You may have noticed that I talk about equipment financing and equipment leasing from the end-user perspective a lot. This is probably because in most people mind’s, this is what equipment financing is all about.
However, there’s a whole other aspect of equipment financing and equipment leasing that I don’t discuss that often, and that’s the vendor side of equipment financing. In fact, it’s probably a larger part of my job than the borrower / end-user side. So in the coming weeks, I’m going to touch a little more on the vendor side of the equipment financing equation (because not only do I find it interesting, I think business relationships that involve credit will be a big deal in the next few years.) And today, let me give you an overall primer.
Essentially, for every equipment lease written, there are three parties involved: The company leasing the equipment (the end-user), the equipment leasing company (that would be me), and the company making / distributing / selling the equipment to be leased (the vendor).
Sellers of equipment, vehicles, and the like need a “finance partner” to help sell their goods. For example, it’s virtually impossible to sell cars without offering point-of-sale financing for the customer. Hence, auto dealerships partner with the manufacturers’ finance arm as well as other outside finance companies and banks.
But what about other equipment manufacturers and distributors – how do they fit into this? Should a distributor of, say, large office machines rely on cash to move their goods? Of course not! It’s beneficial to them to offer easy equipment financing (or equipment leasing). Thus, they have a few options – they can partner with banks (which is becoming more difficult), they can rely on “in house” financing (either through a parent company or the manufacturer), or they can partner with an equipment financing company like mine. Increasingly, the third option is becoming more and more attractive. Especially since the friendly local banks aren’t as friendly as they used to be.
In the current economic climate, I firmly believe that it will benefit many companies to look towards independent equipment financing and equipment leasing companies to help sell their goods. They do this by either by partnering for the first time, or looking to change their equipment financing partnerships because the bank closed the vault (and took away the lollipops… the fiends!)
For now, my only point is to introduce that “third party” (the vendor) that I have ignored in this blog for so long. Look for some deeper vendor-related topics in the coming weeks / months.
Technorati Tags: vendor financing
Now that 2010 (and a new decade) has begun, I’ve definitely noticed a stark difference from last year in regards to “the mood” of the business world (because I’m in the equipment financing business, I definitely have my finger on the pulse of small and medium sized businesses.)
Last year, there was a ton of fear – what was going to happen / where was the economy going / would banks fail / were we going to collapse? These questions were all on the minds of people, and let me tell you, in some cases, business ground to a complete halt. When you fear economic collapse, you’re not spending anything.
Now, of course, nothing near economic collapse happened (it’s almost laughable when you really think about it). In fact, we went through an old-fashioned recession. Something we’ve done before. But, and this is key to remember, this was the first real financial crisis of the internet age (I don’t count the 2000 dot com bust, as we were far from fully wired then). This time, everyone knew everything that happened, and everyone had an opinion. The hype was out of control, and helped what appears to be a self-fulfilling prophecy.
Now it’s a year later, and there aren’t any more fears of collapse. Equipment financing and equipment leasing still aren’t back to where they were pre-recession, but we’ve definitely seen the bottom. And it’s thawing, ever so slowly. It seems the people who are still around are taking a deep breath and thinking “Looks like I survived… ok, what now?” And “what now” quickly turns into “let’s continue on” (and continue on hopefully means a call to Fletch to lease equipment.)
It’s interesting to see the change – the absolute dread of a year ago has vanished, and has been replaced by the resolve I mention above, and also a hefty dose of political arguing (who’s to blame? Him? Her? The Right? The Left?) I guess my point here is to observe what I see as interesting, and to point out things are never as bad as the hype suggests.
If you’re reading this, you’re still here. What now?
Technorati Tags: 2010, equipment financing business
I did this last year, and looking back, I was right about a lot of things. The Dow finished a little higher than I thought, but the Yankees did win the World Series like I predicted (and the Red Wings made the finals.) And a lot of my other economic predictions came true in one form or another. Now, if I could only do the lottery numbers…
So here are some predictions for 2010:
- Section 179 will stay around – there’s almost no chance it goes away, as to do so would send the wrong message to businesses in the face of a soft economy. In fact, the limits may increase as business expansion will be seen as a key issue in creating jobs (more on this below).
- The economy won’t get much better, nor will it get much worse. But the recession is ending / has ended (depends who you ask), and we’ll settle into what is a “new” normal. As we get used to this “new normal”, upticks towards the end of the year will be seen as very welcome.
- If nothing changes, equipment financing and equipment leasing will stay about the same as they did last year.
- But something might change… There’s a good chance we may see some more government intervention into the economy, specifically geared towards job creation, which will probably be seen as our biggest issue. If that happens, equipment financing and equipment leasing may take on a new life.
- I will go on a cruise in May. Yes, I see that happening (pretty easy prediction when I’m looking at the ticket receipt.)
- The Yankees will repeat. I don’t say that because I am a fan, but because I feel that group of oldies has one more “dynasty run” in them. The Colts will win the Superbowl, the Devils the Stanley Cup, and the Orlando Magic the NBA title.
- In the end, this will be an easier year for almost everyone than 2009 was, even if it’s only because 2009 hardened many of us.
Hope you all had a happy and safe new year, and are ready for a fresh, crisp 2010!!
Technorati Tags: 2010, section 179, Small Business
