Southern Nevada’s existing solar array at Nellis Air Force Base is currently the largest operating solar PV plant in the United States. The new project, expected to be completed in 2010, is larger in scale and will employ 120+ people during the construction phase alone. Details of the PPA were not readily available, but this is great news to Nevada residents who have become frustrated with their state’s reluctance to adopt renewable energy reform. Despite the  great potential to produce solar power in Nevada, inadequate transmission lines connecting the state’s northern and southern power grids have held back development in the past. NV Energy reported that ALL of the power generated by the production facility will go to consumers in their southern service territory.

Now more than ever, financing options are becoming a HUGE factor in the equipment acquisition process. Salesmen of heavy equipment/capital equipment will tell you time and time again, the ability to control the financing process allows them to close more deals. In this economy, many companies simply cannot handle the burden of paying cash for new equipment purchases, even if the purchase is necessary. Small businesses all across the US and Canada are delaying equipment acquisitions until the economy turns around, even if the upgrade/purchase is well past due. As an equipment/technology vendor, the ability to offer comprehensive equipment leasing and financing options is a must, and the ability to control the financing process can be just as important.

Annual equipment leasing volume in the United States is now over $260 billion; looking closer, those figures reveal that over 35% of all capital equipment is acquired under an equipment lease contract. Equipment leases are a very popular financial tool that is currently used by over 80% of U.S. companies to acquire capital equipment. Your customers WANT to lease!

As a salesperson, you have a couple different choices when your clients inquire about leasing & financing options:

1. Your company can finance the equipment internally- This option ties up cash and you may face future liability in the event of any defaults.
2. Tell your client that you do not directly offer financing options- This may alienate your customer and drive them into the arms of another vendor that might be able to offer flexible financing.
3. You can provide them a list of “approved” equipment leasing companies to choose from- The client is forced to pursue financing on their own. In this economic environment, the process cannot only be confusing, but very time consuming as well. Your customer can easily get lost in the sea of commercial financing options.
4. Develop a relationship with a full-service leasing company- This option provides the vendor with a cash sale and gives the end-user flexible financing options. Full-service equipment leasing companies should be able to provide comprehensive financing for a wide variety of credits (not just your A++ credits).

To avoid delays and loss of control you MUST offer financing along with your equipment.  But, as discussed, getting into the finance business presents a whole different set of challenges and your business is selling equipment, not financing it. During the slower summer months, take the time to develop a relationship with an equipment leasing company. Make sure they are able to offer marketing support and truly understand your market and clients. A proactive marketing partnership gives you the benefits of an internal finance company while avoiding the challenges, liabilities and exposure of being in the finance business.

Help your salespeople make more sales with less hassle… offer equipment leasing & financing options!

A group of world business leaders issued a clear call for change this Tuesday, issuing “The Copenhagen Call,” a demand for a global climate treaty. This came after Al Gore, on Sunday, called on attendees to pressure governments around the world to cut greenhouse gas emissions.

“The clock is ticking…” Gore Said. “We have to do it this year. Not next year. This year… because Mother Nature does not do bailouts.”

“The Copenhagen Call” encourages businesses around the world to adopt a treaty which will help reach GHG (Green House Gas) reduction targets in 2020 and 2050, and cut global emissions by at least 50% by 2050. The Copenhagen Climate Council also supports unified emissions measurement and reporting/verification standards that would lead to mandatory reporting across the globe. In addition to more obvious goals, the group also advocates financial incentives that would help finance low-carbon technologies, and jump start investment in these areas. While everyone seemed pleased with the general direction of the “call,” Greenpeace seemed less than enthused that “polluters” from Shell and Duke Energy “hijacked” the conference and were in attendance.

If you are a business owner that has weathered the economic storm over the past few years, you’ve probably seen your competition going out-of-business at an alarming rate. Their exit from the marketplace might have your business poised for growth as the economy picks back up in the 3rd and 4th quarters of 2009. That is… if you are able to acquire the necessary capital equipment needed to accommodate the additional clients/jobs. With banks tightening lending requirements and sometimes, exiting markets all together, leasing companies have been using their asset-based expertise to their advantage. By truly understanding the value of a given asset, an equipment leasing company can structure a lease/loan with no additional collateral besides the piece of financed equipment.

Over 80% of businesses in the United States utilize equipment leasing options as a means of business financing. Equipment leasing approvals are generally available in as little as 48-hours for amounts under $75k, with larger commercial approvals up to $3MM available after full financial disclosure. The majority of businesses turn to equipment leasing because of the flexibility it affords. With credit approval, an equipment lease can be executed with only one month’s payment due in advance. This can be a HUGE help, especially when compared to the 15% traditionally required to initiated bank loans and credit lines. If you are involved in a high-tech industry, or one which requires constant equipment upgrades, you’ll be happy to know that equipment leases can be structured with upgrade options. The ability to upgrade your equipment down-the-road means never having to worry about technology obsolescence.

So who qualifies for commercial equipment leasing programs? While the application requirements vary, generally any sole proprietorship, LLC, corporation, partnership, or freelance professional can apply for commercial financing options. Credit approvals up to $75k are generally available on an application-only basis, with personal guaranties of the majority owners (if a closely held company) being required. For amounts over $75k, expect any reputable leasing company to request business financial statements to assess a company’s financial strength.

When applying for an equipment lease, you should have the following information handy and ready to supply for final credit approval:

1. Trade References- 3 companies from which you purchase goods/services from on a regular basis.
2. Business Banking Statements- Copies of the first page, showing average daily balance, for the three latest months.
3. Exact Legal Business Name- Needed to verify time-in-business (TIB).
4. Personal Information on Majority Owners- Anyone owning more than 15% of a company will need to provide personal information (name, address, social security number) and sign a credit authorization to begin the credit application progress.
5. Financial Statements/Tax Returns- For financed amounts over $100k, be prepared to provide an equipment leasing company with two-years federal tax returns, as well as a current interim statement with balance sheet/profit & loss statement. Additional financials will be requested as needed, on a case-by-case basis.

Factoring companies are usually very well-versed commercial lenders with tremendous experience in risk assessment. In this current economic environment, developing a relationship with the right factoring company can relieve some of the burden associated with A/R collections and cash flow management. Of course, with the increased risks facing commercial lenders in the current marketplace, many factoring companies will be requiring more financial information from a client before entering into a factoring arrangement. Expect any reputable factoring company to complete a credit check on a client before developing a relationship. That being said, once the factor establishes a comfort level with a given client and their accounts, a credit line can then be established for future use.

While there has been an increase in small business factoring in recent years, please keep in mind that A/R factoring should only be used for short-term financing and cash-flow needs. For more long-term financing, especially for the acquisition of capital equipment and fixed assets, consider equipment leasing options and business lines-of-credit.