Consider Leasing for Heavy Equipment

In need of new equipment, but not ready to use all your capital to purchase it? 
Leasing is a GREAT solution.  Why you ask?

Not only does leasing help you conserve your cash, it also ensures that you don't wind up paying for equipment that becomes obsolete or unsuited for your needs. And think about this: if you need the equipment only for a short time or special project, leasing saves you the hassle of having to be both a buyer and, then later, a seller. 

Mazuma Capital will work on crafting a lease to help minimize your federal income tax liability, maximize your accounting objectives and customize cash-flow solutions to your budget.  Our Associate Structuring Group has expertise in all these areas and will help guide you to the best structure for your situation.

From technology and medical equipment to renewable energies, leasing is a great option. There's no limit to the type of equipment available for leasing. Even a one-person operation can lease equipment. Unlike loans, leases do not require a down payment. You're required to pay for the use of the equipment during the lease term. You may also be responsible for routine maintenance and other costs as well. When the lease expires, the equipment goes back to the leasing company, you can opt to purchase however you choose to complete your obligation.

Lease payments are considered an expense that you deduct from your business income, just like any other expense.

Flexibility is another leasing feature. If customers or the competition demand that you always have the latest technology, a short-term lease can help you get what you need and keep your cash in other uses. Another plus is that most leasing companies offer lease-to-own plans if you determine that purchasing the equipment is in the best interests of your business.

The Equipment Leasing and Financing Association, a trade group of leasing companies and financial services companies, has a special section that explains the basics of leasing at its website, elfaonline.org. You'll also find guidance on leasing options and benefits, loan/lease differences, leasing terminology.

Mazuma Capital is a national direct lender, financing $100K-$10MM transactions. 
Mazuma Capital offers amazing vendor services and broker programs as well. 
Contact Mazuma at info@mazumacapital.com 801-816-0800.

• Tax oriented leases “true or guideline” leases
• Non-tax oriented leases
• Loan, conditional sales contracts, balloon, and other purchase option structures
• Operating leases
• Lease facilities
• Sale & lease back options
• Step up/step down leases
• Seasonal leases
• Differed payment options
• Bundled lease products
• Non-tax operating leases, and other tax/GAAP products

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.

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:

• 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.

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.