Usually I do a “hot and not” post every year, and this year, I reported that just about everything was hot. But as I looked at some reports the other day, two things jumped out at me. The first is that construction equipment financing was robust. This usually happens in a good economy, as that’s when things get built.

But what really caught my eye was the fact that pre-owned construction equipment took a solid jump in 2018. It seems that there are plenty of construction firms leasing used construction equipment like backhoes, dump trucks, bulldozers, and other heavy equipment. Financing used construction machinery was always something firms did to save money, but it took such a jump recently that I asked myself “why?” I can guess at a few reasons:

There are Plenty of Good Pieces Out There. In “good times”, companies are quicker to replace machinery with newer, better models. This leaves a larger than usual inventory of gently used construction equipment.

Leasing / Financing Rates are Low. Rates are still low, despite a few small increases. Most experts feel more increases are imminent, so jump on this.

Machines Last Longer Today. There was a time when companies would shy away from taking out monthly payments on a used backhoe (for example), but today, they are built so well that even a used machine will outlive the payment term.

Financing used construction equipment makes sense for many construction firms. The numbers bear this out, and it looks to continue well into 2019.

True story:

Once, at a trade show, I was talking to the owner of a regional retail/service chain (12 stores in all, plus a small warehouse) about soft cost financing. We got to talking about “training”, because that’s one of the soft costs that a good equipment financing company will finance.

He told me he bought a fairly robust point of sale system, complete with shipping and inventory features. But the bank wouldn’t finance training (they didn’t even finance the entire price, but that’s another story), so he instead went with the included bare bones one-day seminar, and not the week long, hands-on training option.

The result was while the system was easy enough to pick up at basic level, key advanced features were glossed over. One such feature was real-time inventory (as opposed to the daily/weekly/monthly reports they ended up using for the first year.) He estimated that simply using this advanced feature from the beginning would have resulted in more efficient ordering and inventory turnover. In short, learning about this would have paid for itself. If only the bank would have agreed to add training to the financing…

If it’s available, financing training with any equipment purchase can be a very smart move. Obviously, not everything you purchase will require training, but for computer systems, point of sale systems, some more advanced machines (like CNC Machines), financing training can be a very cost-effective move. Especially since the cost of the training is stretched out over years – for most deals, adding training to monthly payments amounts to a few extra dollars, which makes it a no-brainer.

An addendum – we helped my trade show contact with financing other products, and the “deal closer” was the fact that we financed soft costs. It makes those extras and add-ons very attractive, and easy to buy. So whether it’s maintenance agreements, training, or other soft costs like delivery and setup, a good equipment financing company will happily include it in any deal.

I was getting my oil changed the other day, and started thinking about “maintenance”, as in regular maintenance for my car (because, of course, that’s exactly what an oil change is).

Then, since I’m Fletch, my mind wanders to equipment financing, and regular maintenance on purchased equipment. And it occurred to me that I don’t speak about maintenance agreements and things like that nearly enough. Because one of the advantages of equipment financing is the fact that a good equipment financing company (like mine) will not only finance equipment, but also finance what are called “soft costs”, like a maintenance agreement.

Oh, I’ve mentioned soft cost financing from time to time, and maybe even had a post about it, but this time, I’m going to do a little series on financing soft costs along with equipment, because it deserves some time in the sun. In future posts, I’ll highlight a popular soft cost that can get financed, and discuss it a little. Because I’m certain there are people out there who are unaware that you can not only finance, say, a baling machine, but you can also finance delivery, setup, training, the tax, a maintenance agreement, and more.

But we’ll look at all of those later – for now, let’s discuss the very idea of soft costs, and why financing them is a great reason to choose an equipment financing company.

If you read here often, you know all the ways an equipment finance company can beat the bank. And one of those reasons is an equipment finance company will finance 100% of the equipment, PLUS soft costs. A bank will typically only finance 80%, and NO soft costs. This means you are not only on the hook for the unfinanced 20%, but if you want anything extra (like perhaps a few training sessions for that complicated machine), well, that comes right out of your pocket too.

But the friendly equipment financing company will not only finance 100% of your equipment, they can finance the soft costs as well. So yes, go get the training and the maintenance agreement, because they make perfect sense. Hey, we want you to be as successful as possible, and if we can help by financing the training (et al) to go along with the machine, we will.

Soft costs financing is a good thing, and it’s something you should definitely consider the next time you finance or lease equipment.

I’ve recently written about the strong small business economy, and improving your company. But I realized my thinking was somewhat limited in what I was suggesting.

For example, I was discussing adding machines, trucks, etc., and combining such with equipment financing and Section 179. Now, while those are perfectly good ways to improve your business, a strong economy, combined with excellent equipment financing rates and a robust Section 179 deduction can mean improving your company in some less “obvious” ways.

To give an example, is your business one that has a waiting area, either for customers or corporate visitors? How is that waiting area looking these days? Can it use some freshening up? I’ll bet it can, because a waiting area is not something that is directly tied to revenue, so it doesn’t get thought of very often. Yet it will influence how your company is perceived, and ultimately will be reflected in the bottom line (albeit indirectly.) Some new seats, couches, and televisions / vending machines can make a big difference, and right now is a great time to do this.

Conversely, your company’s exercise area (if you even have one) is a place that could probably use an update. And if you don’t have one, now is the perfect time to put one in. Study after study has shown this not only helps in overall employee happiness, but it also has a positive effect on your employees’ overall health. And happy, healthy employees better contribute to your bottom line.

Employee lounge / break area / cafeteria – again, these are areas that don’t directly tie to revenue, so sometimes they get pushed aside. But these are great company upgrades to make when revenues are strong and equipment financing rates are low. Plus, most of this equipment qualifies for Section 179, meaning you can deduct the entire cost.

So yes, improving your company doesn’t always mean buying new production machines. An exercise room and a vending machine (that hopefully sells healthy snacks) are improvements that can pay dividends for years.

I subscribe to several business-related newsletters and e-zines. There’s nothing like timely business and financial news hitting your inbox every day. My wife thinks it’s boring, but then again, she spends hours looking at pictures of food on Pinterest. I try to tell her that mine is more interesting, because money buys food, but she counters with “you can’t eat money”. Ok then.

But I received some good news in the inbox the other day from the National Federation of Independent Businesses (NFIB), which is the nation’s leading small business association. They report that small business optimism is at a 45 year high.

45 years. This surpasses the booms of the 80’s and 90’s, and we all have to admit, things were pretty good then. But they are better now.

But you know, it took me a minute to think about it to realize just how good things are right now. That’s because the news cycle is dominated by a lot of negatives regarding business – people upset over minimum wage, income inequality, loss of manufacturing, and more. You would think that business is terrible. But it’s not.

Small and medium businesses are thriving. Have you called a plumber or a carpenter recently? They have waiting lists. Have you gone car shopping lately? If you see a model you like, you’d better pounce, because they might not get another black Model XYZ for a while. My neighbor just waited three weeks to get a tree removed, and this year, Mrs. Fletch and I are replacing our above-ground pool. We went shopping in January, and even then, the pool company was backed up into June for new installs. And realistically, we’re probably looking at July.

So we’re in a good place, business-wise (although getting our pool earlier would be nice, of course). And that’s going to lead to my next post, which is (predictably) going to discuss some equipment financing, Section 179, and using this optimistic wave to improve your business.

Ignore the negative news – things have been good for a while now, and they are looking better every day.   

I just read an interesting blurb about

So who’s right?

I say “who cares?”

Whether it’s three hikes, four hikes, five hikes, or even just two hikes, the fact is rates are fully expected to go up in 2018. And that isn’t welcome news to borrowers. Because like it or not, it will cost you more to borrow money next year. And that includes financing equipment. You will simply pay more for it if you wait.  

That’s why I’m “emergency blogging” today. If you had your eye on a piece of equipment, DO NOT WAIT to finance or lease it. The only thing waiting gets you is a higher monthly payment. That’s it.

This has an increased impact here in the last few weeks of the year. If you lock in a great fixed rate NOW, you will be unaffected by rate increases in 2018 and beyond. Plus, you can take a full Section 179 Deduction on qualifying equipment this year.

There’s nothing to think about. I know it’s the holiday season, but somewhere in between decorating the office and the company party, get that piece of equipment you wanted.

The clock is ticking.

We’re six months into 2017, so let’s take a look at the year so far and comment on a few things.

If you read here, you know I loath to get political, so I’ll refrain from any straight politics and policies. But I have to say that the small business community continues to be enthused at the general direction of the economy. Equipment financing is the lending business, and the lending business is generally a good barometer of how small businesses feel about “things”. And right now, they feel good.

I’m continually amazed at the speed of technology. In my lifetime, I have seen clunky computers with DOS give way to smartphones that do more and more, seemingly every month. Think about this – in your hand, you have not just a wonderful communications device, but you also have almost all of human knowledge at your fingertips. It’s astounding when you step back and look at the big picture. Right now, on a day to day basis, you have access to more information than the President himself had 25 years ago. That’s pretty cool.   

Another thing on the technology front: my friend has some vintage audio equipment. He had a preamp that wasn’t working with its remote – specifically, the volume knob wouldn’t work with the remote. There’s a plastic gear that had a tooth broken. The manufacturer is long out of business, and this part, probably worth no more than a nickel, was impossible to get. The solution? Have one 3D printed. I mean, wow – his mind was blown. And now his preamp works!

Of course, the preceding has little to do with equipment financing, unless you are looking to finance a 3d printer for your company, of course. And I see more and more companies doing exactly this, because it becomes a piece of equipment that can make almost *anything*, even obscure little parts that help old machines stay running (and now I think I need a “why financing 3D printers matters” post!)  

2017 is shaping up to be an excellent year for a majority of businesses and industries. I’m hoping the trend continues for the next six months, and into the next year. It’s a great time to be in business!