Leases-Leasing
Equipment Leasing: Getting A Quick Lease Approval
Are you considering leasing equipment for your firm, but you are running out of time? Here are a few tips to make sure your company?s lease gets approved quickly:
Guard Your Company?s Credit Standing
Establish a pattern of paying invoices and bills on time. As with personal credit, a history of prompt payment is one of the most important criteria in extending lease financing. If your company has a dispute with a vendor or credit provider, try to resolve it quickly. Be prepared to discuss the status and reasons for the dispute in detail with the leasing company. Because many leasing transactions require personal guarantees of the principals, it is important that the principals also maintain good credit standing.
Prepare A Lease Package
Include information in the lease package that the leasing company might require. You should include a background write-up discussing your company. Discuss your company?s history, the business background of the principals and a detailed discussion of what your company does. Also include a discussion of the competition and your company?s accomplishments. Include company financial statements and tax returns, if available. Include a list of credit and trade references. Also include a list of the equipment you intend to lease along with some equipment literature. Finally, include a summary of the lease terms you are seeking.
Identify Credit Enhancements Ahead Of Time
Although you might not need credit enhancements for your lease, it will not hurt to identify them in case they are needed. Possible credit enhancements include: additional equipment collateral; cash equivalent collateral such as CDs, stocks, bonds and cash; other assets such as real estate, revenue contracts, intellectual property rights; personal guarantees.
Have Updated Financial Statements
Although financial statements may not be needed for transactions under $75,000, they are often required for larger transactions. Where possible, these statements should be prepared by a C.P.A. and audited. Most lessors want to see financials covering at least three years of operations and the most recent interim financial statements.
Have an updated business plan with projections. Show a forecast of revenues, expenses and earnings. Include the lease payments as an expense item under the assumption that the lease is approved. Include the key business assumptions used for the plan. Offer a summary of the projections, comparing them to historical performance.
Get Bids From At Least Three Leasing Companies
If you want a competitive lease transaction, it makes sense to get lease quotes from several reliable leasing companies. Look for leasing companies that specialize in the type of lease transaction that you are seeking. There are lessors that specialize in lease transactions under $ 75,000 for instance. Others specialize in certain types of equipment like cars, medical equipment or copiers. Investigate each lessor?s background and reputation. Establish a deadline for all bids. Once the bids are in, compare them carefully and look for any terms or conditions that might prove problematic.
Offer To Make Lease Payments Using ACH Debiting
ACH debiting is an automatic payment mechanism established by your firm, the leasing company, and your firm?s bank. It permits the leasing company to receive lease payments from your firm?s bank account on specified payment dates. This set-up is attractive to leasing companies because it reduces the cost of billing and collecting. Additionally, ACH helps alleviate collection concerns since it creates automatic, on-time payments.
Provide Credit References
Most lessors want to talk to at least three or four vendors or creditors about your company?s payment performance and adherence to other business terms. If you have done business with other lessors or lenders, include one or two of these as references. Provide the name and address of each creditor, the contact person and a phone number for each contact.
Getting an approval on your next lease transactions should not remind you of watching grass grow. You can expedite the process considerably by following these easy steps. Be prepared for a quick lease approval.
George Parker is a co-founder, Director and Executive Vice President of Leasing Technologies International, Inc. (?LTI?). A twenty-five year industry leader, George is a frequent panelist and author of several articles and e-books, including "Using Venture Leasing As A Competitive Weapon" and "101 Equipment Leasing Tips".
Headquartered in Wilton, CT, LTI is a leasing firm specializing nationally in direct equipment financing and vendor leasing programs for emerging growth and later-stage, venture capital backed companies. More information about LTI is available at: http://www.ltileasing.com
George Parker
Tags: equipment leasing, leasing, lease, lending, lease approval, equipment financing, financing, loan, capitalSimilar articles
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