Wednesday, December 29, 2010
Mazuma Capital Partners: Companies Brace for Powerful Impact of Lease Accou...
Mazuma Capital Partners: Companies Brace for Powerful Impact of Lease Accou...: "Proposed new accounting standards have been drafted in order to push lease liabilities back onto corporate balance sheets. Such a change wou..."
Companies Brace for Powerful Impact of Lease Accounting Changes
Proposed new accounting standards have been drafted in order to push lease liabilities back onto corporate balance sheets. Such a change would represent a major shift for companies that have typically favored the off-balance-sheet treatment of operating leases, and it could have a significant impact on corporate decisions to lease or purchase real estate in the future.
The proposed guidelines are a joint initiative by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board to create a uniform global standard and greater corporate transparency in lease accounting procedures. The most recent draft would establish one method of accounting that requires firms to recognize all lease liabilities and assets on their corporate financial statements.
Another key component is that companies would be required to record the lease value or rent commitment over the entire lease term, including renewal options. Although the intent is to stop off-balance-sheet activity, the changes would add significant weight to corporate balance sheets.
For example, a firm that pays $1 million per year in rent for its corporate headquarters would quickly see its liability multiply depending on whether it has a five-year or 15-year lease. Companies would appear more highly leveraged, which could affect factors such as corporate credit and existing debt covenants.
Although FASB cites data that values leasing activity at $640 billion in 2008, other industry sources estimate that current volume as high as $1.3 trillion in operating leases for U.S.
One fear is that the new accounting practices could deter companies from signing long-term leases, or encourage firms to own rather than lease facilities. Both of those factors could be a detriment to the sale-leaseback and net-lease finance niche where leases typically extend 15 years and beyond.
Sale-leaseback transactions have accounted for $24.8 billion, or slightly more than 50%, of the $46.6 billion in single-tenant sales globally over the past 12 months from June 2009 through June 30, 2010, according to Bloomberg Business.
Tuesday, December 28, 2010
Welcome to the 'New Normal': Modest Investment in Capital Equipment
Banks and borrowers will continue to move tentatively in 2011 before investing big dollars in new machinery, says NEFA's Peretore.
Manufacturers might be getting ready to invest in new equipment, but several signs point to only modest growth in 2011, as questions of financing and confidence moving forward set the stage for a tentative recovery in capital investment.
Monday, December 27, 2010
What do the tax cut extensions mean for business owners?
Tax Cut Extension- How It Applies To Equipment Leasing
In December 2010 President Obama signed into law a tax bill extending cuts for all Americans. The benefits range from tax cuts for millionaires and the middle class to longer-term help for the unemployed.
Business will benefit from the 100% expensing provision. For investments placed in service after Sept. 8, 2010, and through Dec.31, 2011, the bill provides for 100% bonus depreciation.
Operators will be able to depreciate 100% of equipment purchased in 2011. The bill also extends increases in the maximum amount and phase-out threshold under section 179, the association added. Under current law, a taxpayer with a sufficiently small amount of annual investment may elect to deduct the cost of certain property placed in service for the year, rather than depreciate those costs over time.
Expensing - One-year 100 percent depreciation. For 2012 Section 179 at $125,000 and $500,000 phase out – alas not continuing the much more beneficial $500,000 and $2,000,000 phase out which is still good for 2010. According to Joint Tax the provision in general extends the expensing to qualified property placed in service after September 8, 2010 and before January 1, 2012.
Boost to Section 179 Depreciation
Rather than depreciating business property over several years, Section 179 now allows a taxpayer to expense the entire cost of certain property in the year of purchase. The new law allows a Section 179 deduction for up to $500,000 in 2010 and 2011 for qualified property. If the total purchase of all acquired property exceeds $2 million, there is a dollar-for-dollar decrease in the allowable deduction.
Qualified property includes tangible personal property (such as equipment and furniture) and software that must be used more than 50% in a trade or business. Prior to this new act, real property (buildings and structural components, air and heating units) did not qualify for this special treatment. Now the definition of qualifying property expands to include ‘qualified real property,’ and limits the Section 179 deduction on this type of property to $250,000.
Qualified real property includes the following:
• Qualified leasehold improvements
These are improvements to interior parts of non-residential real property placed in service more than three years after the date the building was first placed in service. This does not include improvements to the exterior, elevators or escalators, common areas, or internal structural framework.
• Qualified restaurant property
A building or improvement to a building if more than 50% of the building’s square footage is devoted to preparation of and seating for on-premises consumption of prepared meals.
• Qualified retail improvement property
Improvements to non-residential real property if such space is open to the general public and used in the retail business of selling to the general public that meets the other definition of qualified leasehold improvements.
The Section 179 deduction is allowed to the extent of taxable income, with the remainder carried forward to the next year. Be careful, however, because Section 179 carry-forwards on qualified real property are not allowed beyond 2011.
Extension of ‘Bonus’ Depreciation
The bill also extends through 2010 the 50% first-year bonus depreciation that had expired. The allowance is 50% of the depreciable basis of qualified property for assets purchased and placed in service for 2010. To qualify, the property must be a new (not used) asset that has a depreciable tax life of 20 years or less, software, water-utility property, or qualified leasehold-improvement property.
Land improvements also qualify as eligible property and include items such as sidewalks, roads, fences, bridges, and landscaping. There are no purchase or income limitations as described in the Section 179 deduction, and many large businesses can benefit from taking this extended provision to offset taxable income.
New Reporting Requirements
The law provides for $12 billion of tax relief and builds in some revenue raisers to help foot that bill. One revenue booster requires informational reporting (typically 1099-MISC) on rental-property expense payments of $600 or more for individuals who receive rental income. There are exceptions to reporting requirements, such as for individuals who can show that the requirements create a hardship, individuals who receive rental income of a minimal amount, for members of the military who rent their principal residences temporarily. Further guidance on these exceptions should come out by the end of the year.
What This Means for Your Business
For many, 2010 may be a year when cash flow does not match taxable income, and businesses are striving to maintain their capital in the business instead of paying taxes. If qualified-asset purchases are less than $2 million, a Section 179 deduction can be taken to reduce taxable income.
In addition, if there are new land improvements or qualified asset purchases over $2 million, taxable income can be offset by taking the bonus 50% depreciation. Businesses can also elect to exclude real property from qualified Section 179 property if the regular $2 million cap is close to being reached. Whichever method is used, there are several strategies that may be implemented to defer taxation. In deferring taxation, property owners have additional cash available to grow their business.
SBJA and Section 179 Deduction (Adjustments)
A qualifying taxpayer can choose to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years. This property is frequently referred to as section 179 property.
The Small Business Jobs Act (SBJA) of 2010 increases the IRC section 179 limitations on expensing of depreciable business assets and expands the definition of qualified property to include certain real property for the 2010 and 2011 tax years. Under SBJA, qualifying businesses can now expense up to $500,000 of section 179 property for tax years beginning in 2010 and 2011.
Without SBJA, the expensing limit for section 179 property would have been $250,000 for 2010 and $25,000 for 2011. The $500,000 amount provided under the new law is reduced, but not below zero, if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $2,000,000.
The definition of qualified section 179 property will include qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property for tax years beginning in 2010 and 2011.
Increased Bonus Depreciation for 2011
The bonus depreciation amount for business assets purchased in 2011 has increased to 100%. This means you can fully depreciate the cost of any business asset purchased next year. The bonus depreciation amount for business assets purchased in 2010 is 50%.
For additional information on how the tax cut extensions apply to your business consult a licensed CPA or attorney.
For addtional information on equipment lease financing contact the experts at Mazuma Capital 801.816.0800
Source:
IRS.gov
http://www.irs.gov/formspubs/article/0,,id=177054,00.html
Smart Money, Tax Blogs
In December 2010 President Obama signed into law a tax bill extending cuts for all Americans. The benefits range from tax cuts for millionaires and the middle class to longer-term help for the unemployed.
Business will benefit from the 100% expensing provision. For investments placed in service after Sept. 8, 2010, and through Dec.31, 2011, the bill provides for 100% bonus depreciation.
Operators will be able to depreciate 100% of equipment purchased in 2011. The bill also extends increases in the maximum amount and phase-out threshold under section 179, the association added. Under current law, a taxpayer with a sufficiently small amount of annual investment may elect to deduct the cost of certain property placed in service for the year, rather than depreciate those costs over time.
Expensing - One-year 100 percent depreciation. For 2012 Section 179 at $125,000 and $500,000 phase out – alas not continuing the much more beneficial $500,000 and $2,000,000 phase out which is still good for 2010. According to Joint Tax the provision in general extends the expensing to qualified property placed in service after September 8, 2010 and before January 1, 2012.
Boost to Section 179 Depreciation
Rather than depreciating business property over several years, Section 179 now allows a taxpayer to expense the entire cost of certain property in the year of purchase. The new law allows a Section 179 deduction for up to $500,000 in 2010 and 2011 for qualified property. If the total purchase of all acquired property exceeds $2 million, there is a dollar-for-dollar decrease in the allowable deduction.
Qualified property includes tangible personal property (such as equipment and furniture) and software that must be used more than 50% in a trade or business. Prior to this new act, real property (buildings and structural components, air and heating units) did not qualify for this special treatment. Now the definition of qualifying property expands to include ‘qualified real property,’ and limits the Section 179 deduction on this type of property to $250,000.
Qualified real property includes the following:
• Qualified leasehold improvements
These are improvements to interior parts of non-residential real property placed in service more than three years after the date the building was first placed in service. This does not include improvements to the exterior, elevators or escalators, common areas, or internal structural framework.
• Qualified restaurant property
A building or improvement to a building if more than 50% of the building’s square footage is devoted to preparation of and seating for on-premises consumption of prepared meals.
• Qualified retail improvement property
Improvements to non-residential real property if such space is open to the general public and used in the retail business of selling to the general public that meets the other definition of qualified leasehold improvements.
The Section 179 deduction is allowed to the extent of taxable income, with the remainder carried forward to the next year. Be careful, however, because Section 179 carry-forwards on qualified real property are not allowed beyond 2011.
Extension of ‘Bonus’ Depreciation
The bill also extends through 2010 the 50% first-year bonus depreciation that had expired. The allowance is 50% of the depreciable basis of qualified property for assets purchased and placed in service for 2010. To qualify, the property must be a new (not used) asset that has a depreciable tax life of 20 years or less, software, water-utility property, or qualified leasehold-improvement property.
Land improvements also qualify as eligible property and include items such as sidewalks, roads, fences, bridges, and landscaping. There are no purchase or income limitations as described in the Section 179 deduction, and many large businesses can benefit from taking this extended provision to offset taxable income.
New Reporting Requirements
The law provides for $12 billion of tax relief and builds in some revenue raisers to help foot that bill. One revenue booster requires informational reporting (typically 1099-MISC) on rental-property expense payments of $600 or more for individuals who receive rental income. There are exceptions to reporting requirements, such as for individuals who can show that the requirements create a hardship, individuals who receive rental income of a minimal amount, for members of the military who rent their principal residences temporarily. Further guidance on these exceptions should come out by the end of the year.
What This Means for Your Business
For many, 2010 may be a year when cash flow does not match taxable income, and businesses are striving to maintain their capital in the business instead of paying taxes. If qualified-asset purchases are less than $2 million, a Section 179 deduction can be taken to reduce taxable income.
In addition, if there are new land improvements or qualified asset purchases over $2 million, taxable income can be offset by taking the bonus 50% depreciation. Businesses can also elect to exclude real property from qualified Section 179 property if the regular $2 million cap is close to being reached. Whichever method is used, there are several strategies that may be implemented to defer taxation. In deferring taxation, property owners have additional cash available to grow their business.
SBJA and Section 179 Deduction (Adjustments)
A qualifying taxpayer can choose to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years. This property is frequently referred to as section 179 property.
The Small Business Jobs Act (SBJA) of 2010 increases the IRC section 179 limitations on expensing of depreciable business assets and expands the definition of qualified property to include certain real property for the 2010 and 2011 tax years. Under SBJA, qualifying businesses can now expense up to $500,000 of section 179 property for tax years beginning in 2010 and 2011.
Without SBJA, the expensing limit for section 179 property would have been $250,000 for 2010 and $25,000 for 2011. The $500,000 amount provided under the new law is reduced, but not below zero, if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $2,000,000.
The definition of qualified section 179 property will include qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property for tax years beginning in 2010 and 2011.
Increased Bonus Depreciation for 2011
The bonus depreciation amount for business assets purchased in 2011 has increased to 100%. This means you can fully depreciate the cost of any business asset purchased next year. The bonus depreciation amount for business assets purchased in 2010 is 50%.
For additional information on how the tax cut extensions apply to your business consult a licensed CPA or attorney.
For addtional information on equipment lease financing contact the experts at Mazuma Capital 801.816.0800
Source:
IRS.gov
http://www.irs.gov/formspubs/article/0,,id=177054,00.html
Smart Money, Tax Blogs
Wednesday, December 22, 2010
Major Incentives for Equipment Purchases in Year-End Tax Bill
Companies have something to cheer about when it comes to their upcoming large equipment purchases. The new tax-law that went into effect this week includes 100% expensing for qualified capital investments, including investments in plants and equipment, for 2011 and a 50% deduction for 2012. This is great news as companies remain uncertain when it comes to the economic growth for business.
Mazuma Capital supports the ELFA in their crusades for the use of capital formation tax incentives. The focus remains on the need to invest in plants and equipment as a key component of economic growth and competitiveness. The provision allowing the full deduction – without monetary limitations – of qualified capital investments through 2011 and the 50% bonus depreciation level for 2012 is a major win for economic growth.
We hope to see growth in manufacturing and in many industries whom have felt the pinch of the current economy. Agriculture, construction, manufacturing and transportation outlooks seem positive as growth is reported. We will all be routing for the best as we continue full steam ahead into 2011.
Mazuma Capital supports the ELFA in their crusades for the use of capital formation tax incentives. The focus remains on the need to invest in plants and equipment as a key component of economic growth and competitiveness. The provision allowing the full deduction – without monetary limitations – of qualified capital investments through 2011 and the 50% bonus depreciation level for 2012 is a major win for economic growth.
We hope to see growth in manufacturing and in many industries whom have felt the pinch of the current economy. Agriculture, construction, manufacturing and transportation outlooks seem positive as growth is reported. We will all be routing for the best as we continue full steam ahead into 2011.
Thursday, December 16, 2010
Broker Services Program
Broker Services Program
Broker Services Program
Mazuma Capital’s exclusive broker services program is available to brokers seeking funding for $100K- $10MM for qualified middle-market clients. Through private label financing solutions or as a trun key service provider brokers may access this program to reduce turn-around time and streamline processes. Our broker programs are tailored to meet the needs of your customers; allowing you to continue focusing on your relationships, services, sales, financial and business objectives.
Benefits for your customers
If you have addtional questions please see our Broker Services Program Brochure, or contact us at 801-816-0800 / email us at partners@mazumacapital.com.
Mazuma Capital is a proud memeber of the NAELB, and follows the ELFA Code of Fair Business Practices.
Benefits for you
- Extend the range of services offered to your customers
- Increase sales
- Process may be controlled by you, or through Mazuma- your choice
- No Risks
- Increase customer loyalty and establish new relationships
- Additional services provided at end of lease
- 100% Financing
- Conservation of capital
- Flexible terms
- Easy to budget payments
- Potential accounting and tax advantages
- Preserve existing credit
- Ability to bundle transactions
- Keep up with the latest technology, models and upgrades
- Built in service and warranty offerings without additional costs
If you have addtional questions please see our Broker Services Program Brochure, or contact us at 801-816-0800 / email us at partners@mazumacapital.com.
Mazuma Capital is a proud memeber of the NAELB, and follows the ELFA Code of Fair Business Practices.
Mazuma Capital Partners: Mazuma Capital Announce Exclusive Broker Services ...
Mazuma Capital Partners: Mazuma Capital Announce Exclusive Broker Services ...: "Draper, Utah December 16, 2010–Mazuma Capital announces a new extension of services to include an exclusive broker program. The offeri..."
Mazuma Capital Announce Exclusive Broker Services Program
Draper, Utah
The broker program has been formed in conjunction with Mazuma Capital’s new affiliation with the NAELB (National Association of Equipment Leasing Brokers). The exclusive broker program is available to brokers whom seek funding from $100K to $10MM for qualified middle-market clients. Through a private label solution or as a turn key service provider brokers may access this program to reduce turn-around time and streamline processes.
Mazuma Capital possesses financial backing that provides strength to fund transactions internally, allowing Mazuma to carry residual risk, fund projects over extended installation periods, and other capabilities that most of Mazuma’s competitors can’t match. By bringing together these unparalleled resources coupled with a unique approach to the market place, Mazuma Capital can deliver the quality, timing, strategy and strength that top brokers are seeking.
“We know and understand the competitive landscape of equipment leasing right now. With the migration of the main stream banks, money centers and independent leasing companies to better credit markets, these sources continue to tighten as they stretch to find ways to reduce static loss, take less risk and strengthen their respective portfolios. This has made the “A” credit markets extremely competitive and left a gaping hole in the “B” credit markets. Mazuma Capital, staying true to its niche`, has successfully funded more than $100MM in “B” credits since the start of the downturn. This is due to our strategic partners who remain flush with capital and our own internal capital and expertise in being able to structure and carry equity risk on transactions that have merit. As relationship continue to win deals, it is important for Mazuma to be an advocate for these companies, and the brokers that represent them. By following best practices and delivering on our commitments we have created an amazing broker program that provides flexible lease options to meet the needs of brokers and their clients”, said Jared Belnap, Mazuma Capital CEO and President. “It is Mazuma’s goal to help promote these best practices and incorporate them into each leasing transaction and relationship we enter into”, said Belnap.
About Mazuma: Mazuma Capital is committed to our client’s and partner’s success. Our unique capabilities and innovative product offerings provide solutions accelerating financial growth. Servicing both rising companies and established businesses, Mazuma continues to secure its position as the middle-market industry leader. We build long-term relationships by delivering on our commitments. Mazuma co-authored theUtah Best Practices Alliance
The broker program has been formed in conjunction with Mazuma Capital’s new affiliation with the NAELB (National Association of Equipment Leasing Brokers). The exclusive broker program is available to brokers whom seek funding from $100K to $10MM for qualified middle-market clients. Through a private label solution or as a turn key service provider brokers may access this program to reduce turn-around time and streamline processes.
Mazuma Capital possesses financial backing that provides strength to fund transactions internally, allowing Mazuma to carry residual risk, fund projects over extended installation periods, and other capabilities that most of Mazuma’s competitors can’t match. By bringing together these unparalleled resources coupled with a unique approach to the market place, Mazuma Capital can deliver the quality, timing, strategy and strength that top brokers are seeking.
“We know and understand the competitive landscape of equipment leasing right now. With the migration of the main stream banks, money centers and independent leasing companies to better credit markets, these sources continue to tighten as they stretch to find ways to reduce static loss, take less risk and strengthen their respective portfolios. This has made the “A” credit markets extremely competitive and left a gaping hole in the “B” credit markets. Mazuma Capital, staying true to its niche`, has successfully funded more than $100MM in “B” credits since the start of the downturn. This is due to our strategic partners who remain flush with capital and our own internal capital and expertise in being able to structure and carry equity risk on transactions that have merit. As relationship continue to win deals, it is important for Mazuma to be an advocate for these companies, and the brokers that represent them. By following best practices and delivering on our commitments we have created an amazing broker program that provides flexible lease options to meet the needs of brokers and their clients”, said Jared Belnap, Mazuma Capital CEO and President. “It is Mazuma’s goal to help promote these best practices and incorporate them into each leasing transaction and relationship we enter into”, said Belnap.
About Mazuma: Mazuma Capital is committed to our client’s and partner’s success. Our unique capabilities and innovative product offerings provide solutions accelerating financial growth. Servicing both rising companies and established businesses, Mazuma continues to secure its position as the middle-market industry leader. We build long-term relationships by delivering on our commitments. Mazuma co-authored the
# # #
Media Contact – jfuchs@mazumacapital.com 801-816-0800 X291
Tuesday, December 14, 2010
Mazuma Capital Partners: CFOs Cautiously Optimistic About 2011- Leasing Pro...
Mazuma Capital Partners: CFOs Cautiously Optimistic About 2011- Leasing Pro...: "According to Barrons.com it seems most CFO's are cautiously optimistic about the coming year and how the Economy will play out (http://..."
CFOs Cautiously Optimistic About 2011- Leasing Provides Great Options For Purchasing
According to Barrons.com it seems most CFO's are cautiously optimistic about the coming year and how the Economy will play out (http://blogs.barrons.com/stockstowatchtoday/?mod=BOL_hpp_stw)
Some of the largest concerns we see lingering are CFO's trying to find cash to pay for items as they plan for new purchases. The danger in using existing bank/credit lines or current cash can be detrimental if an emergency arises, or as our economy lie in a state of limbo. So what can CFO’s do now in planning for those much needed purchases??
Now more than ever it is time for CFO's to look towards leasing options for new equipment purchases. With the uncertainty of the economy more businesses are looking at the benefits of leasing. Mazuma Capital can help you make the best choice for you and your company. Some of the many reasons clients have chosen to lease their capital equipment from Mazuma Capital are:
Some of the largest concerns we see lingering are CFO's trying to find cash to pay for items as they plan for new purchases. The danger in using existing bank/credit lines or current cash can be detrimental if an emergency arises, or as our economy lie in a state of limbo. So what can CFO’s do now in planning for those much needed purchases??
Now more than ever it is time for CFO's to look towards leasing options for new equipment purchases. With the uncertainty of the economy more businesses are looking at the benefits of leasing. Mazuma Capital can help you make the best choice for you and your company. Some of the many reasons clients have chosen to lease their capital equipment from Mazuma Capital are:
- Obtain a fixed rate of capital
- Ability to match the stream of payments with the useful life of /revenue generated from the equipment
- Flexibility as to the deployment and use of equipment
- Equipment management and replacement strategy
- Preferential tax and accounting treatment
- Deploy cash to more vital areas such as payroll, M&A, inventory, etc vs. into a depreciating asset
- Avoid or eliminate technological obsolescence
- Access to an inexpensive cost of capital
Whether you’re a fortune 500 NYSE company with the goal of maximizing ROE and EPS, or a large insurance company looking to convert some of your non-admitted assets into cash for capital and surplus benefits, it is important to find a leasing structure that lends to the success of your financial goals.
From health care and HIPPA compliance to GAAP and SAP it is important to have a team of experts on your side when choosing your options. Mazuma collectively takes over 100 years of leasing experience when crafting flexible leasing options for you. With so many rules, governance, and changes there are no guarantees that there is always a solution, but rest assured that we will exhaust all of our resources in an attempt to satisfy your objectives.
Monday, December 13, 2010
What is in store for equipment leasing in 2011?
Looking towards 2011 we are asking a lot of questions. What will the equipment leasing industry do, how will it adapt? Will Money Come Back into Equipment Finance?
We are already seeing a large number of banks bid aggressively for middle-market and larger small-ticket transactions. Some of the national banks have been going up to $250,000 and $300,000 on an application-only basis for bank customers on equipment and industry sectors they like.
There are a few new entrants into the small-ticket application-only market, including the broker market (on a selective basis). This trend will probably continue in 2011 and pricing will be very aggressive on quality transactions.
This is a mixed bag for syndicators of transactions. On one hand, there will be more sources of capital available. On the other hand, there may be a large rate differential between walking down the street to Wells Fargo and getting financed at 4% and selling a broker transaction with points - so the syndicator world will continue to be predominantly "B" and "C" deals, not true "A" deals.
Lots of Smaller Banks will Continue to Fail and Shed Assets
The FDIC will begin to press weaker banks to shed assets and shut down now that there is ample liquidity in the overall system. As such, we see opportunities to purchase portfolios and leasing companies from banks next year. There will, however, be lots of bidders for those assets. In general, we will see greater separation of the "haves" and the "have nots" in the funding world and the "haves" are going to be buying market share.
What will 2011 Hold?
We are coming out of a very deep recession, and tangible recovery is only just begging. For many leasing companies it is still going to be a difficult year. Overall equipment demand - especially for small businesses - is still weak (even though it is better). There are just not enough good deals to go around. The next year is going to require huge amounts of hard work to be profitable.
More Competitive
Even small leasing companies are in a world market. Large companies like GE, Wells Fargo, Bank of America, Chase, etc. are constantly investing in new technology. These companies do collections fromIndia at a much lower cost than small companies in the US
Banks Will Still Be Banks
Having said that large institutions and especially banks are going to continue to be big competitors, there is an opposite side of the coin. The banks are struggling with increased regulation (unlikely all of it will be repealed even with a Republican House) and they are generally not interested in small, complex areas of the economy. Thus, we see that value will continue to be added by focusing on the complex and focusing on "niche" markets.
People Will Wake Up to Accounting Change
Radical accounting changes are coming. The smaller the borrower the less effect the changes will have. However, it will open up real opportunity for lessors willing to take big residual risk in the future as companies will be interested in shedding liabilities from the balance sheet. We will be back to having lessors who are actually in the equipment business. Change will not likely come until 2013, but next year is only two years away!
We are already seeing a large number of banks bid aggressively for middle-market and larger small-ticket transactions. Some of the national banks have been going up to $250,000 and $300,000 on an application-only basis for bank customers on equipment and industry sectors they like.
There are a few new entrants into the small-ticket application-only market, including the broker market (on a selective basis). This trend will probably continue in 2011 and pricing will be very aggressive on quality transactions.
This is a mixed bag for syndicators of transactions. On one hand, there will be more sources of capital available. On the other hand, there may be a large rate differential between walking down the street to Wells Fargo and getting financed at 4% and selling a broker transaction with points - so the syndicator world will continue to be predominantly "B" and "C" deals, not true "A" deals.
Lots of Smaller Banks will Continue to Fail and Shed Assets
The FDIC will begin to press weaker banks to shed assets and shut down now that there is ample liquidity in the overall system. As such, we see opportunities to purchase portfolios and leasing companies from banks next year. There will, however, be lots of bidders for those assets. In general, we will see greater separation of the "haves" and the "have nots" in the funding world and the "haves" are going to be buying market share.
What will 2011 Hold?
We are coming out of a very deep recession, and tangible recovery is only just begging. For many leasing companies it is still going to be a difficult year. Overall equipment demand - especially for small businesses - is still weak (even though it is better). There are just not enough good deals to go around. The next year is going to require huge amounts of hard work to be profitable.
More Competitive
Even small leasing companies are in a world market. Large companies like GE, Wells Fargo, Bank of America, Chase, etc. are constantly investing in new technology. These companies do collections from
Banks Will Still Be Banks
Having said that large institutions and especially banks are going to continue to be big competitors, there is an opposite side of the coin. The banks are struggling with increased regulation (unlikely all of it will be repealed even with a Republican House) and they are generally not interested in small, complex areas of the economy. Thus, we see that value will continue to be added by focusing on the complex and focusing on "niche" markets.
People Will Wake Up to Accounting Change
Radical accounting changes are coming. The smaller the borrower the less effect the changes will have. However, it will open up real opportunity for lessors willing to take big residual risk in the future as companies will be interested in shedding liabilities from the balance sheet. We will be back to having lessors who are actually in the equipment business. Change will not likely come until 2013, but next year is only two years away!
801-816-0800
Friday, December 10, 2010
Solar Energy Industries Association Applauds Inclusion of Treasury Section 1603 Program Extension in Senate Tax Compromise
Extending program will drive U.S.
The 1603 tax credit has created flexibility for funding renewable energy projects and is fundamental for keeping the solar industry growing inAmerica
So far, the TGP has helped move forward more than 1,100 solar projects in 42 states. A report on the impact of the extension of the TGP by EuPD Research projected it would create 65,000 new U.S. jobs and 5,100 megawatts of solar capacity – enough to power more than 1 million households.
Mazuma Capital is committed to help the growth of renewable energy sources by breaking down financial barriers for companies looking to implement new technologies and green inititatives.
See more at http://mazumacapital.com/
Source Materials
SEIA policy overview of Treasury Grant Program: http://seia.org/cs/federal_issues/treasury_grant_program
Fact sheet on TGP and job creation: http://www.seia.org/galleries/FactSheets/Factsheet_TGP.pdf
Summary of solar projects awarded a Treasury Grant:
The Solar Foundation National Solar Jobs Census 2010: http://www.thesolarfoundation.org/sites/thesolarfoundation.org/files/Final%20TSF%20National%20Solar%20Jobs%20Census%202010%20Web%20Version.pdf
The 1603 tax credit has created flexibility for funding renewable energy projects and is fundamental for keeping the solar industry growing in
The TGP was created by the American Recovery and Reinvestment Act (Section 1603) to provide commercial solar installations with a cash grant in lieu of the 30 percent solar investment tax credit (ITC). President George W. Bush signed the 8-year ITC into law in 2008, but the economic conditions created by the global recession made it clear that few would be able to utilize the tax credit.
So far, the TGP has helped move forward more than 1,100 solar projects in 42 states. A report on the impact of the extension of the TGP by EuPD Research projected it would create 65,000 new U.S. jobs and 5,100 megawatts of solar capacity – enough to power more than 1 million households.
Mazuma Capital is committed to help the growth of renewable energy sources by breaking down financial barriers for companies looking to implement new technologies and green inititatives.
See more at http://mazumacapital.com/
Source Materials
SEIA policy overview of Treasury Grant Program: http://seia.org/cs/federal_issues/treasury_grant_program
Fact sheet on TGP and job creation: http://www.seia.org/galleries/FactSheets/Factsheet_TGP.pdf
Summary of solar projects awarded a Treasury Grant:
The Solar Foundation National Solar Jobs Census 2010: http://www.thesolarfoundation.org/sites/thesolarfoundation.org/files/Final%20TSF%20National%20Solar%20Jobs%20Census%202010%20Web%20Version.pdf
Wednesday, December 8, 2010
GREENBELT RESOURCES CORPORATION AND DIVERSIFIED ETHANOL ANNOUNCE PLANT TECHNOLOGY FINANCING PROGRAM THROUGH MAZUMA CAPITAL FOR CUSTOMERS
PASO ROBLES, Calif. , & BURNSVILLE , Minn.
Mazuma Capital is a leading national direct lender and will provide third party financing for qualified Diversified customers. Dedicated to maintaining a portfolio that includes renewable energies, Mazuma provides a sophisticated selection of finance programs that offer the flexibility necessary to meet the range of Diversified customers’ needs.
"Providing strong financing options for our customer seeking to own an ethanol plant is a critical avenue to continue the growth of the green fuels industry,” said Darren Eng, CEO of Greenbelt Resources Corporation. “When a partner like Mazuma takes notice and brings their expertise and success to the table, it strengthens customer confidence that ethanol from waste is a viable investment.”
“Our support for Diversified plant financing is another cornerstone for Mazuma in the renewable energy sector. By carrying risk and providing solutions to overcome financial barriers on emerging green technologies, more and more middle-market companies can now implement green initiatives. Promoting the adoption of emerging green technologies is a continued goal of Mazuma Capital and through our partner programs and extensive knowledge of new technology financing Mazuma will continue to enhance energy project offerings,” said Jared Belnap, Mazuma Capital’s President and CEO.
Diversified currently operates a waste-to-ethanol plant in Paso Robles California that conducts pilot studies on various feedstocks to expand a database of information to support continued growth of waste-to-ethanol plant production. Shareholders and prospective investors can register for email updates on company financial and operations announcements at www.greenbeltresources.com/investors.
About Greenbelt Resources Corporation
Greenbelt Resources Corporation™ is committed to developing and implementing technology that makes alternative fuel reliable, practical, and efficient. The company is dedicated to delivering business solutions with integrity and perpetually high quality control through intelligent support services. Greenbelt Resources subsidiary Diversified Ethanol Corporation™ provides end-to-end waste-to-ethanol solutions designed to establish a highly efficient installed network of customer-owned modular ethanol plants providing localized processing of locally generated waste into locally consumed ethanol. The company's ethanol plants are built around the award winning Butterfield Closed Cycle System™. Founded in 2001, Greenbelt Resources Corporation is a public company trading under the symbol GRCO.PK. For more information including how to contact the company, visit Greenbelt Resources on the web at http://www.blogger.com/Local%20Settings/Temporary%20Internet%20Files/OLKE4/www.greenbeltresources.com.
About Greenbelt Resources Corporation
Greenbelt Resources Corporation™ is committed to developing and implementing technology that makes alternative fuel reliable, practical, and efficient. The company is dedicated to delivering business solutions with integrity and perpetually high quality control through intelligent support services. Greenbelt Resources subsidiary Diversified Ethanol Corporation™ provides end-to-end waste-to-ethanol solutions designed to establish a highly efficient installed network of customer-owned modular ethanol plants providing localized processing of locally generated waste into locally consumed ethanol. The company's ethanol plants are built around the award winning Butterfield Closed Cycle System™. Founded in 2001, Greenbelt Resources Corporation is a public company trading under the symbol GRCO.PK. For more information including how to contact the company, visit Greenbelt Resources on the web at http://www.blogger.com/Local%20Settings/Temporary%20Internet%20Files/OLKE4/www.greenbeltresources.com.
# # #
Tuesday, December 7, 2010
Stepping Inside the Shoes of Medical/Healthcare CFO's- new challenges they face with proposed accounting changes
Mazuma Capital Company offers it's employees an extensive cross training program to become familiar with all aspects of the leasing industry. Last week we had an accounting expert come in and discuss the proposed accounting changes, and how that will impact businesses and leasing experts. As a followup to our training I reached out to professionals in industries across the board. Below is a summary of what challenges face CFO's in the medical/health care arena. I wanted to share his insights with you on the proposed accounting changes, and how they are preparing. I think it is critical for us to be thinking outside of the box on how to approach these CFO’s by understanding their mindset. I hope you find it helpful…
Thanks for your questions regarding the proposed accounting changes, and how they will affect medical/health care purchases going forward. Yes we have discussed the change concerning leases and how they will all be shown as Capital leases on the Balance sheet. It is a particular concern to us and other facilities like us that have large loans on their existing property and have to maintain Debt covenants per their loan documents. For example like Debt Service Coverage and Long term debt to capitalization. This will most definitely put expansions and additions planned for facilities on hold. Being able to maintain certain grants and financial benefits through the government come to us by keeping facilities profitable. By adding debt to our books, we will have to re-think our strategies to maintain these benefits we currently receive.
With that said we may have to look at delaying purchase of larger capital items and end up trying to pay cash for them. Smaller Capital items we will definitely pay cash.
Remember too that we operate several hundred Critical Access Hospitals (under 25 beds) that can take advantage of being reimbursed by Medicare at cost. Prospective payment hospitals cannot take advantage of that so it may even be more difficult for larger facilities when looking to purchase larger items, such as MRI and X-Ray machines.
Those are just a few of my thoughts. We will be interested to see what leasing companies put together as an offering for facilities like ours. Right now we are going with cash, but if there is a product that arises, I know that CFO’s all over the country will welcome it, if it can help the balance sheet.
Monday, December 6, 2010
Mazuma Capital Partners: Operating Leases and the Proposed Accounting Stand...
Mazuma Capital Partners: Operating Leases and the Proposed Accounting Stand...: "The big question looming over the proposed accounting changes, is how will big business deal with the disappearance of operating leases? I'..."
Operating Leases and the Proposed Accounting Standards
The big question looming over the proposed accounting changes, is how will big business deal with the disappearance of operating leases?
I'm not an expert, however I can tell you a few things for certain. First, most companies lessors and lessees are hiring accountants with heavy international experience in real estate. Second, the financial accounting impact is not going to result in competitive disadvantage since all companies must comply. Third, there will be differences in the overall adjustments experienced depending on how mature the leases are with respect to tenant occupying the space.
The valuation topic will pick up more steam and perhaps the number of options to renew included in the original lease will be reduced, basically the leases may be written differently. Overall there will be more transparency as to financing strategy in companies who have chosen to lease all locations rather than invest in capital assets - the wirelesss telecom industry generally leases all tower locations or builds to suit on leased land. There are many discussion brewing within this industry regarding how to move froward with new tower locations.
Most important at this moment is to prepare the shareholders for drastic changes in reported numbers. Applying the proposed changes will mean putting most of your leased assets on balance sheet, which will result in changes of businesses financial performance indicators, such as ROI. It will also affect the structure of earnings statement, as the expenses will be moving lower in your income statement. It is also important that some bank covenants may be affected. The preparation for such changes requires careful management of expectations, from both, shareholders and banks.
Bottom line, business will adjust and continue on, still exercising the option to pay cash or lease. The leasing industry will continue to grow and evolve with the changes likely to be put into effect (Mid- 2011). New products and offerings will still add value for businesses and will continue to be a great option to keep operating cash clear, as well as other advantages.
I'm not an expert, however I can tell you a few things for certain. First, most companies lessors and lessees are hiring accountants with heavy international experience in real estate. Second, the financial accounting impact is not going to result in competitive disadvantage since all companies must comply. Third, there will be differences in the overall adjustments experienced depending on how mature the leases are with respect to tenant occupying the space.
The valuation topic will pick up more steam and perhaps the number of options to renew included in the original lease will be reduced, basically the leases may be written differently. Overall there will be more transparency as to financing strategy in companies who have chosen to lease all locations rather than invest in capital assets - the wirelesss telecom industry generally leases all tower locations or builds to suit on leased land. There are many discussion brewing within this industry regarding how to move froward with new tower locations.
Most important at this moment is to prepare the shareholders for drastic changes in reported numbers. Applying the proposed changes will mean putting most of your leased assets on balance sheet, which will result in changes of businesses financial performance indicators, such as ROI. It will also affect the structure of earnings statement, as the expenses will be moving lower in your income statement. It is also important that some bank covenants may be affected. The preparation for such changes requires careful management of expectations, from both, shareholders and banks.
Bottom line, business will adjust and continue on, still exercising the option to pay cash or lease. The leasing industry will continue to grow and evolve with the changes likely to be put into effect (Mid- 2011). New products and offerings will still add value for businesses and will continue to be a great option to keep operating cash clear, as well as other advantages.
Friday, December 3, 2010
Taking the "ease" out of Lease
Operating Leases- A thing of the past- What the future holds…
By doing away with operating leases, new accounting rules could bring billions of dollars back onto balance sheets.Accounting-standards setters are under fire, again. The new leasing standard, proposed jointly by the Financial Accounting Standards Board and the International Accounting Standards Board, has been characterized as naïve, lacking value, and in need of serious reevaluation. The outcry comes not from a handful of opponents but from companies on both sides of common lease contracts — those that rent office space, copiers, or airplanes and those that own the assets.
At the center of the maelstrom is the “right-to-use” asset concept, the accounting mechanism that places leased assets and liabilities on the balance sheets of lessees, as if they owned the assets. That would essentially eliminate operating leases. Credit Suisse estimates that, within the S&P 500 alone, the volume of assets returning to balance sheets could surpass $550 billion.
Read entire article http://www.cfo.com/article.cfm/14540137/2/c_14540453?f=most_read
Thursday, December 2, 2010
How to determine the best approach to financing equipment
If your company is looking to expand, upgrade or just keep operations running smoothly, having the right equipment financing solution can affect your overall financial position. Financing is available for all sizes of equipment acquisitions, from technology upgrades to heavy equipment such as mining equipment or yellow iron. When seeking out an equipment financing source, it’s important for businesses to be prepared.
What are the first things to consider when financing equipment?
Look at your company’s capital position to determine what the right financing option is. Future cash flow should also be a consideration, as financing may affect the cash flow of the company both in terms of the productivity the equipment may provide and the required payments. It is also a good idea to consult with your company’s accountant to help determine the best option available for the business.
Before acquiring equipment, evaluate the value that the equipment is likely to bring your business. Business leaders then need to decide what financing product makes the most sense for the company, whether it is to lease the equipment, obtain a loan or use cash to purchase. Each option has its benefits.
A lease, for example, typically has little to no out-of-pocket expense up front, whereas a loan may require a down payment or equity injection into the equipment. Business leaders should also consider what impact a lease or loan will have on the company’s balance sheet. Some leases are off-balance-sheet financing, so the lease payment shows as an expense on the income statement rather than a liability on the balance sheet. If leased, the asset is not carried on the balance sheet either. This can be helpful for a company that has to comply with leverage or debt covenants because these ratios remain unaffected with a lease. Leases can also provide a company with more flexibility regarding the equipment. Some lease structures can include options to return the equipment at the end of the lease, upgrade the equipment, purchase the equipment, or renegotiate the lease. This can allow a company to keep up to date with changes in technology and may provide a competitive advantage in the market.
Can multiple pieces of equipment be financed?
Many business owners want the convenience of a single transaction covering multiple items instead of having separate transactions for various pieces of equipment. Equipment can be combined into a single transaction based on the equipment types, reasonable usefulness, or life. For example, if two pieces of equipment are being acquired, one with a useful period of 10 years and the other a useful period of five years, financing may be structured for seven years to combine the equipment and provide the convenience of one note to the borrower.
When should companies apply for equipment financing?
You should begin to explore financing options as soon as you think that you may need to acquire any new or used equipment. For a company that is expecting to grow and is forecasting an equipment need at a later point and time, equipment lines of credit may be a smart option to have in place in order to provide flexibility to purchase the equipment more efficiently on your own schedule.
Are there special interest rates or payment plans available for equipment financing?
In some cases, a company may obtain financing with no payment due for a period of time, designed to allow the company to get the new equipment up and running and producing revenue before a payment is due. Other seasonal businesses may opt for structured, or skip, payments, which allow the company to match payments to the seasonality of its business and can improve cash flow.
Do certain types of equipment financing offer tax advantages?
When a company purchases equipment, it may be able to take depreciation deductions over a period of time, which lowers its taxable income. Many companies over the last several years have also been able to take advantage of government stimulus programs that allow for accelerated depreciation of equipment or an increase in the Section 179 expense allowance. The interest payments of an equipment loan, and the entire lease payment for some lease structures, are also expensed on the income statement, which can lower taxable income. Before making a purchase, talk to your accountant or tax adviser to learn how specific tax incentives can work for your business.
http://mazumacapital.com
What are the first things to consider when financing equipment?
Look at your company’s capital position to determine what the right financing option is. Future cash flow should also be a consideration, as financing may affect the cash flow of the company both in terms of the productivity the equipment may provide and the required payments. It is also a good idea to consult with your company’s accountant to help determine the best option available for the business.
Before acquiring equipment, evaluate the value that the equipment is likely to bring your business. Business leaders then need to decide what financing product makes the most sense for the company, whether it is to lease the equipment, obtain a loan or use cash to purchase. Each option has its benefits.
A lease, for example, typically has little to no out-of-pocket expense up front, whereas a loan may require a down payment or equity injection into the equipment. Business leaders should also consider what impact a lease or loan will have on the company’s balance sheet. Some leases are off-balance-sheet financing, so the lease payment shows as an expense on the income statement rather than a liability on the balance sheet. If leased, the asset is not carried on the balance sheet either. This can be helpful for a company that has to comply with leverage or debt covenants because these ratios remain unaffected with a lease. Leases can also provide a company with more flexibility regarding the equipment. Some lease structures can include options to return the equipment at the end of the lease, upgrade the equipment, purchase the equipment, or renegotiate the lease. This can allow a company to keep up to date with changes in technology and may provide a competitive advantage in the market.
Can multiple pieces of equipment be financed?
Many business owners want the convenience of a single transaction covering multiple items instead of having separate transactions for various pieces of equipment. Equipment can be combined into a single transaction based on the equipment types, reasonable usefulness, or life. For example, if two pieces of equipment are being acquired, one with a useful period of 10 years and the other a useful period of five years, financing may be structured for seven years to combine the equipment and provide the convenience of one note to the borrower.
When should companies apply for equipment financing?
You should begin to explore financing options as soon as you think that you may need to acquire any new or used equipment. For a company that is expecting to grow and is forecasting an equipment need at a later point and time, equipment lines of credit may be a smart option to have in place in order to provide flexibility to purchase the equipment more efficiently on your own schedule.
Are there special interest rates or payment plans available for equipment financing?
In some cases, a company may obtain financing with no payment due for a period of time, designed to allow the company to get the new equipment up and running and producing revenue before a payment is due. Other seasonal businesses may opt for structured, or skip, payments, which allow the company to match payments to the seasonality of its business and can improve cash flow.
Do certain types of equipment financing offer tax advantages?
When a company purchases equipment, it may be able to take depreciation deductions over a period of time, which lowers its taxable income. Many companies over the last several years have also been able to take advantage of government stimulus programs that allow for accelerated depreciation of equipment or an increase in the Section 179 expense allowance. The interest payments of an equipment loan, and the entire lease payment for some lease structures, are also expensed on the income statement, which can lower taxable income. Before making a purchase, talk to your accountant or tax adviser to learn how specific tax incentives can work for your business.
http://mazumacapital.com
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