Rob Haynes, Director of Business Development for Dynamic Funding, Inc, shares some observations on trends within the financing industry with CompanyWeek, and offers some advice for what business owners should be asking a leasing partner.
They are bringing together industry leaders to discuss trends and regulations shaping the future of the lending industry. This free event will be a great opportunity for lending and leasing professionals to get together for a keynote and 3 great breakout sessions:
- How Outsourcing Supports Your Goals and Strategy
- The Innovative Lending Platform Association & Healthy Business Lending
- The Present and Future of Scoring in Equipment and Small Business Finance
Alex Gish, Director of Business Development for Dynamic Funding, Inc, shares tips and tricks for better work spaces and well-designed professional settings with ColoradoBiz Magazine. Read which factors affect employee and office productivity the most, and how leasing can make a equipment or furniture refresh affordable.
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Contact: Aimee Miller
Aimee Miller Marketing & Communications
DYNAMIC FUNDING, INC. ADDS DIRECTOR OF BUSINESS DEVELOPMENT
Englewood, CO (February 1, 2017) –Dynamic Funding, a Colorado-based equipment leasing company, added Steve West as director of business development. West has nearly 40 years of experience in IT equipment and large-scale data storage sales.
“We are excited to welcome Steve to Dynamic Funding and are excited for him to bring his vast experience in the IT equipment market to the team,” said Brad Bayless, vice president of Dynamic Funding.
West joins DFI from United Reprographics Supply in Centennial, CO, where he was vice president of sales. Prior to his position with URS, West was the senior account executive at K12 and SLG.
Founded in 1996, DFI is a full service lessor that provides equipment financing for technology assets, software and services and additional operating equipment.
The affordability of equipment, technology and other hard assets can make or break a company’s growth. This is why leasing is so appealing to many businesses – acquiring these necessary items with a manageable monthly payment. But why then do established businesses with large cash reserves choose to lease, when they could just pay off the asset and avoid the interest? It turns out that there are quite a few benefits to financing for all types of organizations, from start-ups to Fortune 100s alike.
Leasing allows your customers to deduct monthly lease payments on a true lease as an operating expense. Depending on the lease structure and the accounting treatment, this means their lease may qualify for off-balance sheet treatment, which may assist them in acquiring the equipment they need while maintaining compliance with bank and loan covenants, staying within capital budget constraints, improving their financial position.
Another set of tax benefits many organizations take advantages of are Section 179, bonus depreciation and qualified leasehold improvements. With Section 179, the IRS allows for the project cost to be fully deductible if your business uses the leased equipment and lease payments pay the cost over time. Interest as part of the payments is also deductible.
Bonus depreciation is the provision that allows businesses to expense off a portion of an asset in the year it is added. This has proven to be very helpful for businesses with large amounts of qualifying equipment, as they are able to save large amounts of tax in the year of purchase. With a gradual depreciation phase-down in place, production equipment and improvement purchases with less than 20 year lives will be able to be expensed at 50% of the asset price in the year of purchase through 2017, 40% in 2018, and 30% in 2019.
Qualified leasehold improvements allow depreciation lives to be reduced to 15 years, instead of the 39 year schedules normally applied. This means that after Section 179 and bonus depreciation deductions, a business will be able to accelerate remaining tax value of improvements over 15 years instead of 39 years. This rapidly reduces the timeframe in which a business can depreciate an asset and enjoy the tax benefits more quickly.
Cash on Hand
It is hard to think of a scenario in which a business having a solid cash reserve would be a bad thing. As any business owner will attest to, having liquid capital to fall back on is always a good idea, especially when one considers the multitude of issues that may arise in a given day. While many businesses have the ability to pay for the equipment and other hard assets up-front, they would rather not deplete their cash or working capital capabilities. And with the ability to put little to no money down in order to acquire an asset, businesses are able to continue their workflow without disruption from an extended waiting period.
Fixed Monthly Payment
Knowing that a fixed cost is on the horizon can actually be a relief to a business. One of the most difficult things about expense accounting month-to-month is factoring in the new, surprise costs that pop-up. That is why even when they are able to pay the full cost up-front, many businesses opt for monthly payments since they are expected costs that allow them to better manage their budgeting cycle.
Hedge of Technology
In an age when the next best thing may be available a month after you purchase the latest and greatest, there can be a fine line behind staying up to date and lagging far behind. This is one benefit that leasing can provide better than paying for assets outright. Depending on the structure of the financing agreement, many companies lease assets as a way to stay current with advancement, updates and new features on a regular basis. This usually proves easier than trying to sell the asset themselves at a loss, only have to turn around and buy something new at full-price.
Since leasing is a hedge against technology, many businesses choose operating leases wherein at the end of the lease term, they have the option to return the asset. If the then fair market value of the asset is less than the residual that the business assumed, they bear the loss but are protected from fair market value fluctuations. Also, if the lessee chooses to swap the asset for one of newer technology, then the existing lease can typically be terminated and a new lease initiated.
At Dynamic Funding, Inc., we help business owners acquire the hard assets they need to expand and grow their business without tying up capital. Most recently, we have helped businesses in manufacturing, brewing and IT with expansion projects and final touches before opening. Read more about each below:
Office Furniture Refresh
Fair Market Value/Operating Lease – $70,000 over 36 months
The customer was at a point where using their capital wasn’t appealing, so they pursued a financing option instead.
$1 Out/ Capital Lease – $25,000 over 48 months
The customer was a startup brewery at the end of their build-out, and realized that they didn’t have the capital for the last piece of the restaurant equipment. They found DFI at the right time, and they were able to open their doors for business.
Office Expansion and IT Acquisition
Fair Market Value/Operating Lease – $109,000 over 60 months
The customer was doing a large office expansion, and didn’t have the capital reserves to put toward their new furniture and IT equipment. They opted to go with leasing, and liked that DFI would put half of the amount down to get the order started.
Alex Gish, Director of Business Development for Dynamic Funding, Inc, shares 3 tips for breweries seeking commercial financing with CompanyWeek. Read how one Denver-area brewery used our financing program to successfully open when other funding sources couldn’t help.
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Contact: Aimee Miller
Aimee Miller Marketing & Communications
DYNAMIC FUNDING, INC. CLOSES DEAL WITH PHIRELIGHT
Englewood, CO (August 17, 2016) – Dynamic Funding, Inc., (DFI) a Colorado-based equipment leasing company, announces that it has closed a deal with Phirelight LLC., a leading cyber security company, for technology enhancements.
“Our leasing agreement will enable Phirelight to get the equipment they need to improve functionality of their rapidPHIRE product and operate more efficiently,” says Brad Bayless, vice president of Dynamic Funding, Inc.
The financing will allow Phirelight to add more robust technology to its current platform, including computer servers and additional equipment.
John Stubbs, president of Phirelight’s U.S. operations adds, “DFI’s equipment leasing has provided us a flexible way to expand our customer capacity and lower our overall operational costs. This equipment has allowed us to grow our footprint and spin up services in Colorado’s only Tier III Gold Certified data center. We’re very excited for what the future holds.”
Phirelight was created in 2001 by a team of defense intelligence, cyber security, and military experts who recognized the need to help organizations manage and protect their critical assets. Makers of rapidPHIRE, the new dimension in cyber intelligence, Phirelight empowers an enterprise to easily understand how their networks behave, while at the same time assessing and managing cyber threats in real time. Phirelight serves a client base of large enterprises, government, and SME organizations in Canada, the United States, and Europe. Along with the rapidPHIRE ecosystem of technology partners, Phirelight provides a full suite of solutions. For more information, please visit www.phirelight.com.
As a leader in equipment financing consultation with Dynamic Funding, Inc., I have listened to hundreds of small and start-up business owners who are seeking capital and operating leases, and it seems like they have all made the same key mistakes. As a trusted partner to small businesses and start-up entrepreneurs, I would like to share the insights I have gained to help you successfully attain funding. While identifying the right financing provider and their terms will be the first thing, there are 5 things you should always avoid.
Not having your business plan finalized
Every funding source has a set of criteria for a venture they are looking to lease or lend to. You can’t imagine the number of small business owners who try to start the funding process, but don’t get anywhere because they aren’t ready to share their business plan. Even though you have likely had extensive conversations about your business’s financing needs, business plan is the best way to communicate them.
When you show up to your first meeting, your business plan should be completed, and include any sales projections, profit margin models, and a full summary. A financing deal will likely have several different people looking over it before being approved, so it is always better to share a polished business plan that covers anything that could possibly be needed. This not only speeds-up the process, but makes both you and your business look more professional, increasing your chances of success.
Not having enough market research
Whether or not a financing company decides to fund a loan ultimately rests on how viable the business seems. They are taking on risk in order to help you secure funding, and have to be sure that you will be able to pay them for the assets/loans you acquire. Having an ample amount of market research is one of the best ways to alleviate their concerns, and demonstrate you have a solid grasp on your market sector.
A basic business plan should cover competitors in your specific industry, but the business owners that I speak to who get their leases approved also bring insights about their sales area, demographics of their customer base, potential competitors outside of the industry, trends going in consumer behavior, and any projections for where the industry will go. Business owners who are able to communicate how their business is different/better than their competitor also seem to secure funding more often.
Not planning to share personal financials
Since leasing and financing deals depend on the viability of a business, credit history and company financial information is a paramount piece of the decision. But for small businesses or start-ups, there may not be enough of a financial history or credit profile established to glean information from. In this case, many financing companies will want to look at the business owner’s personal financial information to establish a basis.
These companies are mainly looking for red-flags in credit history, bankruptcies or liens, but having more personal financial information readily available can convey an eagerness and dedication to having the business succeed (and having the lease repaid). You should also share any assets you may have, or stakes in other ventures you are invested in.
Anticipating a low lease rate
For small businesses and start-ups that lack long-established credit and financial histories, the rates for financing agreements are often higher because of the amount of risk the financing company is carrying. I speak to a lot of business owners who are surprised that lease rates are in the mid-teens, since they see far lower advertised aimed at medium-to-large business structures or small business that are well-established.
You should definitely get rates from several sources, but I would not recommend expecting anything lower than 12%. One thing worth mentioning is that your personal financial history and credit profile could help lower this rate slightly.
Expecting a large amount of funding
Since every capital decision rests heavily on credit and financial histories, it should also be noted that small businesses and start-ups are typical only approved for a small amount of funding. This is usually under $25,000, but can go up to around $75,000. In a similar sense, many financing companies will fund a portion of the requested amount if it exceeds their comfort threshold.
I always recommend that people do research and gather as much information about a financing company to gauge their comfort level for risk and new businesses. Never be afraid to ask as many questions as possible up-front, since it can only help you decide whether this company is a good fit for your needs.
If you would ever like to discuss the financing options available to your business, or gain insight into the financing approval process, reach out to me, Alex Gish, Director of Business Development for Dynamic Funding, Inc., here.
Alex Gish, Director of Business Development for Dynamic Funding, Inc, discusses LED lighting solutions for both existing commercial buildings and new construction projects with the Colorado Real Estate Journal. Read how your property can benefit from an overall efficiency plan, and how much you can save with updated lighting solutions.