Airport Corporate Centre 894 Beaver Grade Road, Suite

304Moon Township, PA 15108

Phone 412-262-3225 Fax 412-262-1154

www.acceptlease.com

Asset based lending History- Railroads not banks Concept of paying for the use of equipment v

paying for ownership – Lease v purchase Consider the useful life of the asset. Tax benefits most common motivator for change. Leasing and Financing are the same today.-

Lease with $1 purchase option at the end is the same as financing.

Equipment Leasing and Finance Options for Retailers

Overview

2

It allows businesses to upgrade or improve equipment without large capital outlay up front.

Payment directly to vendor- coordinates with vendor for delivery, and payment.

Payments can be structured to cash flow- more repayment options.

Low maintenance – no yearly financial statement necessary. Payments can include sales tax & installation Eliminates payments added to grocery remit Establishes a new relationship that can help your business

grow and expand. No blanket lien filed on all company assets- only the

equipment financed.

Equipment Leasing and Financing for Retailers-

Benefits

Application process is quick and simple (in many cases no financial statements are necessary).

Decisions today are based on two main criteria- 1. Ability to repay, 2. Willingness to repay

With some exceptions- the value of the collateral is less important in the decision.

Equipment Leasing and Finance Options for Retailers-

Application

Banks usually file blanket lien on all the company assets. Usually require multiple years of financial statements and

personal financial statement for the decision upfront; and yearly updates during the term.

Maybe restricted by collateral or collateral value. Lending limits protect the safety and soundness of national

banks, promote diversification of loans, and help ensure equitable access to banking services. These limits prevent excessive loans to one person, or loans to related persons who are financially dependent. The lending limits regulation (12 CFR 32) applies to all loans and extensions of credit made by national banks and their domestic operating subsidiaries.– (source Office of Comptroller of the Currency, US Department of the Treasury)

Benefit of using the bank is lower rate that may be or may not be fixed.

Equipment Leasing and Finance Options for Retailers-

Pro/Con Bank

“What is the Rate” “What is the Payment” $50,000 at 4.25% for 60 months=$926.48 $50,000 at 7.25% for 60 months =$995.97 Benefits listed in slide 3 for $69.49/mo. or

as most retailers view such things $16.16 per week

Equipment Leasing and Finance Options for Retailers- Rate or

Payment.

Leasing/asset based financing always requires less cash outlay than cash financing and usually requires less than bank financing. When a stores cash position is reduced, liquidity suffers --The ability of current assets to meet current liabilities; a/k/a Working Capital.

Cash is a component of current assets, if cash position is reduced for equipment purchases ; then working capital is reduced.

Equipment Leasing and Finance Options for Retailers- Paying cash

Net Income to Net Working Capital ratio tells the business owner how much every dollar of working capital is earning his/her company.

EXAMPLE Net Income after taxes / Net working capital = the

amount each dollar of working capital is earning the company.

$30,000 net income / $150,000 net working capital= 20% return. If this company pays cash for a $10,000 piece of equipment it is giving up $2,000/year in earnings.

Equipment Leasing and Finance Options for Retailers- Net Income to

Net Working Capital

Personal Property v Real Property Real Property– Land and buildings Personal Property- everything else Examples- Point of sale equipment, check

stands, signs, refrigeration, shelving, HVAC system, security systems.

Grey area- attached to Real Property- walk in coolers, doors (entrance way). Anything that can be claimed as part of the land and buildings if leased/financed may need extra documentation, i.e. Real property waiver.

Equipment Leasing and Finance Options for Retailers- Equipment types

Questions?

Equipment Leasing and Finance Options for

Retailers