ELFA May Pull Support

ELFA might pull support for lease-accounting project 
ELFA said it might withdraw support for development activity related to the lease-accounting standard. President and CEO William G. Sutton said the proposal is "fraught with difficulties" in a letter to the Financial Accounting Standards Board and the International Accounting Standards Board. "Unfortunately, since we do not believe the Boards have appropriately resolved the question of lessee cost allocation, we are seriously considering withdrawing our support for the issuance of a final standard based upon the tentative conclusions reached in the recent redeliberations," Sutton wrote.

Read entire letter on ELFA.org/news

Why offer financing?

As a Vendor, Distributor of Manufacturer here are five key reasons to consider offering financing to your customers.

1.  It’s a Growing Trend

A study by the Equipment Leasing & Finance Foundation shows that among manufacturers who offer financing for their equipment, approximately 30 percent of all equipment sales are financed by the manufacturer or its finance partner.  That rate is increasing each year as the financing division plays a more important role in the organization’s overall strategy. According to the same study, of all manufacturers who offer a financing option to their customers, 67 percent expect equipment financing will increase as a percentage of their manufacturer sales.  The growth of this trend is largely due to the benefits derived from offering financing and its business impact.


2. It Builds Customer Relationships
Building customer relationships and improving customer retention are key benefits of establishing a finance capability.  It allows you to build rapport and trust in addressing customers’ financial issues, as well as answering their questions about the equipment.  It also extends the relationship into future transactions since it provides opportunities to offer advice and assistance with end-of-lease/financing term decisions such as whether to purchase new or existing equipment.  In addition to developing follow-up selling opportunities, it helps build long-term relationships for repeat business.

3.  It Provides Incremental Income

Providing a financing option can provide benefits including facilitating equipment sales and generating additional revenue. In addition to an increase in interest income, additional revenue may be generated if the equipment can be sold for more than its remaining book value at the end of lease.

4. It Creates Value
Offering financing creates value for your customers by saving them money, getting them better terms and helping them stay current.  One way they save money is through the manufacturer's knowledge of the equipment and ability to resell pre-owned equipment.  This may enable the manufacturer to take additional risks on the residual value which lowers the customer's monthly payment.

Customers may get better terms when they purchase equipment that might be otherwise delayed because of lack of financing elsewhere, and the manufacturer is willing to provide better financing terms.  Additionally, value is created when a customer takes advantage of leasing/financing since it eliminates the risk of them owning equipment that is technologically obsolete.

5.  Industry Expertise is Available to Assist You
An important consideration about offering financing is that there is plenty of assistance that can help you determine and establish the captive financing option that’s appropriate for your business.   The non-profit Equipment Leasing and Finance Association has an online Manufacturer & Vendor Resource Center which contains strategic, legal, financial and operational topics manufacturers should consider when developing or enhancing their finance capability.  The website also contains searchable databases to find financing partners and service providers to assist you.

Increasing knowledge of captive financing among small and medium-sized manufacturers and vendors will prepare the way to greater growth opportunities for their businesses and the economy.

Emerging Leader- Equipment Lease Finance

Jared Belnap, President, Mazuma Capital

By Abigail Sutton, Editor

During his tenure in the leasing industry Jared Belnap has personally closed over $150 million in lease transactions and has garnered extensive experience in credit, syndication, sales, legal, documentation, and executive management. Belnap helped create Mazuma. First, as a co-founder and private investor, then, serving as vice president of sales/corporate secretary through December 2007 and in his current position, as president since January 2008. His performance and experience have been invaluable in the formation and implementation of Mazuma’s infrastructure, website development, marketing, documentation, sales and sales management, formation of key strategic relationships and other important functions within Mazuma’s framework. Belnap is an introspective leader who achieves success through calculated risk, for this and more we chose him as February’s Emerging Leader.

Teri Gerson, President & CEO of Executive Solutions for Leasing and Finance, Inc. had this to say about Belnap’s skill and leadership, “Jared Belnap has impressed me with his commitment to analyzing before pulling the trigger.  This saves tremendous back pedaling, both with market entrees, employee hires, and sales force structure. He is thoughtful, honest, and fair in all of his dealings, and always takes a broad view without sacrificing practicality and reality relative to his company.”

Where did you see the need for Mazuma Capital? 
I was working for a Lessor that had a great model, but I felt there were a few challenges with its execution and a top-heavy management structure.  I thought that with a few minor tweaks to the model, an A+ team and the right partners and resources, we could really build something great.  When the timing seemed right, we took the plunge.  By design, we wanted to start small and not “piggy-back” off an existing bank or finance company.  In the beginning, there were only four of us and we grew it from there. We really worked hard in those first few months to build a solid foundation for the company. We knew we were on to something great and we knew it would grow.  We wanted the policies, procedures, product, people and model to be built around larger volumes in the future and we built up to that.

When you were working in the automotive industry did you ever imagine being where you are now, as co-founder and President of a middle-ticket lender with $150M in closed transactions? How would you describe the growth and evolution of your career?

Well, Mazuma has actually funded almost $200M to date, but who’s counting? Coming from the automotive industry, I can honestly say that I never imagined I’d be in equipment leasing today.  I can say with relative certainty, that even from a very early age, I wanted to own my own business and be in charge of my own destiny.   I’ve always had an entrepreneurial spirit, and when I found the right opportunity, I took it.

I would describe the growth of my career as an adventure!  It’s all about the journey… I’ve tried to learn from everyone I can to incorporate the best knowledge, experience, and attributes of those I’ve brushed up against over the years.  I’ve tried to implement them into our business in meaningful ways.  I’ve learned quite a bit of “what not to do” in many situations, which sometimes has turned out to be more important than knowing “what to do” in many circumstances.

Your company slogan seems to be “building relationships by delivering on commitments.” What does this mean to you?  

We’re very customer centric here, especially in the last few years, where competition has become fierce. It’s easy to tell a customer what they want to hear to win a deal, or take it off the street. It’s much harder to address the concerns, if there are any, head-on and lay out a realistic picture for challenging situations.  We’d rather lose a deal than attempt to meet unrealistic demands or expectations.  This statement to me means “straight forward talk and straight forward results.”  When we issue a proposal, we want to deliver on that exact product in a timely and painless way for everyone involved.  We are attempting to build a solid reputation one customer at a time by delivering and exceeding customer expectations.

What has brought your success thus far, in the middle-market leasing arena? 
In a nutshell, it is our people, our product, and our process.  We constantly look for additional sources and partners that can expand and enhance our product offerings.  This allows us to stay competitive and take calculated risks that others sometimes can’t or won’t.  We’ve taken great steps to build an executive team and create a corporate culture that knows how to execute our model efficiently and consistently.  We habitually look for ways to improve and we are always attempting to streamline our process to avoid costly delays or mistakes.

Explain your flat management structure. What else makes you a unique lender in the market? What are your strengths in the marketplace? 
No one in our company is more than three tiers removed from our Committee.  We aren’t the biggest ship in the sea, but being smaller, we’re nimble and efficient.  Decisions don’t wait a week for a committee meeting, if it’s important, it get’s addressed. We have the ability to implement change quickly and become proactive rather than reactive, whether that is changes within the industry and verticals or legislation.

I think we’re unique in that we have a proven model and we stick to it.  When the spigot of funding turned off in late 2008, we went into some of the best times for our company.  We lent money when no one else would and we’re still doing that today! I think that risk is something you can never get away from, but if it’s calculated, it’s manageable and predictable.  We continue to invest equity into lease deals and carry residual risk on some equipment that many of our competitors just can’t get comfortable with.  This coupled with our ability to understand complex credits and situations has allowed us to thrive.

How do you utilize the web and social media for your business?
We’ve taken off with this concept.  Using the web and social media allows us to start conversations with people and uncover needs that otherwise would not have surfaced. We have secured several transactions though our efforts, and social media has given us the opportunity to extend our reach and influence.  We have several blogs and actively contribute articles and ideas to the marketplace through various social media sources.  The cost for us in generating a lead is enormous, and thru SEO and social media sites like Stumble Upon, Digg, Twitter, Facebook, LinkedIn and other online campaigns we’re starting to see a steady flow of business coming directly to us.  We really feel that social media is here to stay and will play a big part in our branding, growth and longevity.

What is your biggest market challenge and how does Mazuma tackle it? 

Our biggest challenge has always been finding the right funding partners who understand our business model and clientele.  That said, much has changed for us here and we’re much more diversified in funding partners than we used to be.  We will continue our efforts to form strategic, long lasting partnerships with funders, vendors, and partners.

What makes a good leader? How would you explain your leadership style?

A good leader is someone who leads by example, from the trenches, not from the tent.  I’m not afraid to get my elbows dirty on an issue or circumstance that might seem insignificant.  I think my management style is all about being a good influence and example to those I work with.  I’m also a strategist and a visionary, and there are always other solutions to difficult problems and unique ways to implement them.  I try my best to encourage and motivate our staff to look for alternatives; stay focused, and see all issues and problems through to satisfaction.

Who do you look up to professionally in or out of the industry and why? Do you/did you have any mentors? Do you have any words of wisdom to those starting out in the leasing industry?

I have a friend and mentor who’s been very successful in the leasing industry.  He’s retired now, but I lean on him for difficult decisions or special help when I can.  He’s built, run, and sold a multi-million dollar enterprise and I respect his intuition and perspective.  He’s a great man of high moral and ethical character, which helps guide me through tough decisions to do the right thing.  We are currently looking to add him to our Board, which we know will be a fantastic move!

This is a difficult and challenging time for anyone to start a new venture in the leasing industry, from the proposed accounting changes and adoption of IASB standards, tightened credit perimeters, to the overall macro-economic conditions, to name a few… That said, if you can form a niche’ that fills a bona fide need, there’s power and genius in taking that first step.  If you find a good team, a great model, and can execute efficiently, I’d say go for it!

Care to share any of your professional or personal goals for 2012?

Sure! On the business front, we hope to complete a software optimization platform to further streamline our business by year-end. This will include electronic signature and on-line asset and process management for our customers.  We also are expecting to deepen our Vendor Program department and have set $10M as a goal for funded transactions through this leg of our business.  We are off to an incredible start this month, it looks like we should come in somewhere around $8M and hope to secure around $65M in new Lease Originations by FYE 2012.

On a personal note, I’ve always tried to challenge myself to improve my physical, mental, and spiritually minded objectives.  So, I took the plunge this year and signed up for an Ironman Triathlon.  Crazy, I know, but it is something that’s been on my tick list.  I’ve run several marathons and have completed many century rides on the bike but swimming is something new.  If I can survive the swim, I just may finish!

To view earlier Emerging Leader features visit: http://www.worldleasingnews.com/category/emerging-leaders/ or to recommend a lessor as an Emerging Leader e-mail abigailsutton@worldleasingnews.com.

Large American Coal Producer seeks out Mazuma Capital in Funding Fuel-Efficient Equipment to Enhance Production

DRAPER, UTAH April 2012–Mazuma Capital, leading national direct lender, today announced it has funded $7.5M so far against an overall $9.4M commitment for a large American coal producer.

The coal producer sought an experienced funding source with in-depth knowledge of the mining industry. There were many challenges present in the transaction from the type, use, and locations of equipment to the challenges present with an evolving global coal market.  There were also several factors that presented additional hurdles with the credit due to recent growth and acquisitions.  Because of these challenges the financing required innovative structuring components along with solving the coal producer’s funding objectives.

The company was concerned that the cash flow of the leases needed to allow for growth initiatives and to provide the ability to expense payments over time as new environmental campaigns were launched. Moreover, Mazuma Capital was able to secure the approvals and work with the company to achieve these funding objectives.

“This coal producer has a very large footprint in the mining industry and they continue to draw upon Mazuma Capital’s unique market positions and access to funds to propel their business forward. Through our exclusive access to capital, and aggressive structures we’ve been able to provide significant value year after year for this company”, said Kelly Holladay, Account Executive at 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

# # #

Mazuma Capital Adds EVP/General Counsel

DRAPER, UT, March 13, 2012 -- Mazuma Capital is pleased to announce the hiring of Todd K. Jenson as EVP/General Counsel.  “The hiring of in-house General Counsel is a consequence of growth, new ventures and upcoming strategic partnerships,” said Jared Belnap, CEO and President of Mazuma Capital. "We are excited about adding Todd to our executive team and look forward to leveraging his experience, and leadership in expanding our footprint in the middle-market leasing segment.”

 “I am excited to join Mazuma Capital.  They are a talented group, and consequently, Mazuma is growing quickly in their core segment.” said Todd Karl. Jenson, newly appointed EVP/General Counsel of Mazuma Capital.

About Todd Karl Jenson

Todd received his Master of Business Administration from the University of Utah, David Eccles School of Business in 2002.  Todd attended Willamette University College of Law in December 2004, and completed his final  year of law school at Brigham Young University (BYU), J. Reuben Clark Law School. The majority of his legal career has been spent between his former employer Republic Bank Inc. as in-house Corporate Legal Counsel, in private practice at two small and mid-size law firms, and at the Office of the Utah Attorney General.  Todd’s expertise at Republic Bank, Inc. focused on commercial litigation, collections, secured lending, bankruptcy, creditors’ rights, and the Uniform Commercial Code.  During his tenure at the Office of the Utah Attorney General Todd represented the Utah Labor Commission in State and Federal Courts handling legal matters in the areas of OSHA, wage claims, discrimination and fair housing.  In private practice, Todd worked in the areas of commercial litigation, insurance defense, personal injury, property law, probate, and municipal law.

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

# # #

Equipment Leasing is on the Rise

U.S. companies are investing more in equipment than they were a year ago. The Equipment Leasing and Finance Association said its monthly index of business volume rose 21% to $5.1 billion last month compared with January 2011. The rise reflects moves by companies to replace computers, vehicles, construction equipment and other assets as the economy improves. It also reflects thawing credit markets, the association said.

Source: WSJ.com, ELFAonline.org

Medical equipment leasing holds steady

It may come as a surprise in the current economy, but prospects for medical equipment leasing are looking good – and not just compared to other vertical markets.

And those figures aren’t small. The U.S. Bureau of Economic Analysis estimates that businesses invested about $81.6 billion in health care equipment in the year 2010. With approximately 62 percent of all U.S. health care equipment being financed, that brings the health care equipment finance marketplace to an estimated $506 billion in 2010, according to the Bureau, as reported by the Equipment Leasing and Finance Association (ELFA).

According to a 2011 survey by the Independent Equipment Company together with ELFA, medical equipment has been rated – for the sixth year in a row – as the type of equipment finance companies anticipate to have the greatest total dollar amount of new business volume.

Recent statistics bear this out; ELFA has found that member companies financed for medical imaging and electronic devices increased from 4.4 percent in 2009 to 4.5 percent in 2010.

This is not a decades-long trend, according to Global Industry Analysts (GIA). The research firm notes that medical equipment lease financing in the United States had been relatively low until five or six years ago, due to lack of awareness about leasing, reduction in reimbursements, and heavy regulations influencing physician referrals. But recently, note the researchers, health care institutions have come to see leasing medical equipment as an affordable and quick solution that saves working capital, provides options for purchasing the equipment, and facilitates upgrades to new technology.

IT is the “it” product

While medical equipment leasing has been stable, the software arena has experienced tremendous growth, particularly with the added interest in electronic medical records (EMR). “Every year over the past three years, medical leasing in IT has almost doubled,” explains French. “The tax incentive is definitely driving the market. It’s a phenomenon.”

The trend is expected to continue. GIA anticipates that medical IT equipment leasing and rentals will reach $56 billion by 2017. Interestingly, GIA notes that Europe is the single largest regional market for medical equipment rental and leasing worldwide, with the practice being particularly popular in Germany, France, and the United Kingdom. The United States is next in line in market share.

Read entire article: http://www.dotmed.com/news/story/16907

Survey: US Capital-Equipment Financing Strengthened In August

Equipment Leasing and Finance Association survey shows rising loan and leasing activity for capital equipment

--Choppy month-to-month activity attributed to concerns about U.S. economy

--Delinquent loans and leases down from a year ago

  

Financing volume for business equipment grew 33% in August from a year earlier, easing concerns, at least temporarily, that spending on capital equipment is weakening.

Respondents to the Equipment Leasing and Finance Association's monthly survey said they financed $5.7 billion of new equipment last month, compared with $4.3 billion in the year-earlier period. August's volume was flat with July. From January through August, survey respondents provided financing for $43.9 billion of equipment purchases, up 25% from the same period in 2010.

The recovery in the $521-billion-a-year commercial leasing and financing industry from its 2009 doldrums appeared to regain some momentum last month after activity plunged in July following a spike in June. The finance association attributed the recent choppiness to increasing uncertainty about the performance of the U.S. economy.

"It is clear from less-quantitative reporting that equipment-finance executives still believe the storm clouds hovering over our economy have not yet dissipated," said William Sutton, president of the Washington-based association. "Current and future business performance will continue to ebb and flow."

Nevertheless, credit-quality metrics measured in the survey showed across-the-board improvement last month. Credit standards eased in August as the approval rate for loans and leases rose to 77.6% in August from 76.3% in July. Of the companies participating in the survey, more than 60% reported that they submitted more transactions for approval during August, up from 59% in July.

Loans and leases past due by more than 30 days amounted to 2.5% of survey respondents' net receivables in August, down from 4.3% a year earlier and down from 2.7% in July. Loan charge-offs amounted to 0.6% of respondents' net receivables last month, down from 1.3% in August 2010 and down from 0.7% in July.

Survey respondents continued to cite construction, trucking and printing as the industry sectors within their loan portfolios that are underperforming.

The 25 respondents to the Washington association's survey included banks Wells Fargo & Co. (WFC), Bank of America Corp. (BAC) and Fifth Third Bancorp (FITB); independent financing companies including CIT Group Inc. (CIT); and finance units for manufacturers Caterpillar Inc. (CAT), Deere & Co. (DE), Volvo Group, and Dell Inc. (DELL)

FASB, IASB Revert to One Model for Lease Accounting

Never mind, the Financial Accounting Standards Board has decided on its plan to allow two different accounting methods for leases. They like their original, single-model idea best after all.
In deciding how companies should account for leases, the FASB and the International Accounting Standards Board initially proposed all leases would be treated like financing transactions, with companies recognizing a liability to make lease payments and putting an asset on the balance sheet reflecting the right to use the asset for the term of the lease. Both would be measured at the present value of the lease payments. The liability would be measured in subsequent periods using the effective interest method while the asset would be amortized or written down based on the pattern of consumption and the expected future economic benefit it would produce.
Companies swallowed the treatment for long-term lease agreements that look and feel a lot like the financed purchase of an asset, but they cried foul for short-term leases that look and feel more like simple rental agreements. FASB and IASB acquiesced and agreed they would work on a two-model approach.
The boards determined “finance leases” would be treated like installment purchases, much the way today's capital leases are booked in the financial statements. “Other than finance” leases would be treated like today's operating leases, with an even amount recognized as expense each period over the life of the lease. Such a recognition pattern would more closely match the actual cash flows as companies pay down their lease obligations, companies argued and the boards conceded. FASB and IASB instructed their staff to define the criteria that would be needed to distinguish between the two types of leases.
Now, however, the boards have reversed course and decided they won't establish a two-model approach. In a joint meeting last week, FASB and IASB said they're going to stick with their original idea as described in the exposure draft for a single model for all leases. They promised to give some further thought to how to address concerns about the presentation and disclosure of information related to amortization, interest expense on the liability to make lease payments, total lease expense, and lease payment cash flows.
The lease project is one of four key accounting standards FASB and IASB are developing jointly to try to bridge major differences between U.S. and international accounting rules. The board continue to mull over how they want map out the accounting requirements for lessors as well.

See entire article:  http://www.complianceweek.com/fasb-iasb-revert-to-one-model-for-lease-accounting/article/203665/

Accounting update from ELFA

May 23, 2011: At a joint meeting on May 19, the FASB and IASB reversed recent tentative decisions in the lease accounting project as follows:

• Lessee P&L - No leases will be allowed straight line rent expense treatment but rather all leases will have be front ended lease costs equal to interest expense and depreciation of the right of use lease asset
• Lease Term - Will not be current GAAP but rather will be a lower threshold including consideration of strategic importance of asset, lessee intent and behavior in renewing in the past and will be adjusted when there are changes in judgment or circumstances
• Incremental Borrowing Rate - Lessee will use its new incremental borrowing rate to calculate adjustments when lease payment assumptions change
• Short-Term Leases - Will not be exempt from capitalization
• Lessor Accounting - Still undecided between only using a derecognition method or having both an operating lease method and a derecognition method. They are considering accreting residuals in the derecognition method.

More Accounting News From the ELFA

ELFA Issues Joint Letter on Accounting for Lessors to IASB, FASB

ELFA and the global leasing industry have issued a Joint Letter on Accounting for Lessors to Leslie Seidman, acting chairman of the Financial Accounting Standards Board, and David Tweedie, chairman of the International Accounting Standards Board.
The letter is signed by the Equipment Leasing and Finance Association (ELFA), Leaseurope (the European leasing and automotive rental federation), the Japanese Leasing Association (JLA), the China Leasing Business Association (CLBA), the Canadian Finance and Leasing Association (CFLA), the Australian Equipment Lessors Association (AELA), the Australian Fleet Lessors Association (AFLA) and the Truck Renting and Leasing Association (TRALA).
The joint letter explains that the global leasing industry has followed the Boards’ recent re-deliberations on the Leases project with great interest. In light of recent Board discussions, the industry wishes to reiterate its common views on lessor accounting before the Boards progress further in their re-deliberations on this topic.
The letter outlines the industry’s position on accounting for lessors as follows:
1. The de-recognition model, with accretion of residual assets, must be the general approach for lessor accounting. This will allow for manufacturing/sales profit recognition for manufacturer/dealer lessors, which we believe to be an entirely appropriate outcome.
2. The performance obligation model lacks conceptual grounding and fails to depict the economics of leases. It must be abandoned.
3. New guidance for lessors must be issued simultaneously with new guidance for lessees and be given full and proper consideration in order to achieve a high quality final standard.
Read the Global Leasing Industry Joint Letter on Accounting for Lessors.
For more information, visit the ELFA Lease Accounting page.

What Segments of Equipment Leasing Have the Most Optomistic Outlook?

According to ELT Magazine there is considerable improvement in the industry overall from last year.  According to a recent study done by the ELFA the industry is returning to prerecession levels and a greater volume of equipment is expected to be leased in 2011.  So what industries are leading the comeback?  Here they are ranked from highest-rated to lowest-rated.
Medical
Oil/gas/energy
Machine tools
Truck/Trailers
Hi-Tech/Computers
Aircraft
Rail
Container
Construction
Telecom
Marine/Intercoastal
Automobiles
Plastic
FF&E
Printing

Medical Equipment has been leader of the pack when it comes to growth the last 6 years.  With the rising demand it is expected to be a 57 Billion dollar industry by 2017.  The medical industry's preference for leased equipment is fueled by the "baby-boomer" generation.  There are some challenges facing health care growth including the "reform" proposals, various potential reimbursement cuts, rules and other things aimed at the industry.  All of these factors make used equipment more and more attractive.

Oil/Gas/Energy markets are improving, due impart to optimism and opportunities for "clean energy" technology and equipment.  There is also a drilling boom in natural gas and oil that has given solid increased value to drilling rigs.

Machine Tools are up thanks to the turnaround in the domestic and international manufacturing sectors.  This market has seen an 85% growth, which is linked to the financing of smaller ticket sizes and one-off deals.  The secondary market demand for machine tools has also played a part in the growth of this sector.

Trucks/Trailers experienced  the greatest overall improvement from last year.  Both new and used trailers increased as the freight tonnage index steadily improves month over month.

Hi-Tech/Computers showed a small decline, but demand continues to grow.   The industry has low margins and demand for upgrades that were put off the past few years will begin to catch up and add to growth.

Aircraft has shown some growth in the commercial structure and the private sector demand is on the rise, particularly the business jet segment.  We will keep our eyes on this industry and measure the effects of the rising price of fuel and effects it will generate.

Rail is still soft, but the demand for over 300,000+ rail cars is creating some buzz.  This market should see a steady and consistent turnaround.

Containers seem to be experiencing tremendous growth as production volume has increased by 10 times over. Conditions for growth are strong and will remain so for the future.

Construction seems to be in a constant battle with the market.  The segment is still soft, although many resellers are experiencing shortage in used equipment.  New equipment is still slow and has seen a decline over the past two years.  The opportunity to buy low and sell high presents itself for the future.

Telecom equipment is turning the corner as demand expands.  With the increase of broadband capacity related to video and data transfer the industry is ramping up.  Long term evolution to accommodate 4G mobile phones will keep growth steady.

Marine/Intercoastal saw declines due mainly in part to supply and demand issues.  The container shipping segment is rapidly outpacing with deliveries of new container ships.

For more information on industry outlooks visit http://www.elfaonline.org/

Top Equipment Leasing Industries of 2011

ELFA Survey: ‘What’s Hot, What’s Not’ in 15 Equipment Leasing, Finance Industries

The medical equipment, oil/gas/energy and machine segments of the equipment finance industry have the most optimistic outlook for 2011, according to a recent survey of asset managers and consultants by the Independent Equipment Company in cooperation with the Equipment Leasing and Finance Association.
The results of the 2011 “What’s Hot/What’s Not” Equipment Leasing Trends Survey, to be released at the ELFA Equipment Management Conference in St. Petersburg, Fla., reveal that industry perceptions of 15 equipment markets are split, but show considerable improvement over 2010. The results indicate the industry is returning to pre-recession levels and a greater volume of equipment is expected to be leased in 2011 than in 2010.
Survey respondents ranked 15 equipment types as follows, in order from highest-rated to lowest-rated:
1. Medical equipment
2. Oil/gas/energy
3. Machine tools
4. Truck/trailer
5. Hi-tech/computers
6. Aircraft
7. Rail
8. Containers/chassis
9. Construction
10. Telecom
11. Marine/Intercoastal
12. Automobiles
13. Plastic
14. Furniture/fixtures/equipment
15. Printing
The full report and survey methodology are available on the ELFA website at http://www.elfaonline.org/ind/topics/AssetMgmt/.
The 2011 “What’s Hot/What’s Not” Equipment Leasing Trends Survey was conducted in January and February 2011. A total of 155 industry professionals responded to the six-question online survey, of which 93 percent were lessors, asset-based lenders or financial advisors and seven percent were service providers. For more information, visit http://www.elfaonline.org/ind/topics/AssetMgmt/.
The Equipment Leasing and Finance Association is the trade association that represents companies in the $521 billion equipment finance sector, which includes financial services companies and manufacturers engaged in financing capital goods. Its more than 600 members include independent and captive leasing and finance companies, banks, financial services corporations, broker/packagers and investment banks, as well as manufacturers and service providers. In 2011, ELFA is celebrating 50 years of equipping business for success. For more information, please visit http://www.elfaonline.org/.

Equipment Leasing Industry Find Companies Are Purchasing Equipment Again

(Reuters) - A key measure of U.S. business activity rose sharply in February from a year ago, as companies borrowed more to invest in their operations, but the reading was down slightly from the prior month and credit quality eased, a lender group told Reuters on Tuesday.

The Equipment Leasing and Finance Association (ELFA) said U.S. businesses originated $4.1 billion in loans, leases and lines of credit in February to invest in everything from computer hardware to office furniture and machinery.

That was slightly below January's $4.2 billion total and well below December's $9 billion figure, but up 28 percent from a year ago, when the U.S. economy was beginning its gradual recovery.

February marked the 10th consecutive month of year-over-year gains, and the third straight month such gains were above 20 percent.

"It's a nice, steady trendline up," said ELFA President and CEO William Sutton. "Everything we are seeing throughout the economy (points to) steady, albeit slow, growth."

ELFA: January New Business Up 24 Percent Over Year

The Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index (MLFI-25) showed overall new business volume for the equipment finance sector in January was $4.2 billion, up 24 percent compared to the same period in 2010.
“After a typical end-of-quarter, end-of-year spike in new business activity, the equipment finance sector seems to be resuming a steady pace of increasing volume,” said ELFA President and CEO William Sutton. “This trend, coupled with a strong outlook by leasing and finance executives about the future of the industry, bodes well for a continued recovery of the sector.”
Credit quality is mixed. Receivables over 30 days increased slightly to 2.8 percent in January from 2.7 percent in December, but declined by 35 percent compared to the same period in 2010. Charge-offs declined significantly, falling to 1 percent from 1.4 percent in December, and also showed improvement over the same period in 2010.
Compared to the year-earlier period, credit standards relaxed as approvals increased to 74 percent in January. And, 56 percent of participating organizations reported submitting more transactions for approval during the month, down from two-thirds of responding organizations in December.
Finally, total headcount for equipment finance companies remained flat for the past three months, and reflected a year-over-year decrease of four percent for January. Supplemental data shows that the construction and trucking sectors once again led the underperforming sectors in January.
Separately, the Equipment Leasing & Finance Foundation’s Monthly Confidence Index for February is 71.6, a new high since the MCI was launched in May 2009, and an increase from the previous high of 69.7 in January.
The MLFI-25 is the only index that reflects capex, or the volume of commercial equipment financed in the U.S. The MLFI-25 is a financial indicator that complements the durable goods report and other economic indexes, including the Institute for Supply Management Index, which reports economic activity in the manufacturing sector. Together with the MLFI-25 these reports provide a complete view of the status of productive assets in the U.S. economy: equipment produced, acquired and financed.
The latest Monthly Leasing and Finance Index, including methodology and participants is available below and also at http://www.elfaonline.org/ind/research/MLFI/.

 

   

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

Benefits of Technology Financing

The Equipment Leasing and Finance Association (ELFA) estimates that eight out of ten U.S. companies lease at least some equipment, but what many people don’t realize is that there are flexible financing options available for almost any kind of technology equipment, including software, services and training.

Equipment financing is a popular way to maximize your purchasing power largely because it is a cost-effective way to obtain the newest equipment without a large outlay of cash.

Financing also helps shield you from the effect of equipment obsolescence, a real issue for all those using any type of technology asset. It’s easy to add the latest software version to your master lease so you don’t have to worry about working with outdated technology.

Some of the recognized benefits of financing technology equipment include:

• Reduced Tax Burden - The IRS does not consider certain leases, for example, to be a purchase, but rather a tax-deductible overhead expense. Therefore, you may be able to deduct the lease payments from your corporate income.

• 100 percent financing – Some financing options require very little money down - perhaps only the first and last month's payment are due at the time of the acquisition.

• Immediate write-off of the dollars spent - With some financing options, payments can be treated as expenses on a company income statement, so equipment does not have to be depreciated over the useful life of the equipment.

• Flexibility - As your business grows and your needs change, flexible financing options provide more opportunities for businesses to add or upgrade equipment during the lease term.

• Asset management – Financing provides the use of technology equipment for specific periods of time at fixed payments. With some financing structures, the finance company assumes and manages the obsolescence risk of equipment ownership. At the end of the finance terms, the financing company is responsible for the disposition of the asset.

• Upgraded technology – Equipment that is frequently updated, such as software, should be financed to limit your risk of being stuck with obsolete equipment. It’s easy to add the latest software version to your master lease, for example, so you don’t have to worry about working with outdated technology.

• Improved cash flow – Many finance structures can result in a lower monthly payment when compared to a standard loan. In addition, some finance companies offer seasonally adjusted payments to match a company’s needs.

Finance Services Too

Training, support and other services are vitally important to a successful technology implementation, yet they are some of the most overlooked costs involved with a technology acquisition.

Often, everything involved in a technology purchase, from the software to the services and training can be bundled into one predictable monthly lease payment, making it easy to budget for all costs associated with a technology acquisition.

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.