Mazuma Capital Funds $12.5m Transaction For Thermal Coal Producer

DRAPER, UTAH, February 17, 2012 – Mazuma Capital, a leading national direct lender, today announced that it has funded over $12.5 million dollars for a U.S. high quality thermal coal producer.

The coal producer sought several funding sources that had expertise in funding newer companies. They had many challenges present in the transaction from the type of equipment, to the documentation aspect.  There were also several factors that affected the credit due to recent mergers.  Due to these challenges the financing was denied through several well-known banks and vendors. Mazuma Capital was ultimately the right financing source to help structure and fund the transaction.

A favorable structure was an important objective in order to provide cash flow, the appropriate tax, and accounting factors to meet the financial goals of the company. The structure also needed to provide the ability to expense the payments over time.  Mazuma Capital was able to secure an approval in a timely fashion while meeting the needs of the company; from the terms to the unique structure.

“This is a newer company that is still in the midst of a huge growth phase.  Therefore, this transaction produced several challenges in finding a suitable financing structure to meet the goals of the company.  The lack of history, recent buyouts, and mergers made this a more difficult credit.  Our team worked hard to develop a perfect balance with the right structure, and suitable terms for the company,” said Jared Belnap, President and CEO of Mazuma Capital.

About Mazuma: Mazuma Capital is committed to our client’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 Utah Best Practices Alliance. Mazuma Capital subscribes to the ELFA Code of Fair Business Practices and NAELB code of ethics.

Media Contact:

Julie Fuchs

801-816-0800 Ext. X291

jfuchs@mazumacapital.com

Understanding Equipment Lease and Finance

Anyone who runs a business should understand how equipment financing can be as beneficial as it is. Here are a few things to see when getting equipment financing to work. These should be reviewed because they show just how effective financing can be for any type of business that needs to get its items sooner without having to pay for everything right up front.
The first part about equipment financing is that it works to ensure that a line of credit is available for a business. This is where a business can easily pay off a certain piece of equipment over a period of time. This can be done while the new equipment is used to create more profits for a business to work with.
Also, the money that is used will be covered in full in a plan. This means that all costs for building and delivering the equipment to a place will be covered. This can work to make it so anyone can get a good profit off of something that it needs for its operations.
Also, the payments in equipment financing will stay the same over time. This may be used to keep a business from suffering from the dangers of inflation. Inflation can make some equipment items higher over time. Using equipment financing will help to protect the business from losing money as the value of something goes up. This is all thanks to how the equipment will be of the same price.
Also, many of the equipment financing payments that a business makes can be tax deductible. This may be used to ensure that the business can save on tax payments. A big point of this involves how these payments might involve interest in some cases.
Of course, the best benefit of this plan involves how it will get a business to receive what it needs sooner. A business will get something quickly without having to wait too long to get it to work. It will be able to get something out to a business as quickly as possible, thus making it easier for the business to get profits off of the equipment that it needs. This may be beneficial for the bottom line of the business and even the customers who want to get this out of it. This is all thanks to equipment financing.
These are all good reasons why equipment financing is such a good thing to get into. This type of financing can be used to get any business to receive the money that it needs for different kinds of items that it needs in order for it to be more profitable and successful. Capital lease financing provides many flexible options that can meet business and financial goals.  Be sure to watch for this when getting any type of business to become more successful and able to operate properly.

BANKS IN NEED OF REFORM-

Economists are concerned that recent reform will not be enough to prevent the need for more bailouts.  In recent months, regulators around the world have taken steps to ensure that banks will be able to weather tough times. New international rules will require big global banks to hold more equity to protect their depositors and other creditors. In the U.S., lawmakers have adopted measures intended to mitigate risk at big banks and keep close tabs on potential threats throughout the financial system.

Over the past few days, though, economists here offered many reasons why the recent banking reforms fall short. Among their concerns: The new capital requirements aren't tough or simple enough, there is too much uncertainty about how governments will deal with distress at the biggest lenders. It seems that there has been little done to prevent the kind of crisis that could occur if trouble broke out at many smaller institutions, such as hedge funds.

Recent history suggests that a capital requirement of 7% won't be enough to fend off bailouts. Many banks that required government support during the latest crisis, including the Citigroup and Royal Bank of Scotland, whom both had capital levels exceeding 7% just before trouble hit in the third quarter of 2007.

Another issue is banks' excessive reliance on short-term borrowing to finance their activities. Tougher rules could push more financial activity away from banks into other areas that don't face the same regulations. The so-called shadow banking sector, which includes everything from hedge funds to derivative markets, already plays a larger role in credit markets than traditional banking.

New financial rules in the U.S. provide regulators with more power to oversee the shadow banking sector, and shed light on it by creating incentives to shift more derivatives trades into places where they can be monitored. But regulators have yet to work out exactly how they will identify dangerous situations in which many players have become exposed to similar risks.

*The capital equipment leasing sector offers attractive alternatives for those seeking finance options.  With tax incentives still available and many options to fit the financial goals of customers, leasing is something that is worth looking into for businesses of all sizes.  The economy has not been kind to businesses over the past few years.  There are many once profitable companies who are finding it harder and harder to secure financing, and banks can't look at the external factors that have left a mark on businesses. When seeking financing for new/used equipment many businesses look to Mazuma Capital.  A lease originator, Mazuma Capital is a funding source that works for businesses, promotes growth and profitability.

2011 Looking Bright for U.S. Company Growth and Purchases

Companies are looking to expand and that means new equipment purchases in the near future.  This outlook is bright coming off of two tough years in the equipment leasing industry.  Slow growth combined with economic uncertainty was not a good combination for the leasing industry.  There seems to be a bright light at the end of this tunnel. Forecasts seem promising and the tax benefits for companies to buy are enticing.

Investment by U.S. companies in equipment and software in the third quarter was up 15% from a year earlier to $1.08 trillion, nearly matching prerecession levels, government data show.

Corporations received more incentives to invest Dec. 17, when President Obama signed into law a tax compromise reached by Congress that, among other things, lets companies deduct from taxable income 100% of certain types of investments in 2011.

It seems that big U.S. companies have cleaned up their balance sheets and, appear to be flush with cash.  These U.S. companies are open to using the cash in 2011 on factories, stores and even hiring. Companies worked hard the last few years and especially in 2010 to preserve cash, and are slowly coming around to spending it.  According to Bloomberg Business U.S. companies are turning around and starting to feel comfortable with the economic outlook.

The maker of specialty glass and ceramics is investing $300 million to expand its research and development center near its headquarters in Corning, N.Y., adding about 100 researchers and Ph.D.s. It also is spending $800 million on a liquid-crystal display factory in China and building more LCD capacity in Taiwan.

Engine maker Cummins Inc., meantime, plans to add about 2,500 U.S. jobs in 2011, many requiring engineering or other technical skills. In 2010, Cummins raised its U.S. employment by only 185 people. The company has about 14,800 U.S. employees.

At the end of the third quarter, cash held by 419 nonfinancial companies in the Standard & Poor's 500 list was up 49% from three years ago—before the start of the recession—while total debt was up a more modest 14%, according to an analysis by The Wall Street Journal.

The good news: The improvement in just the past year was even more pronounced: cash was up 10.6% from the 2009 level, while debt grew 2%.

Profits are higher, too, after companies slashed their work forces and closed less-efficient operations. Total U.S. corporate profits in 2010's third quarter rose 26% from a year earlier to $1.64 trillion, the highest in four years, according to government data.

With this stronger foundation, coupled with new confidence about the global economy, corporations are looking to expand.  Continued growth in the mining and energy businesses around the world is expected to fuel a wide range of U.S. companies. IT spending seems to be on everyone’s mind and will head up the priority spending list this new year.

Source:

Standard & Poors Capital IQ

Bloomberg Business

Wall Street Journal

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.

Just as the market is ripe for first-time home buyers, an overabundance of supply and a dearth of demand have created ripe opportunities for companies to invest in new industrial machinery. But according to Frank Peretore, an attorney who focuses on equipment leasing, and who sits on the board of directors for the National Equipment Finance Association, companies might be stabilizing and the banking industry is returning to health, but that still doesn’t mean large-scale investments are taking place.

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

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.