By Mick Nelson | Monday, February 13, 2017
One of the most challenging steps in the project development process is for an individual or small business to raise enough capital to qualify for a loan. We’ve all heard that only those who don’t need money can borrow it. There is a good amount of truth in that statement. Gaining equity is difficult. How many of you have the $300,000+ necessary to borrow $900,000?
There can be a solution to this dilemma. With some of the more recent design options the USA Swimming Facilities Development Department has helped to identify, lease to own may be considered. The large down payment is circumvented and the total purchase price of the equipment can be wrapped into the lease. This is not a new concept – what is new is our definition of “equipment”. With new building methodologies, certain types of buildings and pools can be considered equipment.
When considering this option you have to be aware of some things:
- Land can be leased
- Permitting and soft cost cannot be leased unless the land owner wants to incur the cost and wrap it into the lease
- Some buildings can be declared equipment and therefore can be leased. The litmus test for this is “can the building be easily removed and then re-erected at another location?
- All office machines and equipment can and maybe should be leased.
We have 3-4 manufacturers that are USA Swimming professional providers and have leasing companies who work with them directly. These buildings can cover both small and large pools. The concrete deck is not leasable so you have to have some equity to invest in this.
- With the increasing popularity of pre-engineered steel pools, there are now options for the pool and all operational equipment to be leased. That means the tank (the pool itself) and all of the supporting circulation and filtration equipment can be leased.
You can contact the USA Swimming Facilities Development Department for information on pre-engineered steel pools. This is the type of pool that Myrtha Pools used for the 2004-2016 Olympic Trials. These pools can go on the ground or in the ground equally as well.
- Some zoning ordinances even allow for modular bath houses to be constructed. These cost about ½ of the price of custom bathhouses and are leasable.
- The inner working of a good business include a strong network. Leasing servers, computers printers, copiers and other technology can help you “hit the ground running”.
So if you can lease the land, lease the building, lease the pool, lease the bathhouse and lease the business/office equipment, all we need is the following:
- A great business plan that will show the lessors how we will make money to pay for the lease. There will be multiple leases involved because each piece of “equipment” has a different lifespan. So the building may be 15 years – the pool may be 8 years the pool equipment may be 4 years and so on.
- Some seed money to pay for professional fees and engineering and drawings and permitting and furnishing-fixtures-and equipment that cannot be leased.
- A good professional development team that will make sure you are getting the best product for you $ investment.
Why lease instead of borrowing money? Leasing leaves your credit available for other business needs. Furthermore, depending on the type of lease you choose, you may be able to expense your lease payments.
How do I decide which lease is best for my business? Nationwide Business Capital has an experienced team of financing specialists who can help you choose the type of lease best suited for your business and the type of commercial equipment.
Some critical questions are:
- How predictable is your cash flow?
- How long will you need the equipment?
- How quickly will the technology of the equipment improve?
- What is your monthly budget?
- Do you want to own the equipment at the end of your lease?
Types of leases
- The Dollar Buy-Out Lease: The customer owns the equipment, makes monthly payments to the leasing company. At the end of the desired term the customer simply pays a $1.00 buy out and the equipment is theirs with no further obligation.
- The Fair Market Value Lease: When the lease ends, the customer can return the equipment, continue to lease it month to month, or purchase the equipment at the fair market value.
- The 10% Purchase Option: Lease has a slightly higher monthly payment and offers the security of a fixed purchase price at the end of the term.
- Straight office equipment leases Lease is a straight lease with service options.
Who Should Lease and the Approval Process
- Who can lease equipment from Nationwide Business Capital? Anyone interested in leasing commercial / business equipment.
- What if I've never leased equipment before? Nationwide Business Capital will walk you through the entire process, our priority is providing our clients with individual attention and assist them select the leasing option that makes the best sense for them.
- Approval is a quick and easy process. No financial information is required when you use our simple one-page credit application.
- How long does it take to be approved? Most applications are processed within 24 hours - and that can go even faster when a full application package is submitted. When your application is approved, we will prepare and send you the lease documents for signature. Once you sign and return the lease agreement, we issue a purchase order to the equipment vendor. Your lease takes effect when Nationwide Business Capital pays the vendor after you have accepted delivery of the equipment.
- What is the typical process for commercial equipment leasing? You fill out a simple, one-page application
- What are the up-front costs to the lease? Usually the up-front cost is the equivalent of two monthly payments - considered your first and last payments. There is a nominal fee to cover the costs of processing the lease documents and filing the UCC-1 financing statements required.
- Is there an application fee? No. There is NO application fee.
- How do I pay the sales tax? Sales tax is apportioned across each lease payment as a separate charge.
USA Swimming will not get involved in your lease arrangements but we have two companies that have worked with our customers in the past who we can refer you to.
For more information please contact: USA Swimming Club Facilities Development Director Mick Nelson firstname.lastname@example.org
General information: For general leasing information contact:
Nationwide Business Capital http://www.nwbcapital.com/or http://www.scequipmentfunding.net
or Jules and Associates, Inc
any equipment leasing company can be considered.
For building leasing information contact:Chris Whitlow
Sport Event Research Group (SERG)
For pre-engineered stainless steel pools both in ground and on ground please contact:
For leasing information for the modular bathhouses contact:
For leasing office equipment, servers, computers, etc. a local supplier is usually best for service advantages.
Usual municipal lease structure
Lease term that does not exceed the economic life of the equipment: 3, 5, 7 & 10 years on equipment, longer terms on real estate.
What is a municipal lease? A financing agreement with a state or local governmental entity (City, County, State, School or other District) in which the Lessor finances the Lessee’s intent to purchase equipment or real estate.
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