Arseniy No Comments

How To Finance Equipment For Your Business Needs

We’ve all heard the phrase you have to spend money to make money…  

But really, it’s only true if you spend that money wisely. Investing money into something that doesn’t improve the outcome of your business won’t get you anywhere. 

We know that having the right equipment to power your business is important. The proper equipment can increase your productivity, lower your costs, or give you access to new markets – all things that positively affect the bottom line.

Would you partner with an IT firm with old computers and network servers? Or how about a frequent coffee shop without an espresso machine? Or hire a construction company without the machinery required to build reliable houses? Absolutely not.

Businesses require the right equipment, machinery, hardware, and/or software in order to operate, gow, and succeed. And the ugly truth is, not everyone has the funds to cover these expenses. There are a few different options out there to get to the money-making stage.

We’ve summarized various ways to fund business equipment needs, each with pros and cons. 

Your pocket – Using cash payment to buy the equipment

Pros : Using your cash reserves to purchase equipment and machinery makes the transaction simple and fast as there’s no lease or loan to enter into, and the new purchase is owned outright.

Cons : Since cash is a finite resource compared to credit, it is almost never a good idea to purchase large business items with cash. Companies that only use cash limit their access to major resources when they are needed.

A bank/credit loanBorrowing money to purchase a piece of equipment and paying it back over time.

Pros : For companies with a strong financial standing, it is easy to secure credit for a large purchase. Using credit creates more flexibility, allows expansion of purchasing power to readily respond to opportunities for growth and to proactively improve machinery and equipment.

Cons : Applying for a line of credit can take a while. It requires detailed documentation such as audited financial statements and involves numerous fees and a substantial down payment.

An equipment financing company (leasing) Signing an agreement that allows you to use specific equipment for a period of time.

Pros : Leasing provides a fixed rate upfront and equal payments month-to-month, which makes budgeting and cash flow management easier. Leasing companies partner with you and understand your needs. They specialize in working with industrial equipment, so they understand your business and the equipment in your space. It is a smooth process where a credit decision can be made in under 48 hours. You are able to upgrade when needed. Plus, you can eliminate maintenance costs with leased equipment. Bonus: There are also significant tax deductions available!

Cons : Are there any? We haven’t found them. Leasing just makes sense.

 

Once you’ve decided to move forward with leasing your equipment…now what? Choosing a lease structure! There are a variety to consider: 

  • Operating Lease – This is the traditional lease agreement that typically provides the lowest payment and is a good option for overcoming any current capital restraints.
  • Capital Lease – a lease classified by the lessee as a purchase, with a title transfer to the lessee at the end of the term. 
  • First Amendment Lease – The first amendment lease allows you to purchase the equipment at one or more predetermined points during the lease. 
  • Tax Lease – A lease in which the lessor, is the party that is considered the owner of the leased equipment for tax purposes. The lessor assumes both the benefits and costs of ownership including depreciation, while the lessee (you) can still write off the lease payment as an expense.
  • Synthetic Lease – A synthetic lease is structured so that it is treated as a capital lease (similar to a loan) for tax purposes and an operating lease (traditional lease) for accounting purposes. 

How do you know which option is best for you? It depends on your business and specific situation. Before you shop for an equipment lease, think about your monthly budget, how long you’ll need the equipment for, how you’ll use it, and when you’ll need to upgrade it. 

Several other lease structures are available through AFG – we offer seamless flexibility to our clients, knowing every situation is different and unique.

Shopping for an equipment financing and leasing company can be overwhelming. Take a step back and consider these factors when selecting the company that is right for your business.

  • Experience – How long has the company been in business? Who are their satisfied customers? 
  • Convenience – How simple is the application process? How soon do you have access to the funds? Do they provide a personal account manager to help you in this process or do you have to reach out to customer care?
  • Specialization – Which industries does the company specialize in? 
  • Reputation – Customer references and overall experience

Businesses can work with a provider that’s intimately familiar with their industry and cooperatively select terms and conditions that meet the unique needs of the business.

With a number of variables involved in securing financing for equipment, AFG is a great place to lease. It makes the process straightforward, clear and convenient. It provides services to a wide range of credit profiles and brings competitive story-based financing to the table. 

“When we need equipment financing, we call Brandon at Alliance Funding. He gets our deals done on time and on budget. What else could you ask for?” – Steve “Barney” Byle, Corporate Controller, Edge metals Recycling, Inc.

AFG can help you find a solution that makes sense for your business.

Start your application today →

Alliance Funding Group No Comments

Emerging from The Shadows: Independents Embrace Optimism for 2021

Leaders of three top private independents share the biggest challenges their companies faced in 2020 and discuss how their cost and access to capital fared over the last year. As the economy emerges from the COVID-19 pandemic with pent-up demand and new infrastructure spending projects on the horizon, they agree 2021 looks bullish for the industry.

What was the biggest challenge your company faced in 2020 and how did you overcome it?

Dave Fate: The biggest challenge we faced was the sudden stop in travel and loss of opportunity to meet face to face with customers, business partners and prospects. When the global pandemic became evident in March, we immediately assessed how best to assist our then current customers and prospects. We are happy to report that our disciplined, uncompromising credit culture, coupled with our focus on assets that are integral and essential to the ongoing operations of the customer, once again proved vital to Stonebriar Commercial Finance’s outstanding performance.

In 2020, SCF achieved record volume of $1.4 billion, its highest level of new business volume in its six-year history.

Operating income grew over 36% from 2019, highlighted by zero credit losses for the sixth straight year. We were able to meet and exceed the challenges brought on by the pandemic due to the skill, dedication and tireless effort of our staff.

Brent Hall: The biggest challenge that we faced in 2020, like many companies probably, was the very rapid transition to a remote work environment. Our IT group had to rapidly deploy additional hardware for home offices and set up a new system for remote meetings which, in our case, was Microsoft Teams. We also implemented electronic documentation.

Justin Nielsen: The pandemic and economic shutdown last year put significant stress on our customer experience approach, as we were forced to make emergency adaptations to our systems. One crucial example was in mid-March of 2020; we identified the urgent need to institute a payment-relief program for our lessees.

It was obvious with the complete economic shutdown that many of our lessees would certainly see an abrupt decrease in revenues and a likely potential for payment impairment.

We “rolled up our sleeves” to create a pre-packaged payment relief plan for our lessees who requested assistance. This took considerable work (often requiring department leaders to work around the clock) and collaboration with each of our wonderful funding partners to complete. It was incredible to watch the Onset team institute such a monumental task in a very short period of time.

By April 1 of last year, we were proud to offer each and every lessee who requested help a temporary payment-relief program. Not one of our customers was declined. We knew we were one of the fastest to bring this fully documented, pre-packaged payment relief to market, as several of our funding partners asked if they could have and use our “CRP” (COVID Relief Program). We were flattered at the request and of course gave it to them freely.

Additionally, many of our customers were frustrated that none of their other lenders or lessors offered them any payment help during the crisis. Our lessees were extremely grateful that we had this in place to help remedy their unexpected cash-flow constraints. Ultimately, we were able to offer our CRP to a large number of our lessees. Not only did this protect the overall performance of Onset’s portfolio, but more importantly, it helped us provide the best customer experience we could during extraordinarily difficult global economic circumstances.

How has the cost and availability of capital changed over the last year? 

Fate: As we have noted in our recent press releases, SCF continued to access the capital markets in 2020 with high demand for our securitized products at the very attractive rates. Our 20-1 and 21-1 ABS issuances were met with record demand from over 70 investors made up of the world’s largest asset managers, insurance companies and other institutional investors.

The markets are very liquid right now with significant amounts of cash looking for quality investments. The past performances of our existing issuances, illustrated by continuing rating agency upgrades, have shown that SCF is a sound and trustworthy investment. SCF’s $1 billion revolving credit facility provides liquidity to operate the business.

Hall: The cost of capital has remained quite low, with no movement in interest rates and strong demand for small ticket equipment lease and finance business. We’ve actually seen a decrease in pricing, and availability has been excellent, with more capital providers chasing fewer quality assets. In our capital raise, which took place in Q1/21, we were oversubscribed, having come to market with a $20 million offering and ending up with $25 million in under two weeks.

Nielsen: Funding availability was a dramatic roller coaster last year. While Q2/20 was Onset’s worst funding quarter in recent history, we significantly recovered by exceeding our quarterly funding record in Q4 and actually wrapped up 2020 by achieving our highest annual fundings in company history — what a year! That said, there was definitely a capital supply and demand issue in Q2, which was certainly understandable and most definitely self-explanatory.

Looking back, it was impossible not to feel the unsettling uncertainty regarding how long the financial markets would take to return to even a resemblance of normalcy. Thankfully, Onset Financial experienced a swift and healthy return of capital availability while debt rates remained competitive compared to previous years of strong global financial markets. It was so refreshing, and frankly, quite relieving to see the capital debt markets snap-back into normalcy at the beginning of Q3, which was a much faster return than the overall national economic recovery. Obviously, this lightning-fast recovery was dramatically impacted by a combination of federal relief programs and stabilizing equity markets after a very bumpy Q2. In summary, considering the Herculean challenges of the pandemic and economic shutdown, capital availability and low debt rates remained constant throughout 2020 with the exception of Q2.

What is your outlook for equipment finance in the year ahead given the macro forces at play (political, pandemic, etc.)? 

Fate: We remain very optimistic for equipment finance in 2021. The economy is growing, demand is trending up in most industries and many consumers are in the best shape they have been overall, with higher personal savings, stronger net worth and less debt. Over $5 trillion of high yield debt will need to be refinanced over the next several years, and significant government spending during that same time would likely drive additional CAPEX needs.

It is important to note, however, that higher taxes and increased regulation, as proposed by the current administration, could temper the growth of CAPEX spending. The equity markets are at record highs, interest rates are still low and companies are flush with cash. The outlook for the equipment finance industry is strong for the near-term.

Hall: We are very bullish on 2021 and expect to grow our business 38%. It is expected that GDP growth will be 4% to 6% this year and there is a lot of pent-up demand for CAPEX. Even though employment is higher, the other economic indicators are quite good, with many companies faring very well during COVID-19 and poised for strong growth this year.

Nielsen: Looking at our current macro-economic environment with total positivity, I’m thrilled at the potential opportunities that lie ahead. There are so many wonderful things happening that I believe will be monumental for the equipment leasing industry. The federal government has flooded trillions of dollars into the market. Hopefully, this will have the desired effect and jumpstart consumer spending, which directly impacts the economic food chain. Companies across the country will need to grow to meet increased demand. Equipment leasing should thrive as the national economic engine begins to hum again.

Additionally, the current administration is moving forward with trillions in infrastructure spending. Again, how can this not be an absolutely huge and potentially industry-changing positivity? Sure, economists may argue the long-term adverse effects this surge in the national debt will have on taxes, the value of the dollar, inflation and artificially low interest rates; however, as it relates to equipment leasing, I believe a major spending flurry is coming and equipment lessors need to be in the best position possible to capture the new funding opportunities.

Don’t forget the stock market! The Dow continues to perform at a record-breaking pace which also drives confidence in capital markets. This should keep capital availability in a state of high liquidity, so there will be plenty of dollars to fund the increased equipment demand. By way of disclaimer, we were hit so hard and fast by the pandemic and it seems the news outlets are constantly reminding us of the very real potential for new virus surges and variants that could quickly send us back into lockdown. So, we still need to always act with prudence. However, it should be obvious I’m extremely bullish on the equipment leasing industry in 2021 and beyond.

Alliance Funding Group No Comments

How Working Capital loans can help pay your business taxes

If you run a business with expenses, you need working capital. What is working capital? Basically, it’s the cash that a business has on hand for current and short-term business operating expenditures. This includes things that are your non-negotiables, like utilities, payroll, taxes, and rent. These expenses are due regardless of the state of your business.

You need positive and healthy working capital for a business to not only survive but also for it to be successful. It ensures that business operations continue to run smoothly without any interruptions or hiccups.

Here are some benefits of a working capital loan : 

  • Provides reserves during a rough patch such as a global pandemic 
  • Gives the ability to expand your business or explore other markets
  • Helps with the acquisition of revenue-generating initiatives
  • Allows you to purchase inventory before the busy season in your industry
  • Supports the hiring and training of additional staff 
  • Assists with tax payments

How a Working Capital Loan can help you with your business taxes

Let’s face it, there is no running away from taxes. But there are tactics you can use to help make paying them easier on you and your business.

Many small businesses run on thin margins so when the time comes to pay taxes suddenly you are facing a huge dip into your operating capital. It’s almost like paying a full year’s rent on your move-in day. Wouldn’t it be easier if you could pay it out over 3-12 months instead? 

That’s exactly what a working capital loan provides.

It ensures you don’t have to stockpile cash for months prior to tax season. Instead, you can get a competitive business loan that you have several months to repay, freeing up some of your profits, while also paying your balance in full.

What about the interest that comes with a loan?

Did you know the IRS charges interest on the outstanding taxes that are due? That’s right –  they treat your balance as a loan and charge a 4-6% interest rate on it. Not only that, but they can also charge late fees (steep ones), place tax liens, or even go after your personal taxes and claim them in place of the missing amount. Tax liens usually have a rather severe impact on your credit history and can drive down your business and personal credit, making it harder to secure credit in the future. This is why low-interest working capital loans can be so beneficial in these situations – you can actually save money and protect your credit and reputation while paying the full amount on time. Now that’s a win-win.

Choosing the right offer for your business

The business loan process at banks is traditionally slow and complicated. They require extensive paperwork, heavily scrutinize your credit, and impart high fees and interest rates.  Whereas at AFG, we make sure our working capital loan process is FAST, EASY, and low risk. 

You can feel secure knowing you are partnering with a trusted lender who offers affordable rates and a smooth and hassle-free process so you can concentrate on your business. We’re here to make it simple for you to get the cash you need without surprises, hidden fees, or penalties.

Interested in applying for a working capital business loan? 

It’s easy – you can apply online with just a few essential documents. Once approved, the funds reach your business account within 24 hours.

Apply now and get up to $150,000 almost instantly.

Alliance Funding Group No Comments

Dimer, a Leader in UVC innovation, Partners with Alliance Funding Group (AFG) to offer Flexible Leasing for its Revolutionary UVHammer Disinfection Solution

LOS ANGELES, March 10, 2021 — Dimer announced its partnership with Alliance Funding Group (AFG) to begin offering flexible and affordable leasing options for its state of the art mobile ultraviolet disinfection solution, coined the UVHammer. This partnership will continue to enable widespread adoption of higher health standards, making it possible for any organization to onboard this pivotal technology into their existing cleaning protocols.

Dimer’s UVHammer provides the fastest, simplest, and most effective UV disinfection on the market. The solution utilizes the same patented technology as Dimer’s GermFalcon – the revolutionary germ-killing device for aircraft cabins that has been brought to market globally by Honeywell, and more recently recognized in TIME’s Best Inventions of 2020.

Dimer’s UVHammer has been verified by a Nationally Recognized Testing Laboratory to be capable of disinfecting a 400sqft operating room in less than 3 minutes. The UVHammer’s patented design enables it to work in nearly any commercial setting and has been utilized to disinfect hospital rooms, hotel rooms, offices, electronics bays, restaurants, and more. The UVHammer is now available for lease starting at $35 / day.

“Dimer wants to save lives by killing germs. Our new partnership with AFG enables Dimer to offer incredibly affordable options for all of our customers, making sure everyone has the opportunity to access the best possible solution.” – Elliot M. Kreitenberg, Co-founder & President of Dimer

About AFG:

Alliance Funding Group (AFG) has funded over $2 Billion dollars in equipment loans, leases, and working capital to over 25,000 customers. Recently ranked as one of the fastest-growing independent leasing companies in the US, AFG possesses the financial resources, industry expertise, and product knowledge to serve the needs of small and medium-sized businesses throughout the United States.

 

Media Contact:

Max Solomon
VP of Marketing
max.solomon@dimeruv.com