed to fit the customer's needs.

Leasing Preserves Margins
Margins can be preserved and competitive pricing minimized when the cost of your equipment is expressed in terms of a monthly lease payment while allowing the customer to focus on the superior capabilities, performance and cost benefits of equipment.

Leasing Makes It Convenient
Leasing makes it easier and more convenient for customers to acquire equipment. Sales are not delayed while a customer is seeking financing. A customer is provided and expects a single source to solve their total equipment financing needs.

The Best Equipment Leasing Company!

2012-01-02T08:47:00.001-05:00

Capital Resources believes that our relationship with our vendors and their customers is our most valuable asset. There are some leasing companies that nail their vendors' customers with costly fees, unreasonable return provisions, biased end of term purchase options, and inflated fair market evaluations. Our experience indicates that this approach to business is very short sighted, and does not encourage long term customer relationships and profitable repeat business for our vendors.

Your customers are your most important asset. How you and your partners treat them will determine how long they remain doing business with you. It is painful enough to lose a customer to your competition because of something you did, but it is downright torturous if the loss was due to the actions of your leasing partner.

The following conclusions from recent studies support the importance of treating your customers with respect:

68% of customers surveyed stopped buying from companies because of the indifferent way they were treated.
10% - 30% of customers will be lost because of poor customer service.
It is 6-7 times more expensive to gain a new customer than to sell to a current one.

Unfortunately, too many leasing companies use a low price strategy to attract inexperienced equipment vendors. First, they offer below market lease rates to capture as much of the vendor’s business as possible. Then, in order to make a profit, they increase their yields to above market rates by charging the vendor’s customers additional fees throughout the term of the lease. Many of these fees are systematically woven into the lessor’s lease agreement and they are overlooked by the vendor and the lessee until it is too late to do anything about them. Again, hammering the lessee with these additional fees is not conducive to building long term customer relationships, and can be very costly for equipment vendors in terms of lost repeat business.

Experienced equipment vendors know that they should consider more than just a leasing company’s lease rates when selecting a leasing partner. Remember, low lease rates do not necessarily equate to high ethics, service, and customer satisfaction.

You and your customers will continue to be Capital Resources' number one priority. We will continue to be a professional, responsive, and competitive provider of financing services. Our agreements and business practices will remain fair and straightforward. Capital Resources will not jeopardize your relationship with your customers by charging them hidden fees or inflated end of term fair market valuations. Our goal is to ensure that your customers return to you time and time again.

Why Companies Lease

2011-12-01T15:03:00.000-05:00

There are many reasons why companies lease their equipment. Equipment leasing provides flexibility and protection against technological obsolescence. Leasing allows a company to better match cash outflow with revenue production through the use of equipment. Leasing conserves valuable working capital and bank lines. Equipment leasing is efficient, convenient, and allows for 100% financing.

Top Ten Reasons Why Companies Lease

1. Purchasing Power. Equipment lease financing allows the lessee to acquire more and/or higher-end equipment.

2. Balance Sheet Management. Certain types of leases help the lessee better manage the balance sheet and improve the overall financial picture, by conserving operating capital and freeing up working capital and bank credit lines for inventory, expansion and emergencies. See Operating vs Capital Lease

3. 100 Percent Financing. With equipment leasing, there is no down payment. The term of the lease can be matched with the useful life of the equipment.

4. Asset Management. A lease provides the use of equipment for specific periods of time at fixed payments. It assumes and manages the risks of equipment ownership. At the end of the lease, the lessor disposes of the equipment.

5. Service Additions. Many lessees choose to structure their leases to include installation, maintenance and other services, if needed.

6. Tax Treatment. Leasing offers the option of deducting 100 percent of the lease payment as a business expense. See Operating vs Capital Lease

7. Upgraded Technology. Leasing provides companies with the ability to keep pace with technology. The lessee can upgrade or add equipment to meet ever-changing needs.

8. Specialized Assistance. Lessors are specialists in equipment leasing and financing, and understand capital equipment markets.

9. Flexibility. There are a variety of leasing products available, allowing the lessee to customize a program to address needs and requirements - cash flow, budget, transaction structure, cyclical fluctuations, etc.

10. Proven Equipment-Financing Option. Over 30 percent of all capital equipment in the United States is acquired through leasing. In fact, eight out of 10 companies lease their equipment.

Recourse vs. Non-Recourse Vendor Leasing - Is Your Company At Risk?

2011-11-03T11:02:00.002-04:00

It is extremely important that every equipment vendor understands the difference between a recourse vendor leasing program and a non-recourse vendor leasing program. It is even more important to examine the impact that each program could have on your company – both now and in the future.

A recourse vendor leasing program is an agreement with an equipment vendor whereby the vendor agrees to purchase the lessor’s remaining financial interest in a lease originated by the vendor, usually upon demand by the lessor, after the lessee has defaulted on the lease.

A non-recourse vendor leasing program is an agreement with an equipment vendor whereby the vendor is NOT required to purchase the lessor’s remaining financial interest in a lease as a result of a default. In other words, the lessor is totally responsible for any losses that are realized from a default -- not the vendor.

A recourse program may result in a higher percent of your prospects’ credit applications being approved and funded, thereby generating incremental profits. However, these profits are not all gravy. A recourse program will also create a future liability for your company that could gobble up those additional profits. Furthermore, this liability can be greater than expected for an equipment vendor that sells their equipment through an independent sales office (ISO). In this case, the vendor has to recover the lessor’s profit as well as the ISO’s profit in the event of a default.

A recourse program also creates a further liability in addition to the obvious loss that may occur as a result of the lessee’s default. The recourse amount may have to be listed as a contingent liability on your corporate accounting statements. The recording of this additional liability could limit your ability to borrow future funds for corporate growth, thereby negating the benefits of generating the incremental profit in the first place.

There is absolutely no question that equipment manufacturers, distributors and resellers should use non-recourse vendor leasing programs as a strategic device to help stimulate sales. However, a recourse program might be needed by a vendor on a limited basis as a tactical tool for a specific situation where there is a sound business reason for assuming the additional liability. In an effort to meet either of these requirements, Capital Resources designs both strategic and tactical vendor leasing programs that satisfy the specific needs of our vendors while eliminating or reducing any future vendor liability.

The True Gift of Leasing

2011-10-17T12:34:00.000-04:00

Many equipment manufacturers, distributors, and resellers believe that the major benefit of working with a leasing company is to provide their customers a financing alternative to outright purchase. There is no doubt that offering a lease alternative with every sale proposal increases the vendor’s probability of closing the sale. Vendors know that it is easier for a customer to obtain approval from their management for a low monthly payment Vs a large capital outlay for their equipment acquisitions. However, this is not the true gift of leasing.

The true gift of leasing is the "account control" that occurs long after the equipment has been paid for. Capital Resources maintains complete control of the leasing process from start to finish. As a result, the customer interfaces only with one source and the vendor, through Capital Resources, controls the account. By working with Capital Resources our vendors not only get paid immediately, but they also lock in future revenues and lock out their competition for the term of the lease. By having their customers lease their equipment through Capital Resources, our vendors are able to guarantee themselves any upgrade or replacement business.

Furthermore, vendors that provide supplies to support their products are able to create a virtual supply contract commensurate with the term of the lease. When our vendors’ customers lease their equipment instead of buying it, our vendors simply concentrate on servicing their customers during the term of the lease. Once a lease commences, our vendors don’t have to fight with their competition day after day in order to maintain their customer base.

If you are a hard-nosed equipment vendor that likes to fight with your competition on every transaction – leasing may not be for you. On the other hand, if you are an equipment vendor that prefers to make your life easier by using account control strategies and tactics that maximize your profits while providing outstanding services to your customers – leasing is the way to go.

Equipment Vendors - Offer an Equipment Finance Option With Every Sale Proposal

2011-09-11T10:00:00.000-04:00

Leasing continues to increase in popularity as a means of acquiring equipment for commercial use. It is estimated that over 30% of the equipment obtained this year by end-users will be leased instead of purchased.

Leasing has become so commonplace that it is more and more difficult to find an equipment brochure that does not list both the sale price and the monthly lease payment for each piece of equipment. As a result, customers have come to expect equipment vendors to automatically offer their products on a sale and lease basis. In fact, only seven percent of your customers that need to lease will ask for a lease proposal. By not offering a lease alternative with each sale proposal, your customers will assume that you do not have the ability to provide a financing solution. As a result, your customers that need financing will simply do business with the vendor that provides a lease alternative in conjunction with their sale proposal. In other words, if you don’t tell your customers, your customers won’t ask. If your customers won’t ask, you can’t win!

The message is simple. Based on the fact that eight out of ten companies lease some or all of their equipment, every sale proposal should be presented with a lease alternative. Your product offering should be considered by all your prospects—not just those that want to purchase.

Furthermore, a total acquisition solution shortens the sale cycle. No longer will your customers have to consider the consequences of decreasing their cash reserves or lines of credit. Alternatively, your customers won’t have to spend valuable time searching for additional funding before they commit to acquire your products.

Best of all, when your customers choose to lease rather than buy, you make a faster sale. You also get paid faster because Capital Resources pays you immediately when the equipment is delivered and accepted by your customers.

Remember, if you don’t tell, they won’t ask. If they won’t ask, you can’t win!!

What is the Best Way to Acquire & Finance Equipment?

2011-08-07T14:00:00.000-04:00

A survey of small businesses by the Equipment Leasing and Finance Association (ELFA) indicates that the top three financing options for acquiring equipment are cash, bank loans, and leasing. Cash is generated through the customer’s operating profits, bank loans are acquired directly through the customer’s bank, and 88% of lease financing is acquired indirectly by the customer through their equipment suppliers.

Cash is king, but is becoming more difficult to generate in today’s economy. As a result, most companies are trying to conserve as much cash as possible for day to day operations as well as for any unforeseen needs.

Banks loans are more painful to obtain as banks continue to tighten their credit requirements. Furthermore, many banks have added yield enhancements and they have also strengthened their restrictive loan covenants, thereby making it more difficult for companies to obtain additional funding in the future. Some examples of yield enhancements include the requirement for larger down payments, compensating balances, and up front fees.

Conversely, lease financing offered through equipment vendors is readily available to fund equipment acquisitions. The ELFA survey indicates that approximately 70% of small businesses are currently using leasing as a source of funds and 40% have used leasing in the past. Moreover, office equipment and computers represent 67% of the equipment type financed through leasing.

Some of the top perceived benefits of leasing according to the survey are:

• The ability to have the latest equipment — No down payment required. Finance 100% of the equipment cost. Low monthly payments.

• Consistent expenses in budget planning — Fixed monthly payments and no hidden monthly fees.

• Convenience — Quick credit decisions and dramatic reduction in paper work. Simple one page application and lease contract.

• Customized Solutions — Level payments, step up and step down payments, seasonal payments, 90 day no pay programs, various end of term options, soft cost financing, etc.

We continue to improve our funding programs to insure that they are competitive, simple and convenient—as research suggests they should be. We will also continue to provide you information on how to use leasing as a tool to increase sales.

Like our funding programs, our primary goal is simple—to help you sell more product. The fact that almost 70% of small businesses are using leasing to finance their equipment acquisitions, dictates that every sale proposal should be combined with a lease financing alternative in order to close more sales.

Vendor Leasing Programs

2011-07-02T13:00:00.000-04:00

Capital equipment lease finance is big business. Over the past decade, the average volume of leased equipment has increased six-fold and is now the fastest growing mode of equipment financing.

With a fluctuating economy, new technology, and competition changing the way companies compete for business, a well-developed, customized vendor leasing plan can make the difference between closing a contract or losing the opportunity.

At Capital Resources, we assist equipment sales representatives in converting prospects into customers. Our sales based financing solutions are tailored to meet an equipment resellers business growth strategy. In addition to a complete line of standard programs, Capital Resources can offer customized finance products such as:

· Bundled financing for equipment, installation, and training
· Graduated payment plans
· Deferred and skipped payment plans
· Conversion and upgrade leases
· Progress payment plans to cover vendor working capital needs until contract completions.

Further, in addition to your commercial clients, unlike most other lessors, Capital Resources can service the needs of your municipal clients.

We’ll develop customized plans that will help your company increase sales and market penetration, and our market-specific leasing strategies will help you differentiate your business and products.

Our customer support team’s sale-oriented focus helps your company increase sales by:

· Creating one-on-one partnerships with your sales representatives.
· Offering programs that respond to changes in markets dynamics.
· Exchanging ideas on what’s working in the marketplace.

Leasing Programs

Leasing equipment is convenient, flexible and financially advantageous for your customers. With different payment structures and end of term options to choose from, Capital Resources can structure the right lease to fit your customers’ needs.

With Each Lease Product, Your Prospects and Clients Receive:
· Competitive access to capital to expand your marketing capabilities.
· A customer account team that understands the unique needs of your
business environment.
· Flexible payment terms and end of lease options.
· Low monthly payments.
· Potential tax benefits.

$1 Purchase Option Lease
Similar to a loan, with this lease structure the customer owns the equipment, makes affordable monthly payments, and enjoys tax benefits such as depreciation and interest expense deductions. At the end of the lease term, equipment is purchased for $1 and no further obligation exists.

$1 Benefits:
· Fixed monthly payments.
· Customer retains depreciation benefit.
· Ownership.

Fair Market Value (FMV) Lease
This lease option is an excellent option for those customers who expect the value of their equipment to decrease quickly, or will want to upgrade their equipment during or at the end of the lease. With a FMV lease, customers have the option at the end of the lease term to either return the equipment or purchase it for its Fair Market Value. In addition, since it is a True Operating Lease, 100% of the lease payments can usually be expensed.

FMV Benefits:
· Low monthly payments.
· Hedge against obsolescence.
· Upgrade flexibility.
· Tax-deductible payments.

Customized Leases
A variety of flexible financing structures are available to meet cash flow, budgeting, accounting, and tax requirements. Options include any number of special features, such as skipping payments at a certain time of the year, lower payments at the start of the lease, or deferred or graduated payment plans to match a client’s revenue and cash flow situation.

Payment Structures
Seasonal Payments – Many industries are seasonally sensitive, and sometimes more income is generated during certain times of the year. Capital Resources can arrange a payment schedule which allows payments to rise and fall in accordance with a customer’s sales peaks and valleys.

· 90 Day Deferred – New equipment sometimes has a learning curve associated with it before it can generate income for the customer. Capital Resources offers customers the ability to defer their payments for 90 days.

· Step Payment Plans – Similar to seasonal payments, this program is tailored to customers who are looking for smaller payments to accommodate the newness of equipment. This program will begin with small payments upfront and increasing payments during the term of the lease.

Benefits of Leasing

Single Source 100% Financing
Other methods of financing require a substantial down payment or deposit. Leasing provides a quick method of acquiring equipment without a major cash outlay and can include software, hardware, installation, delivery and training costs.

Tax Benefits
Properly structured leases allow monthly payments to be treated as operating expenses therefore making them tax deductible.

Preserve Working Capital
Leasing allows you to preserve working capital and bank credit lines that can be used for higher return investment opportunities.

Overcomes Budget Restrictions
Non-debt financing helps overcome capital budget restrictions by creating an operating expenditure making it easier and faster to obtain technology needed today.

Hedge Against Inflation and Rising Interest Rate Climates
Aggressive, fixed-rate pricing protects against inflation and allows you to buy equipment today using tomorrow’s dollars with the additional insurance of fixed-rate financing.

Tailored Financing
Flexible financing options include customer-tailored billing cycles matched to your cash flow or budget requirements. A variety of initial-payment-schedule and end-of-lease options are available including lease renewal, upgrade, purchase or return.

Immediate Return on Investment
The advantages offered by the use, rather than ownership of capital can significantly improve the profitability of a business. Profits are produced by the use of equipment, not ownership.

Technology Upgrade, Flexibility and Protection against Obsolescence
Leasing provides the flexibility to upgrade to newer technology since leased equipment is expensed over a fixed period of time and is more easily replaced before it becomes obsolete.

Convenience
With minimal paperwork and easy to forecast payments leasing is the most convenient way to finance equipment purchases.

The Advantages of Leasing with Capital Resources

For Your Customers

Ø 100% financing.
Ø Ability to upgrade lease for access to newer technology.
Ø Flexible financing options including customer tailored billing cycles.
Ø A variety of end-of-lease options including renewal, upgrade, or return.
Ø Preserves credit lines and working capital for higher return investment opportunities.
Ø Overcomes capital budget restrictions by creating an operating expenditure.
Ø Faster return on investment due to immediate revenue generation.
Ø Aggressive, fixed-rate pricing provides a hedge against inflation.
Ø Certain lease structures create tax benefits by allowing payments to be tax deductible.
Ø Single source financing for equipment, software, maintenance and installation.
Ø Low monthly payments improve cash flow and often qualify as operating expenses.
Ø Minimal paperwork and easy to forecast payments make leasing affordable and convenient.

For Your Company

Ø Rapid credit decisions provide quick turnaround on credit applications.
Ø Invoices are paid immediately upon receipt of delivery and installation verification.
Ø Competitive rate structure provides for high sales closure percentage.
Ø Flexible lease programs include deferred and graduated payment plans.
Ø One on one sales and customer support assistance.
Ø Creative, customer-tailored finance options.
Ø Anticipate market trends and proactively determine effective finance strategies.

For Sales Representatives

Ø Overcomes the dollar barrier associated with retail cost.
Ø Eliminates the need for discounting.
Ø Allows for easy add-on or upgrade capability.
Ø Can be used as a trial close when offering equipment.
Ø Lease options assist in compressing the sales cycle.
Ø Reducing acquisition to a monthly payment demonstrates revenue and/or cost benefits.

Advantages of A Vendor Leasing Program For An Equipment Reseller's Customers

2011-06-01T07:17:00.000-04:00

100% financing.
Ability to upgrade lease for access to newer technology.
Flexible financing options including customer tailored billing cycles.
A variety of end-of-lease options including renewal, upgrade, or return.
Preserves credit lines and working capital for higher return investment opportunities.
Overcomes capital budget restrictions by creating an operating expenditure.
Faster return on investment due to immediate revenue generation.
Aggressive, fixed-rate pricing provides a hedge against inflation.
Certain lease structures create tax benefits by allowing payments to be tax deductible.
Single source financing for equipment, software, maintenance and installation.
Low monthly payments improve cash flow and often qualify as operating expenses.
Minimal paperwork and easy to forecast payments make leasing affordable and convenient.

Why Sell A Leasing Solution?

2011-05-03T12:28:00.000-04:00

Leasing is a widely used method for acquiring equipment. By including a leasing option in your proposal, your image will be enhanced with your customers and will help you to close faster and more profitable sales. As you will find – and may already know – lease financing provides your customers with unparalleled flexibility and control. Your customers likely are very familiar with leasing. Consider that:

8 of 10 U.S. companies use leasing
One-third of all equipment purchased is financed using external funds and leasing is second only to bonds as a financing source.

Question: With all the decisions your customer has to make about their purchase, what’s going to make them select YOU?

Answer: You make the selection and acquisition process easy. You provide the right products to fit their needs. You offer service on those products. And you show the most economical way to pay for it. Your customers have several options when it comes to paying for the equipment you propose. They can:

Pay cash
Take out a loan
Lease

Customers need to determine the best payment alternative given their accounting, tax, ownership, and cash needs.

Why Do 8 of 10 Of Your Customers Use Leasing?

Leasing companies assume that the equipment will have residual value at the end of the lease... so they can offer lower rental payments, and thereby provide a cash savings to the lessee.
Leasing requires little or no upfront cash vs. a down payment in a loan.
Lessees can lower the cost even more by paying one or two advance deposits.
Whether zero, one or two down payments are used, leasing should result in lower monthly payments than traditional loans.
Leasing comes out of the operating budget, making it possible for the customer to use the working capital budget for equipment purchases more central to its core product or service offering.
Leasing can be an additional source of capital.
Low, fixed-rate payments protect against inflation and enhance budget planning.
Leasing allows the customer to finance additional costs such as freight, installation, maintenance, extended warranties, and up-front sales and use taxes.
Leasing provides the ability to upgrade equipment as needs change.

Don’t lose customers that need financing to your competition. Offer a leasing solution with every proposal.

Medical Equipment Leasing

2011-04-11T12:18:00.001-04:00

Research by GIA forecasts the global market for medical equipment rental and leasing will reach $56 billion by the year 2017. Major factors propelling market growth include the growing incidence of chronic diseases, driving the demand for diagnosis and in turn the need for medical equipment; technological advancements leading to the obsolescence of old equipment; surging prices of medical equipment; and the need to curb healthcare expenses. More and more healthcare service and equipment providers are turning to leasing as an economical option for acquiring costly medical equipment and devices.

The healthcare industry is thriving, backed by a growing elderly population; a rising incidence of chronic diseases; an increasing national expenditure on healthcare; and a growing need for medical procedures, products, and services. However, with rapid advancements in technologies and surging prices for medical equipment, hospitals, healthcare practitioners, physicians, clinics and nursing facilities find it difficult to maintain their budgets. As a result, the leasing of medical devices is increasing in the healthcare sector. Leasing of medical equipment is an affordable and quick solution for hospitals, nursing homes, and physicians which are presently constrained by the availability of limited funds due to the recent global economic recession. Leasing saves working capital, provides an option to purchase the equipment, and allows the end-user to upgrade to new technology. Commonly leased medical equipment includes X-ray machines, ultrasound systems, patient monitoring equipment, and laboratory equipment. The surging cost of imaging equipment has led several hospitals and clinics to shift from an outright purchase model to a leasing scenario.

The penetration of medical equipment lease financing in the United States has been relatively low until five to six years ago, owing to the lack of awareness about leasing, reduction in reimbursements, and regulations influencing physician referrals. However, this scenario has changed in recent years, with currently about 35% to 40% of medical equipment in the United States being leased.

Finance a Business

2011-03-10T08:23:00.001-05:00

Nervous after the mortgage meltdown and under greater regulatory scrutiny, banks have been adhering to traditional lending standards, which many small businesses can’t meet. Analysts also doubt whether banks have the appetite for the kind of hand-holding that entrepreneurs often require.

Small business lending also took a dive during the crisis as potential borrowers, with their sales and creditworthiness evaporating, ditched plans for expansion. Many of those that did apply for loans complained that banks, in addition to not giving them, were canceling credit lines and reducing credit card limits.

Small business loan volume plunged 42% in 2009, and dollar volume was down 30%, the New York Fed says. Even the volume of SBA loans, which are largely guaranteed by the federal government, fell 36%.

In late 2009, as banks began to recover, President Barack Obama met with bankers at the White House and leaned on them to lend again. The banks said they’re trying to streamline credit procedures for small businesses. Many banks have “second look” programs, in which they review an application that was originally turned down.

Still, overall results of these efforts are mixed. As a result, many companies have turned to leasing to finance essential equipment required to grow their business.

The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25), which reports economic activity for the $521 billion equipment finance sector, showed overall new business volume for January was $4.2 billion, up 24 percent compared to the same period in 2010.

Compared to the year-earlier period, credit standards relaxed as approvals increased to 74 percent in January. And, 56 percent of participating organizations reported submitting more transactions for approval during the month, down from two-thirds of responding organizations in December.

Can't Understand Your Bank's Loan Policy? Try Leasing to Fund Your Equipment Acquisations!

2011-02-10T09:43:00.007-05:00

2011 Funding Predictions

2011-01-20T12:52:00.000-05:00

The supply of funds in the equipment leasing and finance industry, although significantly improved in 2010, continued to narrowly chase quality transactions - the highest quality transactions were being funded at historically low yields and low margins. Less strong businesses paid a premium for their borrowing in 2009 and 2010; and often times were unable during the two year period to secure any reasonably priced funds for their needs. In 2011, financial organizations will be anxious to rebuild their portfolios with a consistent emphasis on credit quality - even at the cost of lower obtainable margins. However, as the year progresses there will be mounting pressure to begin to moderate on credit requirements in order to improve yield opportunities.

Look for some new entries of funding in 2011 by local, regional and national funding providers who will offer moderately priced products for transactions which are a minimally below the acceptable credit standards set in 2009 and 2010. These funding options will include enhanced credit underwriting processes to better understand and assess risk. Originators and funding organizations that are capable and willing to participate with full disclosure packages for small ticket transactions will greatly benefit from these additional funding capabilities.

Shop Until You Drop Can Kill Your Customer's Credit As Well As Your Deal!

2010-12-10T09:00:00.000-05:00

In most situations where you take the time to shop for the best deal, you end up with the best deal. However, there is one major exception to this rule. In the finance industry "shopping" may hurt your chances of getting the best deal. You ask, "How can that happen?" Let me explain:

Let’s say that you send your customer’s commercial credit application to a lease broker who sends the application to five different full service leasing companies. The broker must shop the deal to obtain an approval as well as to increase his profit. Since a broker makes his profit on the spread, it is important for him not only to get the application approved, but also to get it approved at the lowest lease rate factor. As a result of this "shopping," your customer’s personal credit report will indicate that at least five recent inquires were made. Unfortunately, each inquiry negatively impacts your customer’s overall personal credit rating, thereby decreasing the probability that his credit application will be approved. In fact, some leasing companies as part of their application approval process have built an automatic rejection factor into their scoring model if a customer’s personal credit report exceeds a preset number of inquires within a specific period of time.

How do you solve this problem? First, gain more control over your lease transactions by working with a leasing company that does its own credit, documentation and billing. Direct funding sources make their own credit decisions and they do not need to "shop" their deals to approve and fund their transactions. Secondly, try to get a competitive rate for your customer, not necessarily the lowest rate. Have you ever received a great rate from a leasing company that looked fantastic up front, but in the final analysis the leasing company was unable to fund that rate? Remember that it is much better for a vendor to be funded with a competitive rate than not to be funded with a great rate.