Time in business requirements

yup, we've got the same BS issues with the same leasing companies, go figure they can't make money if they don't loan money, it's viscous cycle..

The leasing company makes money when and if they are paid back, not when they lend the money!

The rep is always free to cosign the loan if they think it's a BS issue but I think it would suddenly become a REAL issue at that point. After all, at that point we'd be talking about REAL money, not OPM.

The leasing company is just wisely refusing all businesses under two years, then looking at the credit app and seeing that there is basically nothing on the app to support the loan, so they request the PG and personal financial information to see if the owner can support the loan.

Though the lease is backed by the asset (copier), that's close enough to worthless as to rank this with an unsecured loan. An unsecured loan is made based on the proven ability to repay.

I've got a great idea! Why don't we package all these copier leases together, then divide them into thousands of "shares" that anyone can purchase?

Eventually the demand for our high-paying financial instrument will exceed our supply, but we can always supplement that by offering leases to people who wouldn't normally qualify.

JasonR, you are on a roll.

We could then mix the "bad" leases in a little at a time with pools of "good" leases, buy insurance on them, and sell those. We'd try not to think about the fact that those would be further mixed with more "bad" and "good" leases...

To make this REALLY roll though, we'd need Congress to step up. Follow the pattern of the 90s, and punish any leasing company that insists on only writing leases with customers who can repay. Block the merges of those leasing companies, refuse to allow them to open new offices. Create a public/private organization, perhaps "Federal You May Lease, Inc" or "LisaMay" as it would be known. Enrich the revolving door of execs at the top of LisaMay and when it all collapses... hire them as government regulators to rein in those "rogue" leasing companies!!!

You guys really have a handle on this new financial management philosophy! Did you get abducted by aliens or teleported to the future to gain this amazing wealth of knowledge?

More likely, teleported to the past...

However, I think our success (in the short term) is guaranteed, and eventually we'll simply be "Too Big to Fail"!

I want a bonus either way though

Didn't we have someone in leasing named Lisa May?

quote:

Originally posted by CashGap:
Didn't we have someone in leasing named Lisa May?

That's a riot!! LOL

quote:

Originally posted by CashGap:
The leasing company makes money when and if they are paid back, not when they lend the money!

The rep is always free to cosign the loan if they think it's a BS issue but I think it would suddenly become a REAL issue at that point. After all, at that point we'd be talking about REAL money, not OPM.

The leasing company is just wisely refusing all businesses under two years, then looking at the credit app and seeing that there is basically nothing on the app to support the loan, so they request the PG and personal financial information to see if the owner can support the loan.

Though the lease is backed by the asset (copier), that's close enough to worthless as to rank this with an unsecured loan. An unsecured loan is made based on the proven ability to repay.

Cash Gap:

Going back to the past and seems like you've been in the biz for a long time. There was a time when:

If you were over 2 years in biz, 90% of the time no PG was required.

The leasing companies that you did business with would not "cream" the apps, they would take the good, the bad and the ugly (well, sometimes with the ugly)

Problem now, is that all leasing companies want the cream, and that's where I have an issue, if you want first dibs to our portfolio, don't cream the apps, and throw us a bone every now and then.

In reference to my statement of they can't make money unless they lend it......well it's true, similar to the chicken and the egg. If they don't lend they won't be in business somewhere down the road. Of course everyone needs to get paid and paid on time. The last two years have been probably the most fustrating times I've ever had in this industry.

Art

I can agree that they leasing companies (and all lenders) acted foolishly in the past. Now the banks are acting like banks. That's not bad, though it may make it tougher to provide people with equipment you, I and they all know they have no business leasing.

[If you were over 2 years in biz, 90% of the time no PG was required.]

And now we know that two years in business is not adequate assurance of the company's ability to make the payments, so more assurance is required in the form of a PG. Mr. Businessman, if you don't believe in your business and you know everything about it, why should I believe in your business?

The "bones" you want thrown are bad loans. There is never a good time to make a bad loan.

Fear not. Five or ten years from now, the lessons will be forgotten. The leasing companies will be counting on their ability to "outgrow" their bad deals... "if we do 1,000 deals and 100 are bad, we won't know they are bad for two years, by that time we'll be doing 3,000 deals per year and 100 won't see so bad..."

Read everything ELFA publishes. I'd expect the worst times for equipment leasing are probably about two years from now. In other words, you ain't seen nothin' yet when it comes to tight leasing requirements.

[In reference to my statement of they can't make money unless they lend it......well it's true, similar to the chicken and the egg. If they don't lend they won't be in business somewhere down the road. ]

Nope. This ignores the fact that all of these companies have multiple outlets for their cash, multiple ways to earn an interest spread on their capital. In no way do they "need" to do it through equipment leasing.

quote:

Originally posted by Art Post:
If they don't lend they won't be in business somewhere down the road.

Well... If they leave the cash sitting in a Money Market, they will probably make 1%. They make profit when they lend it and it makes more than that.

If they lend it and take a loss, they will be out of business faster than if they never lent at all.

quote:

Originally posted by JasonR:

quote:

Originally posted by Art Post:
If they don't lend they won't be in business somewhere down the road.

Well... If they leave the cash sitting in a Money Market, they will probably make 1%. They make profit when they lend it and it makes more than that.

If they lend it and take a loss, they will be out of business faster than if they never lent at all.

gottcha, however that 1% profit may not be able to sustain them for long, btw great discussion thread!