ss_blog_claim=bd50edc517cf0b7549fe6b5f63b6b5f8 The SLS Business Finance Blog: Semi-Partially-Maybe-SortaKinda Restricted Equipment Types

Monday, July 2, 2007

Semi-Partially-Maybe-SortaKinda Restricted Equipment Types

With good information and advice, Leasing can be a pretty painless and fulfilling way of preserving the company's all important cash while still financing equipment that is necessary for the business to grow.

So why would equipment leasing companies want to restrict the types of equipment they will write leases on??

Leasing companies (in our case these are our funding sources) need to control and manage their risk since they are not in the equipment business, they are really in the financing business. They hold the paper, so they carry the risk. Some equipment types lose value so quickly that if a client company defaults on their lease in the first 6-12 months, then the leasing company would be 'upside down', meaning they would be owed more than the equipment itself is worth. Some equipment types that fall into this category include:

  • Computers
  • Other Electronics
  • Furniture
  • Titled Equipment (cars, trucks, tractors)
  • Trailers
  • Software

All these types fall into what is known as semi-restricted. This means some companies will do them, some won't and some will up to a certain $ figure. These equipment types are why an independent broker with numerous choices for sources is the best bet when dealing with one of these challenging equipment types.

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