But there is a change in the air – I’m seeing companies look harder than ever at financial flexibility, and remaining as nimble as possible. You could even say they are resolving to do so. Let’s discuss that a bit.

The pandemic has shown us how fragile it all is, and how everything can change on a news headline or two. Companies can no longer afford to have their assets needlessly tied up. Staying liquid and “ready for anything” is very desirable.

So what does that mean for small and mid-sized companies? It means businesses who finance equipment are going to increasingly look to shed lending restrictions, like blanket liens, minimum bank balances, and requalifying for a loan every year. We go over these extensively here.

If you borrow money from a bank, and thus have a blanket lien and a minimum balance they insist you keep, you are FAR from financially flexible. If there’s an event tomorrow that affects your industry, your cash and your assets are tied up. In plain terms, you can’t make a financial move. 

The other really popular bank restriction is making you requalify for the loan every year. Well, how many industries do you think were a bit off in 2020? So for many of those companies, not only did they have an off year, but the bank has every right to say “yea, you know that equipment loan we gave you two years ago? Well, your current numbers say you wouldn’t get it today, so we’re calling it all in right now.” Ouch. 

Financial flexibility folks, that’s where it’s at. Choose an equipment lender who does NOT use these restrictions (hint hint – us!) 

Happy New Year everyone. Stay safe, stay healthy, and stay flexible!

And hopefully, you’re planning to use Section 179 for 2018. Because like all years, the Section 179 tax deduction will expire at midnight on 12/31. And for 2018 (and beyond), the deduction is a cool one million dollars.

The expanded limits (thanks to 2017’s Tax Cut and Jobs Act) really helps small businesses. And the fact that Section 179 is going to be here year after year helps as well – it essentially assures that you can continually buy (or finance) equipment, year after year, and take the full price of the equipment as a deduction.

At the risk of sounding too self-congratulatory, the above is a bit profound, because Section 179 is changing the way many small and medium companies operate. It makes buying equipment easy, and far more affordable, and means they can upgrade equipment faster. Many companies are planning on buying yearly equipment for as long as this ride lasts. I don’t blame them.

This has a circular effect, because when a company upgrades equipment, the “replaced” machinery typically goes into the used equipment market. This influx of good used equipment helps smaller companies just starting out. I see it all the time – a three-year-old tree removal company that’s mildly profitable makes a big jump and finances a used crane and a second bucket truck, instantly increasing their service level tenfold. That’s how you grow.

The really neat part is the equipment gets to take the Section 179 deduction multiple times. The company that originally bought the equipment takes the deduction when they buy it, and when they sell it, the new owner also takes a Section 179 deduction on the same piece of equipment (albeit at the used price, of course).

So here’s your reminder – you have until midnight December 31st to buy (or finance) equipment, and get it into service (getting a vehicle registered, installing the machine and turning it on, etc.) Then you can take your Section 179 deduction for 2018.

Happy shopping, and we’ll see you in 2019.

Here we are, well into September, and we’re staring the fourth quarter of 2018 right in the face. And now that the third quarter is coming to a close, where are you on your Section 179 spending?

To be honest, there is no good reason to not be completely bullish on Section 179 as we cruise through September. In fact, I can think of (literally) a million reasons why you should be taking full advantage of it. That’s because, as you likely know, Section 179 is a cool million dollars for 2018. That’s a number that can really make a difference for companies. I’m not saying you need to go buy a million dollars’ worth of equipment to make it all work, but the fact is, most small and medium businesses can buy as much as they like, and not worry about hitting a limit. That’s pretty reassuring.

Here’s another reason. Right now, at the end of Q3 2018, the economy is humming along. It’s good business sense to use these “good times” to fortify your position, to update and improve your capabilities, and not only keep up with the Jones’, but surpass them. If you’re thinking of being bold, you have a robust Section 179 to back you up.

Two more reasons, both related to Section 179 equipment financing.

The first is the fact that if you finance equipment right now, you will almost undoubtedly reap a bigger tax savings for 2018 than the total of the payments you make in 2018. Yes, that means financing equipment at this time of year and taking the Section 179 deduction is actually an “in the black” move.

The second is interest rate hikes. One is imminent this month, and there is talk of another in December. If you haven’t already, you should get in before that happens. Not only do you get the benefits listed above, you also save money by locking in. Trust me, rates aren’t going down anytime soon, so solidify your position right now.

The 4th quarter is looking good folks. I’m optimistic.

We’re 11 months into our “which is the best month to finance equipment” series, which means we’re into November. And yes, it’s a great time to finance equipment. I’ll give you one guess as to why (and it has nothing to do with Thanksgiving, although Turkey, Potatoes, and Gravy never hurt anything).

Yup, it’s our old friend Section 179. It’s a great program no matter what month you finance, but wow, does it take on extra significance now. In fact, it can literally make your year.

If you read here regularly, you already know the particulars, but let’s talk about them anyway: If you finance equipment (leasing too) here in November, you can write off the entire purchase price for this year. Depending on the price of the equipment, that can mean a significant dent in your taxes – you will keep more of your money, which is reflected in your bottom line numbers for the year.

But here’s the real beauty in this – as stated, the numbers will make a big difference for this year, but you won’t start paying for the equipment until next year. That’s nice.

Plus, you get to start next year with new (or new to you) equipment – there are worse ways you can start a year.

There are also plenty of bargains this time of year, as companies look to end the current year on a high note, clear out older inventory, or maybe just succumbed to a post-Thanksgiving food coma. Whatever the reason, they’re out there. And equipment financing companies are there with financing.

Which reminds me of a little known factoid: When the Pilgrims came to the new land and celebrated the first Thanksgiving with the Native Americans, it was actually the first equipment financing deal. See, the Pilgrims needed food and local farming knowledge, and the Native Americans desired the metal tools and weapons the Pilgrims had. So they traded food (i.e. currency) for the hard goods. And I’m sure there were some deferred payments and tax breaks and…

Ok, I’m getting a little carried away here, and my history teacher might argue with me on the specifics of that one, but can dream, right?      

Trick or Treat, everyone – it’s October. And it’s a great month to finance equipment.

(Ok, you know I have 12 answers to the “what is the best month to finance equipment” question, but indulge me, because it all makes sense. Thanks.)

Anyway, October is a fantastic time to finance or lease equipment. Here’s why:

1. Helloooo 4th Quarter – Yup, it’s the 4th quarter. You now know (or strongly suspect) how your year is going to end. And for many of us, it’s going to end on a positive note. So given that, if not now for new equipment, then when? And if your year wasn’t great, if you finance equipment now, you can likely get a “no payments until 2018” deal, meaning maybe you can turn things around with some new gear (and get a jump on next year.)
2. Section 179 is Powerful – I mentioned “no payments until…”. Now, imagine how great it is when you combine that with taking a full Section 179 deduction THIS year. No payments, and a full deduction. That’s pretty sweet, no matter how you look at it. Yes indeed, Section 179 gets very interesting this time of year, doesn’t it?
3. There’s Great Stuff Out There – Nobody wants 2017 models now, right? Except smart businesses who know they can get great deals on them. If you’ve had your eye on anything that has a “model year”, get cracking and look for deals on 2017’s. They are out there, and sellers are getting desperate to move them.
4. Halloween is This Month! – This has nothing to do with business (unless you make costumes or candy, of course). But Halloween is a great time of the year – it’s the official kickoff to the holiday season (more on that next month.)

So yes, October is a great time to finance equipment. It’s not a trick – go treat yourself!

We’re now into August, and I’m starting to think that this series might have been better titled “what quarter is best to finance equipment” or “is it better to finance equipment in the fourth quarter or the first?”

The reason for that is many of the months don’t change all that much when viewed back to back. In other words, financing equipment in August isn’t that much different from financing equipment in July. But then again, viewed in the big picture, it’s interesting to see the subtle changes. Plus, Fletch finishes what he starts, so let’s continue.

August is a great time to finance equipment because many companies are still in a summer slump. In fact, it may be even more pronounced in August because now the July numbers are in, and they are soft for many industries. So there might be some deals out there.

Section 179 is climbing higher in these posts. If you finance equipment now, and take the Section 179 deduction, there’s a very good chance you’ll pay less in payments this year than the net dollars you will keep from taking the deduction. Read that again if you must, because it’s an “in the black” statement that makes the company accountant smile.

Here’s another reason: your company may have some grand plans for when everyone gets back from their summer vacations. Financing equipment in August means the stuff you need will be ready for rollout. Nothing like going into the fourth quarter with all systems go.

Last thing – I mentioned a month or so ago that “next year’s models” were starting to arrive. This trickle is starting to turn into a flood, and means two things: The latest and greatest is becoming available, and now “last year’s models” (technically this year’s) are in the way. More deals!

So enjoy a glass of lemonade in the summer sun, and look into some August equipment financing, because it’s a good thing.

One thing is clear – waiting is very common. I said this already, but I see it in my business month after month, quarter after quarter, year after year.

But one thing I actually question is “is it always good to wait?” I don’t pretend to know every company’s financials and such, but one thing I DO know as an equipment financing / equipment leasing specialist is the fact that buying new equipment (or even “new to you” used equipment) is almost NEVER seen as a bad thing by anyone.

• Let’s face it – your employees like new equipment. New computers, new office furniture, new office machines… these all make employees feel better about their jobs and the company. Yes, the accountant will say “expense”, but is it really? How important is morale to production? Trust Fletch here – decades-old office furniture and computers built in 2003 cost you money.
• New equipment also makes employee’s jobs easier, especially if the equipment is directly tied to production. That’s a no-brainer, but it’s worth mentioning.
• New equipment also can mean new products or services offered. Again, another no-brainer, but offering new products or services can really help the bottom line.
• Expanding on the preceding, new equipment can also put you ahead of your competitors. A print shop buying the latest in laser printing technology jumps to the head of the line in offering fast, cutting-edge print products.
• Your customers like it when you stay current. And it’s not just machinery – even something as simple as an old sofa in your reception area can have negative effects.

There is almost no downside to buying new equipment. And your accountant will even be happier if this equipment is financed / a favorable equipment lease is written (and use Section 179, of course).

So basically my message (after three posts about this) is this: If you need equipment, and feel the need to wait for an arbitrary date, weigh both the upsides and downsides to waiting. I’ll bet after all is looked at, “buying now” makes as much sense as anything.

Just this week, congress passed a job-creation / tax cuts bill that’s aimed at rewarding businesses who hire new people. Called The Hiring Incentives to Restore Employment Act (or HIRE – clever, huh?), it seeks to give tax breaks (in the form of a social security tax exemption) to businesses that hire a previously unemployed (for 60 days) person.

Furthermore, the HIRE Act will provide a $1,000 tax credit (to be taken in 2011) for every new employee retained for 52 weeks. This is a good thing – maybe this will help a few out of work people get jobs.

But to me, the biggest news is tacked onto this bill was our old friend Section 179. This new HIRE Act keeps Section 179 around for at least another year. And even better, the “higher limits” that were first instituted two years ago were kept. This means businesses may elect to write-off up to $250,000 of certain capital expenditures (generally meaning equipment purchased) in 2010. So instead of depreciating a piece of purchased equipment over time, the entire purchase price can be written off in the first year. Nice.

This write-off is subject to a phase-out once these expenditures exceed $800,000. But still, this is BIG BIG news for businesses. And it’s big news for me, because when a business combines equipment financing (and equipment leasing) with Section 179, the benefits are profound. In many instances, a company could actually write off MORE than the first year’s finance payments total, making leasing equipment a profitable venture for the fiscal year. Again – nice!

Anyway, now you know – Section 179 is back. So if you were thinking about buying new equipment, 2010 is your year!

When you are looking to finance equipment (or lease equipment), all equipment financing companies are not created equal. There are an awful lot of “flavor of the moments” out there, many that I wouldn’t trust to make me coffee, never mind finance equipment.

So here are a few things to consider when choosing an equipment financing company:

• Make sure your equipment financing company has been around for awhile. Really, you’d be surprised at the number of “in business since this morning” equipment financing companies are out there. My rule of the thumb? A decade in business. At least.
• Speed and ease of approval. Once you meet the above “in business for at least a decade” criteria, the next step is to make sure the equipment leasing company can get you fairly quick approval (let’s say, a day at most), and that they don’t need your first born to do such (although depending on your first-born’s demeanor last night, you may not mind putting little junior up for collateral.)
• Do they finance used equipment? This may not be that important for some, but I think it’s something that matters. Even if you have no interest in financing used equipment now, you may have interest in doing such later. Make sure your equipment financing company will at least consider this.
• How about “odd” things, like financing software? You’d be surprised at the number of equipment leasing companies that won’t lease software. Now, I’m not saying someone needs to write a lease on Microsoft Word, but financing an ERP system makes sense for many companies. And many equipment financing companies will happily write a software lease.
• I’m not going to say rates don’t matter, but it should be one of the last things you pay attention to. Any reputable equipment financing company will have competitive rates. I think the above is much more important than a tenth of a point on a rate.

That’s a fairly short list, but it does touch on a few things (and some that are “not so obvious”) that I think are important.

Have a great day!!

One of the fun things about any family reunion are those fringe relatives that you really don’t know, but have a vague idea about them and what they do. And vice-versa, of course.

To give an example of what I mean, I have 2 cousins who never really see each other except for the reunion (lets call them Cousin A and Cousin B). Cousin A has a (very) low level job with a professional baseball team. Cousin B has a kid who’s really good at baseball (he isn’t, but we humor cousin B.)

In reality, Cousin B really doesn’t know much about Cousin A except that he works for the Yankees (actual team name changed). So last year, he had this grand idea that Cousin A can get his son a tryout. Now, keep in mind, Cousin A essentially answers mail and has zero pull when it comes to the team or the talent. In fact, he’s never even met the manager, etc. It caused a bit of a scene, because Cousin B really had his hopes up for an immediate tryout and multi-million dollar contract for his kid.

Anyway, that’s reunions. And similar happened to me this year. I was cornered and asked to finance equipment for an Aunt’s startup business. Specifically, a computer and an office chair.

Now, it’s true I work in equipment finance, but there are two things working against her here (well, three if you count the lipstick four, and if you count my uncle…. but I’m getting off message.)

1) While we do finance office furniture and computers, we do such on a larger scale than one piece for one office. In other words, we’re not a replacement for a credit card.

2) The most important one, we almost never (and I mean never) finance equipment for startups. Let me tell you why:

The big reason we don’t provide equipment financing for startups is because 80% of startups fail. There’s no nice way around that number. I know the SBA has rosier numbers, but that’s because they are selective as to the numbers they use. My company has records going back almost 30 years, and the 80% number holds true. So financing equipment for startups is risky, very risky. And while equipment finance companies are known for somewhat liberal approval policies, startups are typically not in the mix.

Anyway, I politely explained this to her, and the party commenced with a minimum of fuss. I also suggested that if she needs equipment financing and a credit card or the like isn’t an option,  check out the SBA.

I also wanted to put this post up for any other distant relatives who read my blog and are thinking of attending next years reunion. To those people, let me say that I’m really looking forward to seeing you (sort of), but, like with Aunt Edna, I probably can’t help you with equipment financing. However, I’ll be happy to man the grill!