Franchises Preserve Capital with Equipment Leasing

Many people today dream of owning a business. Being your own boss can be liberating, not to mention profitable. However, small businesses have a disturbingly high failure rate and the new owner wants a prospect with a proven history of success.

Franchises give entrepreneurs the opportunity to open a business with an established regional or national brand identity. With a plan to follow and experts to consult, your chance of success soars. Franchising is the path of choice for the slightly more conservative entrepreneur.

The downside of franchises is that they are often quite expensive, more so than starting a business under your own name. Coming up with the initial capital can be tough and preserving your assets is paramount. One of the largest expenses is equipment financing. When stocking your franchise with equipment, leasing rather than buying is the more cost effective solution.

Start up equipment leasing

The initial franchise fee buys you assets such as the right to use the brand, initial training, and long-term consultation to keep your business running profitably. You still need to acquire the equipment necessary to run the business.

For example, let’s say you buy a franchise of a successful, well-recognized steak house but you need tens of thousands of dollars worth of stoves, tables, and plumbing fixtures. Rather than taking out a huge loan to equip your restaurant, equipment leasing allows you to get the kitchen and dining room furnished without depleting your valuable capital.

Financing upgrades

When you own a franchise, you aren’t truly your own boss. You still have to make changes at the whim of the parent company in order to preserve the brand. Sometimes this is something simple like integrating a national ad campaign into your local marketing efforts or changing a few options on the menu. Sometimes it’s more complicated and expensive.

Parent companies look at the national or global impact of their decisions and project the financials years in advance. They reason that a short-term loss in assets, say from upgrading their restaurants nationwide, is worth it for a long-term boost in profits.

On the multi-billion dollar corporate level that might be fine, but the cost of upgrades can be devastating to the local franchise owner. Small business owners don’t have the deep pockets of the parent corporations and it can be daunting to face the prospect of substantial debt in the hope of future profit.

For a small business, equipment leasing allows significant upgrades to be done in a more cost-effective and less financially damaging manner. You don’t have to squander your resources nor risk your credit rating on expensive new purchases.

Although you may be part of a national or global franchise, you are actually a small business owner. You have the benefit of consulting with experienced support personnel at the parent company, but you are operating on a tight budget and can’t afford huge equipment costs. Equipment leasing is the smart choice for franchise owners.

Medical Financing and Commercial Mortgages

Medical financing continues to enjoy the best loan options in the business. Lenders continue to “salivate” over doctors, dentist, and veterinarians. For example, 90% financing on purchases or construction transactions still exists.

A lot of borrowers are surprised to hear this, especially in regards to construction financing, as most banks are currently no longer considering construction loans. However, there still are a hand full of national, non depository banks and lenders that continue to lend.

One of the interesting things about both purchase or construction financing for medical practitioners is the ability to roll in other non real estate components into the loan. For example, say you where considering purchasing an office condo, which only currently had the outer shell complete. The cost to build out of the space can easily be included. In addition, cost of medical equipment can be rolled into and often amortized over a 25 year schedule, unlike most equipment lenders that normally only offer 5 – 7 year schedules. Also lines of credit/working capital can be factored in, beyond the value of the real estate.

Medical Financing

We are currently working with a doctor in Georgia, on a ground up construction project which is a very good example of this. He purchased the land for $300,000 and the cost for construction is $500,000. For most non medical borrowers they would only be able to have the 80% of the $800,000 financed. However with this doctor, he added $150,000 of equipment and a $250,000 line of credit. He received 90% financing of the $950,000 and still had the line of top of that… With this particular lender they will go up to 133% of the real estate/equipment value (only for medical financing transactions).

Medical practitioners should take some time or work with a seasoned third party provider to produce options beyond what the local banks provide. There can be huge differences, again like higher leverage, longer fixed rates (like 10 years) and amortization schedules to 30 years. As a comparison, most local banks only offer 20 year amortization schedules with 5 year fixed rates, and they expect side business, like your checking, saving, etc if you work with them.

Picking a Best in Class Finance Partner

WHY OFFER SOFTWARE LEASING & FINANCING

Increase your sales

Shorten your sales cycle

Increase your margins

Increase revenue recognition

Receive payment faster

Make your sales people more effective

Eliminate capital budget delays

Overcome cost objections

Build repeat business

Key Equipment Finance offers innovative and strategic vendor leasing programs for businesses. Our vendor leasing programs will give you the ability to now offer your customers the equipment leasing option for your product.

Vendor Lease Program:

Custom Lease Structure: Our leasing professionals will work closely with your staff to design a program that will provide the leasing alternative for your products.

Sales Training: We offer a lease orientation program for your sales team to show the competitive advantage of leasing vs. purchase.

Lease Rates: Lease rates are continuously updated and will be distributed to your sales team quarterly via e-mail.

Lease Quotation Preparation:We will prepare lease quotations within 24 hours. We will also assist your sales team to provide quotes directly.

Credit Review: Credit reviews are completed within 2 – 4 hours. Leases are non-recourse to you, unless otherwise agreed by you in advance.

Documentation: We prepare, and execute all lease documents. The Master Lease is executed once, and any additional needs simply require a one page Lease Schedule.

Invoice Payment: Invoices are paid within 1 business days of receipt of notice of equipment delivery and acceptance.

Process:

Issue Lease Quote: A lease quote is issued in accordance with the sales quotation.
Submit Credit Application: The customer completes and returns the lease application and financial information for credit review. Key Equipment Finance renders a credit decision within 2 – 4 hours of receipt
Prepare, Forward and Recover Documents: Upon credit approval, lease documents are prepared and forwarded to the customer for signature.

Issue Purchase Offer: Upon receipt of properly executed

documents,Key Equipment Finance issues its purchase order for the products and services to be leased.

Invoice Payment: Upon advice of installation and acceptance, invoices are processed for payment within 1 days of receipt.

Vendors understand the importance of a total solutions sale that includes financing for building repeat equipment sales.

End-users realize many benefits from leasing their equipment but manufacturers and vendors benefit too.

Total Solution Sale

Being able to offer your customer a total solution your equipment and a way to acquire it means you have greater control of the sale. No delays while your customer is trying to arrange financing. Reduce chance your customer will look for alternate equipment solutions.

Easy Upgrades During the Lease; Ideal Position for the Next Sale

When you control your customers financing, you can build-in options for technology upgrades or add-on during the lease and, most importantly, you have a built-in advantage for rolling-over financing of your next generation equipment to your customer.

Larger Ticket Sales

Selling a monthly payment amount that can be designed to fit your customers budget helps you sell additional features that your customer might need, which makes your sale larger.

Your Paid up Front

No accounts receivable problems. You get a check for 100% as soon as the equipment is installed, and installation is verified by your customer.

Makes Closing Simpler

“You can lease this equipment with an option to own. Its 100% financing; 100% deductible with the option to own – at $xx per month over 36 months, or $xx per month over 48 months Which plan is best for your budget?

Helps Close the Sale Now

Leasing gives you the ability to show your customers how to get the equipment they need, when they need it allows you to work within their budget cycles.

Competition

Your competition offers lease finance solutions. So can you.