Tag Archives: business

When and How to Get Construction Equipment Leasing

June 24, 2020   Auto Loans

Construction Equipment Leasing is a type of leasing arrangement where a small business owner (like you) would like to get Construction Equipment but at a lower cost than when you buy the Construction Equipment yourself. It falls under the broader category of Equipment Leasing which means that the equipment you want to lease is probably very expensive (and Construction Equipment are extremely expensive) but you cannot rationalize buying the equipment because you might need the equipment only for the short-term or you lack the capital for outright purchases.

The usual lease period for Construction Equipment Leasing starts at the 24-month term and could last as long as a 48-month term. Usually, Construction Equipment Leasing will not require you to make a hefty down payment though you may be required to give a security deposit of some amount. This allows you to use more of your cash flow for your business needs and to save up. However, for long-term purposes, it is not advisable to use the Construction Equipment Leasing option – rather, a cheaper option for the long-term loan option is bank financing itself. Construction Equipment Leasing is ideal for short-term needs only.

Construction Equipment Leasing may fall into three main categories – namely the capital lease, the operating lease, or the skip lease. The capital lease (also called a finance lease) acts like a regular loan and will last about as long as the actual lifespan of the Construction Equipment. If the Construction Equipment is in good working condition at the end of this lease term, the capital lease allows you to take advantage of the stipulation to buy the same Construction Equipment you have been using for your company. The operating lease (also called a true lease) lasts shorter than the life span of the Construction Equipment and will usually use up less of your business cash flow. You may find payments for the operating lease to be tax deductible (but you’ll have to check the agreement you are entering if this applies to you.) A skip lease is ideal for any seasonal business where income usually flows in only during specific months in the year (rather than year-round like other businesses.)

When it comes to Construction Equipment Leasing, you may get yourself a better deal if you go straight to the Construction Equipment manufacturers. The larger business finance institutions are also known to do this more commonly than the smaller ones. The best way to find this option is to go online and look for any links to “leasing options.” As with any financial transaction, do not snatch up the first offer you get. Rather, try to look around the market and see if there are any Construction Equipment Leasing companies that can give you a better deal under the same leasing terms. It is equally important to find out if you are in for any tax breaks if you pursue Construction Equipment Leasing for your company. This can be confirmed by your company accountant.

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How a Financier Reads a Business Plan and Tips for Writing a Business Plan

June 10, 2020   Fast Loan

This article explains the importance of a business plan when seeking help from a financier. In addition it provides useful tips for writing a business plan.

A business plan has four main purposes.
1. To establish the viability of your business
2. To document your objectives and forecasts for the business
3. To benchmark and measure progress
4. To communicate your plans to outsiders – such as a financier

There are two types of financier, the lender and the investor that you may approach or who may be interested in your company venture.

The Lender i.e. a bank will be looking to see how you propose to handle potential risks that your company may encounter. Their main concern is regarding the security of the repayments for the money they have loaned you, and will therefore want to ensure that you will be managing the company’s risk wisely. As well as checking your credit rating a bank manager may ask you a number of questions in an interview which you will need to be able to answer, such as:

• Why do you need the amount requested?
• What will you do with it?
• How do you know it’s enough?
• How much less can the company survive on?
• What other sources of finance do you have or who else are you borrowing from?
• How are you going to pay it back?
• What collateral or guarantee do you have?

You need to ensure that these questions are already answered in your business plan as it is much harder to change the manager’s mind in your interview with them. The bank will look for collateral and cash flow within your plan.
Make sure you are not afraid to ask for the exact amount required, because if they lend you an amount that is not enough to get the business going and you need to ask the bank for more money, they may question how well you have planned your financial requirements. This could make them sceptical about lending you more.
Professional Investors accept risk, although they will try to limit their exposure to it. The questions they may be asking themselves while reading your business plan are:

• How much can I make? – They are usually looking to make around 30-50% annual compound growth on their investment
• How much can I lose? – What is the risk of losing their investment?
• How can I get my money back or out of the company?
• Who else is investing it this company?
So now you know why it is important to have a business plan when seeking investment from a financier, the article will give some useful tips for what to include in the business plan. The business plan should summarise the following points:

• The overall objectives of your company.
• Who your clients will be and their current buying behaviour.
• Who your suppliers are and how much bargaining power they have.
• Who your competitors are and how you will differentiate yourself from them.
• Who are the key personnel and what their core skills are.
• How the business will operate, including the assets needed to run it.
• How much finance is required; and contingencies should sales fail to meet the forecasted level.

To conclude, business plans are very useful for raising finance for a business. Even if you are lucky enough to be in a situation where you do not need to raise capital, preparing a plan will help focus your thoughts, check your calculations, help you monitor results and enable better communication of your ideas.

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