The following financial program for equipment leasing and equipment financing should interest many of you both as a vendor and one looking to purchase equipment. Following is a guide line for product requirements. Meet the following requirements and this might be the ideal product for you.
The program really likes rolling stock, machine tools and associated equipment types. Just because your equipment isn’t listed we can probably still finance it. Contact us for a discussion.
What is the rate?……
5 to 5.5% in most cases.
Equipment Age. A general guideline is that hard assets should be 10 years or less.
Sound too good to be true? If the guidelines above are met you could very likely qualify for this program. Or your customers. Call now if you have a deal you would like to discuss: 916-983-1122. Or call and talk to your favorite representative.
Up dated and Additional Information
WE DO MORE THAN JUST SERVICE CONTRACTS!
If you have read the prior articles you know that the Contract Financing product has a few basic, and necessary, components, and they need to there to be successful putting a contact financing deal together. The ingredients are: investment-grade end user, stipulated minimum payments and equipment required for performance. The end user must see a distinct need and advantage to consider Contract Financing. Now, we can turn our focus to where these elements can be applied in Contract Financing. Service Contracts, where a vendor or service provider needs equipment, and sometimes working capital, to fulfill their contract to provide some type of unique service to their customer, are the most common source for Contract Finance. However, we also extend this product into other contracts as well; for example, Distribution Agreements, Production Contracts and Power Savings Sharing Agreements – to name a few – are also viable sources for Contract Financing. Even with these different types of contracts, the basic components remain the same. The end user is still an investment-grade company; there will still be a minimum payment or quantity supplied; and there is still equipment necessary to fulfill the contractual obligation. Asking the appropriate questions will help to indentify your customer as a candidate for this program, even when they have a contract that is not a traditional Service Contract.
If you are willing to ask some additional questions, we are able to assist you and your customers with their Contract Financing needs. A missed opportunity is always taken by somebody else who knows how to ask and is capable of listening. Keep in mind the majority of our customers, meaning the supplier, are not bankable credits, so always ask why they need the equipment and or software…
Contact your Insta Lease representative today to learn even more about our Contract Financing product and how to never miss another opportunity.
Recap—3 Necessary Ingredients for Success!
If you have something that is close to the above model contact us. We may be able to help.
Credit is still very tight in this up and down economy. Bank lending seems to be picking up a little but the clients they lend to are the A credits. In other words, those businesses that have been making money or have already turned the corner and are again making money and the credit of both the owner/officer and the business is good.
Many in the business community have hung on during these crippling times. They have cut personnel, cut expenses and have managed to survive. They see an opening and a chance for growth but their credit has been damaged and they are no longer bankable. What do you do?
The solution may be right under your nose. Many businesses require equipment in order to operate and make money. Many have hundreds of thousands of dollars tied up in all types of equipment. If this sounds like you the solution for additional working capital may be in your paid for, or almost paid for equipment. You may have heard the term sale-leaseback, debt restructuring or asset based lending. Whatever the term, the assets you own could hold the key to obtaining working capital to advertise, hire people, purchase new equipment, service a large contract or any other problem you are trying to solve.
Serving most industry sectors—especially Construction, food, pharmaceutical, metal working, transportation, wood working, machine tools and many industries, the sale leaseback is a viable tool and solution.
We can find some solutions, with additional collateral including real estate and equipment. Do any following situations sound familiar?
We can find solutions for all of the above problems if the additional is available.
If you or your customers are factoring contracts, it may be ideal situation for contract finance. Let us work with you or your customers to provide a proprietary contract structure that will allow a portion of future revenues on 2 to 7 year contracts at a fraction of factoring costs. No more Chinese water torture with month to month funding from factors that charge 25% or higher. Get more money for equipment and working capital. It may create the ability to acquire and fulfill more and larger contracts, which is a win/win situation for all parties.
Here are the components of a successful contract finance deal:
If you, or you have customers, who would like to structure their contracts so the contract itself provides cash now, contact us now.
WHO can benefit from Contract Financing?
Literally, there are thousands of small companies – ranging from long
lived to emergent – that either have or are working on contracts with investment
grade credits. These companies could use your help to provide desperately
needed capital to complete their contracts.
WHAT is Contract Financing?
Our Contract Financing (or monetizing) is a very flexible financial tool providing
a number of capital options – much less expensive and onerous than equity or
sub-debt. So long as there is an equipment component, contract financing can
be used to:
1. Acquire equipment necessary for the fulfillment of a service contract
2. May provide much needed working capital to run your business and/or develop infrastructure
to facilitate the contract option
3. Refinance existing equipment and improve cashflow
4. Accelerate contract revenues
5. As an entre’ to repeat business
Each transaction is a custom product designed to meet the needs of you and your customers.
Contract financing is for just about any contract where a component of equipment is
necessary to complete the contract. There is a provider (usually a smaller company) and an end
user (investment grade.) The term of a Contract Finance can be as short as 12 months, or as long
as 10 years.
This product has a variety of applications and has worked successfully with:
1. Service Agreements
2. Warehouse Agreements
3. Management Agreements
4. Distribution Agreements
5. Muni Contracts
6. Federal Contracts
Where Contract Finance Deals Come From
1. Commercial Bankers
3. Investment Bankers
4. Private Equity Groups
5. Merchant Bankers
6. Venture Capital Firms
7. Service Providers
9. IT Consultants
10. Forums Where Companies Needing Equity Are Showcased
11. Factoring Companies
12. Accounts Receivable Companies
What is the Value and Who Benefits from Contract Financing?
This form of financing could be extremely valuable to smaller companies that don’t have
the resources to purchase equipment or adequate working capital to service the contract.
In many cases, it can be used as an alternative to equity or to augment existing equity in
the provider company. In fact, many smaller companies do not bid large contracts
for fear that they will be unable to fulfill them because of a lack of capital. The equipment
necessary to fulfill a contract can be existing equipment that is refinanced or sold and leased back,
or brand new equipment that is located at either the provider’s or the end user’s location.
These need not be a new contract to qualify for Contract Finance. The contract can be monetized
for the remaining balance/term of an existing contract.
Here at Insta Lease, one of the mottos we work by is “Forget about all the reasons why something may not work. You only need to find one good reason why it will.”~ Dr. Robert Anthony, which is why we’re excited to announce that we’re providing budding business owners yet another opportunity to “Find the way to make it work”, Insta Lease now offers a Start-Up Program for entrepreneurs . Even those industries that are considered difficult to fund such as:
• Restaurants-yes, even restaurants!
• Health Care Clinics
• Construction Companies
• Production Companies
• If you don’t see your business –contact us. We can probably find a way to finance it.
It can be tough to secure adequate funding for start-up business ventures, as those of you know that have tried to find funding for your project. The current lack of financial stability in the market has had a dramatic effect on the start-up capital that banks are willing to fund. However, this challenge gives way to tremendous opportunities through business equipment leasing. Rather than tying up credit lines or spending precious capital when borrowing from a bank, business entrepreneurs can take advantage of equipment leasing benefits that include:
• Flexible Lease Terms: Business start-ups can select from equipment leasing terms spanning from 24-60 months
• Elimination of Equipment Obsolescence: Entrepreneurs can regularly upgrade rather than own out-of-date equipment
• Tax Benefits: Business owners can deduct equipment leasing costs in a single tax year in addition to the bonus depreciation deduction outlined in the Small Business Jobs Act.
Do you have questions about Insta Lease’s Business Start-Up program or your company’s eligibility? Contact Insta Lease and our equipment leasing professionals will provide you with the information you need.
If you are going into business or are already in business you should be aware of your personal and business credit. Of the two the personal credit report is the most important in my opinion. Pay attention to your credit score as well as the entries in your credit file. When you complete an application for credit and submit it for approval, the first step or close to the first step is to pull a personal credit report on the owners of the business. Credit reports are pulled on all owners that own 10% or more in the business. Sometimes a funding source will pull credit on everyone that owns a piece of the business, even a very small percentage. It is at this point that a basic decision is made. Reject the transaction, send it to pending for additional information and explanation of certain items, or the best decision, it is approved as submitted if the business meets other criteria. In this instance a good credit report will result in an approval and you get the equipment to further increase the value of your business. How much a good credit report is worth to you is determined by what the equipment will do for you and the business versus having your credit turned down and not being able to purchase the needed equipment.
Another important tip is to be aware of the credit of your partners. Sometimes we are hesitant to ask someone we are in business with or going into business with what their credit is like. However, the consequences of not being aware can be very costly. More than once I’ve seen the following situation or similar situation prevent a transactions approval. A typical example would be either a partnership or a closely held corporation. They are all listed as owners and have equal or different percentages of ownership. One or two of the partners can have very good credit, 680 FICO or better. The other partner may be credit challenged and the FICO may be 640 or less. A situation like this could result in the transaction being turned down. Or an approval may be granted with conditions that are tough to meet.
Following is an example that illustrates the difference: Assumptions: $20,000 amount to finance; 60 monthly payments; 2 advance payments; $1.00 residual.
Payment with a 620 FICO $666.00 per month
Payment with a 680 FICO $490.00 per month
There is always an exception to every rule. If you would like to discuss your situation or just would like more information please complete the form and one of our staff will get in touch with you.