- THE MAGAZINE
Regardless of the heartfelt effort you put into your business, money is almost always a factor in determining the success and longevity of a company. For many carpet-cleaning business owners, leasing can be an excellent solution to the problems that limited cash flow can create. Read on as experts from eight leading leasing companies tell you what leasing can—and can’t—do for you.
Coast to Coast Funding
At Coast to Coast Funding, the key phrase seems to be “tailored to the individual.” The leasing company prides itself on designing leases for businesses according to their needs. Elliot Solway of Coast to Coast suggests that lessees use leases to obtain hard assets and use banks for acquiring soft assets.
Coast to Coast finances used equipment and will lease virtually anything for almost any business. To qualify for a lease, an individual will need good personal credit and preferably have been in business for at least two years. Leases can be approved from within an hour of applying to two days later. The company prefers to lease over $2,500 and does not have a leasing limit, depending on the lessee’s credit. Coast to Coast also finances installation, service, software and web sites.
With a web site outlining specific leasing plans and financial tips for carpet cleaners, Hathaway Capital has about 30 to 40 different leasing programs. Hathaway’s leases are designed for the lessee to own the equipment at the end of the leasing period.
For carpet cleaners, the seasonal payment lease might be the best option, according to Hathaway Capital’s Jim Swander. In a seasonal payment lease, the payment structure fluctuates based on the seasonality of the lessee’s business. Hathaway will also lease to almost any type of organization, from a large corporation to a one-man business, including start-ups, even if your credit is somewhat tarnished.
Hathaway tries to process lease applications within a day. The company requires an investment as little as $100 and will generally lease amounts over $3,000. The company finances equipment, freight, installation and sales tax.
Two common types of leases this California-based company offers are operating leases and finance leases. Because the terms of operating leases are shorter than the expected useful life of equipment, they are useful for leasing high-tech equipment; business owners are not locked into equipment that may become outdated. A finance lease is shorter and more adequately covers the useful life of the equipment. In a finance lease, rentals tend to be lower.
Generally, according to Leasing Advantages’ Peter Chipouras, an operating lease is the simplest type of lease for a business to account for because only the rentals are expensed. Leasing terms range from 12 to 60 months, although large ticket items can be leased up to 84 months. The company also offers flexible finance programs including a 90-day delay, seasonal payments, start-ups and skipped payments.
For carpet cleaners, seventeen year leasing veteran Betty Loya, operations manager at Leasing Associates, generally suggests a dollar purchase option lease. In this type of a lease, the lessee would have slightly higher payments with the option to buy the equipment at the end of the lease for a dollar. Leases involving truckmounts would usually last about 36 months. Lease terms range from 24-60 months and businesses can lease all almost any type of equipment.
At Leasing Associates, an applicant needs good credit to qualify for an equipment lease. Loya says an applicant can be approved within an hour. For amounts between $2,000 and $100,000, only a one-page application is required. For amounts in a higher range (the company will lease up to $5,000,000), financial statements are required.
If Dennis Hardin of Hardin Financial could offer potential lessees one piece of advice it would be this: talk to your CPA. “Asking some one if you can get a lease is like going into a restaurant and asking if you can get food,” Hardin said. “Of course you can get food. But the quality ranges from a hot dog to a filet mignon.” The best type of lease for a carpet cleaner? Hardin recommends an operating lease because it won’t reduce a business’s net worth.
Hardin Financial, the first lender in the U.S. to offer equipment leasing to carpet cleaners on a national level, finances used equipment and will lease to virtually any business. The company can process a lease instantly or in several days. Typically, Hardin says, the lessee would be required to put down a first and last payment. While the company does finance software, it does not finance web sites.
American Express Business Financial
Like many leasing companies, American Express Business Financial will finance used equipment, installation, service and software. So what’s different about American Express? According to Michael Nester, the company has a leasing program available to start-up businesses. Equipment leases through American Express preferred vendors can be approved for a new business if the lessee has good personal credit. For leases under $150,000, an applicant only needs to complete an application that can be approved in as quickly as 15 minutes. For higher amounts, the company will need to see the lessee’s financials and prefers that the business have been operating for at least five years.
American Express Business Financial offers various types of leases including seasonal term leases and quarterly payment leases. Most importantly, American Express offers “customized structure to the customer’s needs,” says Nester.
All Lines Leasing
With 30 years of industry experience and memberships in the ISSA and the Building Service Contract Association, All Lines Leasing “is dedicated to the cleaning industry,” according to company vice president Duncan Leighton.
Specializing in contractors, All Lines Leasing offers a variety of leases including a standard $1 or 10% purchase option lease and a 30 month, 60 day deferred payment lease. All Lines also offers fair market leases and will custom design operating leases to best suit its customer’s needs. Lease terms range from 24 to 60 months. While the company prefers to lease to a business at least two years old, All Lines will lease to start-ups. For lease applications over $35,000, two years worth of financial statements with corresponding tax returns are required.
Beneficial Capital Leasing
With over 30 years combined professional expertise in the carpet/restoration industry, Beneficial Capital Leasing offers existing businesses and start ups the same rate structures. “When you charge a start up company a higher rate structure, you decrease their chances of long term success,” says Mary Allison of Beneficial Capital. Beneficial Capital offers two general types of leases: a true lease (a fair market lease) and a dollar purchase option lease. The most common terms for a true lease range from three to five years. According to Allison, the structure of a dollar purchase option lease negates the tax reporting attributes of the lease.
Beneficial finances software, websites and used equipment, depending on its condition. The company’s lease amounts range from $2,000 to an unlimited amount.
Allison advises potential lessees to explore their options with a variety of finance companies, banks and their accountants. “The more information you have, the easier it will be to assure the correct decision is made for the long term success of your business,” says Allison.
So, is leasing a viable and profitable option for your business? Take your time and research your options. Talk to your financial advisors. Weigh the benefits and disadvantages of leasing for your company. The experts have spoken. Now the decision is up to you.