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Headed to ELFA National Conference

By Brad Bayless

I’m off to Chicago to attend the Equipment Leasing and Finance Association (ELFA) National Funding Conference. This conference is a great opportunity for businesses networking with some of the finest funding sources in the industry, and I am glad to be participating. I’m looking forward to re-connecting with industry peers and gaining valuable insights that will benefit our clients in the year to come.

2013 Industry Outlook

The US commercial and industrial equipment rental and leasing industry, which includes more than 8,000 companies with combined annual revenue of about $45 billion, is expected to see growth in 2013, according to the latest industry forecast for First Research from INFORUM.

Commercial and industrial machinery rental and leasing companies are expected to benefit in 2013 as the construction sector continues to recover. As suggested by industry professionals, companies need to target customers in sectors with the strongest increases in construction spending, such as energy, manufacturing, and hospitality.

New Website Unveiled!

AT DFI, we are constantly looking for ways to improve our business, and our new website is just one of the ways we are making enhancements for our customers. Thank you for visiting our new site! We encourage you to check back often to stay up to date on industry news, learn more about our flexible equipment leases, or receive a quick quote. 

Brad Bayless Authors Article for Newsline (NEFA)

All’s Fair That Ends Fair
In This Economy Fair Market Value Leases May Offer the Best Value

With the current state of our post-recession economy and expected growth from companies in 2013 as we pull out of the doldrums into more optimistic times, I am bullish on operating or fair market value (FMV) leases as the most prudent option for equipment leasing today. In this ever-evolving business environment, FMV leases give business owners and CFO’s maximum flexibility and often lower monthly payments while reducing the risk for the technology to become outdated or obsolete. In today’s business climate, these are critical factors to facilitating emerging growth. According to a recent survey of small to middle-market business owners by Forbes Insights and CIT, more than four out of five executives said their companies made at least one capital goods purchase of significant cost within the last year. And the same number said they will make an additional acquisition within the next six to 18 months. More than one-third reported that the business need was “too strong” to delay the equipment purchase.

Rise of the Fair Market Value Lease

Those sentiments related to making essential equipment purchases have been echoed by our own clients, my colleagues in the industry and the small to mid-sized businesses we meet with regularly. I’ve been in the equipment leasing industry for most of my 30-year career and I have never seen a landscape more ripe for FMV leases than today. I believe wholeheartedly that companies today are evaluating the next steps in terms of technology platforms and overall improvements to enhance their operations and manage growth. With that kind of momentum in the business marketplace, flexibility is a must and undoubtedly one of the cornerstones of a true operating lease. The five big keys to FMV leases in today’s economic climate include:

  • Less Risk: The lessor owns the equipment as well as the risk associated with ownership
  • Keeps Equipment Up to Date: Lessees can return equipment at end of lease, especially valuable for technology related equipment, can refresh with no penalty, and are only paying for the useful life of the equipment.
  • Tax Benefits: Advantages can vary
  • Flexibility: Payment plans range from variable to fixed, seasonal to deferred with a variety of options for the lessee.
  • Less Restrictive than Bank Financing: With today’s technology landscape changing too quickly for anyone without a crystal ball to know exactly what to do, operating leases truly offer the flexibility to be able to respond to the changes in technology when it comes to leasing the necessary equipment. Companies who may opt for a fair market value lease can adapt to market changes without the unwieldy burden of being tied to any specific equipment or software brand, supplier or platform. They also offer a distinct advantage at tax time.

Picking a Payment Plan

Once a lessee has settled on operating lease, evaluating the various payment plan options is the next step. A company’s accounting, budgetary requirements and cash flow management may require a customized structure, but typical FMV payment plans include:

  • Fixed Plan: Offers consistent monthly or quarterly payments
  • Seasonal Lease Plan: A seasonal leasing plan works best for businesses with cyclical or seasonal changes in cash flow due to the operating schedule or other factors affecting cash flow
  • Deferred or Skipped Payment Plan: This plan allows a customer to begin payment of the lease typically 30, 60 or 90 days after taking possession of the equipment according to the agreement.

Additional payment plans may include: bundled financing for equipment, installation, and training or conversion and upgrade leases.

Overcoming Obsolescence

Making sure customers have every advantage available in the marketplace is the key to providing the best service and delivering real value to create long-term relationships. Our advice to clients today is: invest in the necessary resources to grow your business without over-leveraging and, if possible, keep cash readily available for your operational needs. We can heighten the overall value of our industry by serving as advisors—offering a variety of financing options, explaining the important qualities associated with each one and helping clients accommodate new growth by having the proper systems in place. By offering the option of an FMV lease during the consultation process, a business owner or CFO may seize the opportunity to stay current on technology trends and deliver the most up-to-date equipment and software to their employees to increase productivity and stay ahead of the competition. And with an FMV lease, a company will only be responsible for the useful life of the equipment and have the ability to refresh as needed—ending the cycle of outdated technology and moving toward greater efficiency, while taking the strain off their balance sheet.

Read the entire Newsline publication featuring Brad’s article here.

Contact Brad at 303-754-2007 or bayless@dynamicfundinginc.com.

Equipment Leasing Industry to Grow in 2013

U.S. businesses and government agencies will finance more than $742 billion in equipment acquisitions in 2013, according to the U.S. Equipment Finance Market Study 2012-2013, released last month by the Equipment Leasing & Finance Foundation. The study, conducted by IHS, provides a comprehensive look at the size and expected growth of the U.S. equipment finance market.

According to the study, the equipment finance sector has emerged from the Great Recession with finance volumes at an all-time high, as a result of double-digit growth in equipment investment and a favorable interest rate environment.

Seventy-two percent of companies use some form of financing when acquiring equipment, including loans, leases and lines of credit (excluding credit cards). Companies with less than $1 million in revenues use financing in 49 percent of their equipment acquisitions, while companies with revenues between $25 million and $100 million use financing in 86 percent of their acquisitions.

Even with the relatively high degree of uncertainty over the economy and regulations/fiscal policy, nearly 30 percent of companies surveyed anticipated increasing their equipment investment over the next 12 months.

Read more.

Denver ranked in Top Ten for November Economic Index

Denver ranks in Top Ten for large U.S. markets in Economic Index for November.

According to G. Scott Thomas, who covers demographic trends in the On Numbers blog for American City Business Journals, the Denver Business Journal’s parent company, metro Denver saw 2.91 percent growth in private-sector employment, and 5.86 percent earnings growth over the last five years. This month, only Oklahoma City; Austin, Texas; Tulsa, Okla.; Houston; Omaha, Neb.; and Columbus, Ohio surpassed Denver. The Monthly Economic Summary for November 2012, compiled by the Metro Denver Economic Development Corporation, further supports this information.

The Consumer Confidence Index increased in November by 5.6 percent month-over-month. The index is at its highest level since February 2008, as consumers pointed to improved confidence in the job market as the main factor.

Metro Denver employers added 2,100 jobs between August and October. Employment increased 2.5 percent in October year-over-year and rounded out a strong third quarter with a 2.7 percent increase over the third quarter of 2011. Also, the report’s Market Trends section for the third quarter suggests industrial real estate markets in the Metro Denver area continued to recover due to the balance of supply and steady demand for space. The Denver market is faring better than the national market, with vacancy rates 1.5 percentage points lower than the national number of 7.4 percent.

Read more.