ss_blog_claim=bd50edc517cf0b7549fe6b5f63b6b5f8 The SLS Business Finance Blog: December 2008

Tuesday, December 30, 2008

GMAC Gets $5 Billion in TARP Funds

Reprinted from The Monitor

GMAC said it has sold $5.0 billion of GMAC's preferred membership interests and warrants to the U.S. Department of the Treasury as a participant in the Troubled Assets Relief Program (TARP) established under the Emergency Economic Stabilization Act of 2008. In return, GMAC will be subject to additional regulation and must be in compliance with the executive compensation and corporate governance requirements of Section 111 of the Emergency Economic Stabilization Act.

Separately, the Treasury Department said it has agreed to lend up to $1 billion to General Motors so that General Motors (GM) can participate in the rights offering at GMAC in support of GMAC's reorganization as a bank holding company. In its announcement, GMAC said, "As a bank holding company, GMAC has improved access to funding to provide financing to consumers and businesses. In particular, the company intends to act quickly to resume automotive lending to a broader spectrum of customers to support the availability of credit to consumers and businesses for the purchase of automobiles."

GMAC also announced that GM and an affiliate of Cerberus Capital Management contributed to GMAC the $750 million subordinated participations in the $3.5 billion senior secured credit facility, as amended, between GMAC and Residential Capital, LLC in exchange for new common equity of GMAC.

In addition, GMAC announced that GM and an affiliate of Cerberus Capital Management entered into agreements to purchase $1.25 billion of new common equity. The U.S. Treasury and GM intend to enter into an agreement for the Treasury to fund GM's share of the new common equity. GMAC also announced that the conditions to its previously announced separate private exchange offers and cash tender offers have been satisfied and that GMAC has accepted all of the validly tendered GMAC old notes and ResCap old notes.

Editor's Note: GMAC was one of the largest originators of mortgages for many years. This statement and action is a clear indication they intend to get back to their original purpose, which was to provide access to credit for people buying GM cars and trucks.

Southern Lending Solutions

Friday, December 26, 2008

GMAC To Become A Bank

The Feds have allowed the General Motors Corporation to become a banking institution in order to take advantage of the bail out dollars. Yet another company to make such a request. This is in addition to the over 17 Million approved in previous weeks to both GM and Chrysler. As a stipulation the Feds are requiring GM to reduce the amount of stake that they have in the company. The Federal Reserve Board granted GMAC's application on an emergency basis, shortening its normal review process. Emergency approval has become the Fed's routine practice this fall as it offers shelter to companies including investment banks Goldman Sachs and Morgan Stanley and credit card lenders American Express and Discover Financial Services.

Southern Lending Solutions

Best CD Rates offers a home on the web to find information and suggestions about your personal financing future. The company provides in depth articles and reviews on the latest trends in the market. Feel free to subscribe to their online news feed or use the mortgage calculator to find out payments on a home loan. Find out where to go and what information you will need to get the best cd rates on the market. You can review detailed information on the current state of the economy and what lending sources are offering the most competitive programs that suit your needs. If your interested in where to shelter your money, provides suggestions and the latest news regarding online savings accounts so that you can be sure that you are capable of making educated decisions with your money. Learn more about bank cd rates and which bank is providing the best return for your money. reviews and details everything that you will need to know to prepare for your financial future and security. Don’t make decisions on your own. Use a resource that makes you capable of making the best choices with your money. With a variety of services offered and reviews to back them, insures your ready for the challenges of today’s market.

Tuesday, December 23, 2008

What Is PCI Compliance?

Payment Card Industry Compliance is a critical and ever changing standard that affects millions of businesses in the US. Most importantly it was created to help with the rising issues surrounding identity theft. The Identity Theft Resource Center, a non-profit organization in San Diego states that not only is identity theft no going away anytime soon, it’s out of control! Today’s economic climate provides the perfect catalyst for identity fraud. The PCI Data Security Standard (PCI DSS) originally began as five different programs from the five credit card schemes. Each company’s intentions were roughly similar: to create an additional level of protection for consumers by ensuring that merchants meet minimum levels of security when they store, process and transmit cardholder data.

Who has to comply you might ask?
Any business accepting credit cards must comply annually. There is no way around it. It is especially critical for those businesses that feel the need to store credit card info after an initial transaction is complete such as those doing recurring transactions.

Southern Lending Solutions

Perfect Cash Advance

These days we all find ourselves in the situation of coming up short by the end of the month. It’s hard to know where to turn to when finances are tight. Perfect Cash Advance offers quick and easy solution to short term cash crunches. The company offers one of the quickest cash advance services on the market. You can fill out a quick on-line form that is 100% secure and often receive cash delivered to your account by the next business day. Payday loans are yet another service that Perfect Cash Advance offers. They work with many different lenders and will be able to provide you with a service that’s right for you. Why deal with the hassle of going out to a retail location when you can apply for a loan right from their website. The whole process is automatic and funds are wired directly to your account. Fees are deducted electronically as well so there is no need for reminders or statements. Many of the lenders will also work with you to meet your needs should you not be able to pay back the loan in the required time period. That’s one of the greatest benefits of working with a company that has an established reputation with many lenders. Fill out the simple on line application and find out why Perfect Cash Advance is a great fit for your short term cash needs.

Professional And Reliable Supply Chain Solutions

Intermec Inc. is one of the leading supply chain technology companies, which not only offers unique and customizable products, but also the support necessary to keep your business running. Intermec acts a consultant as well as equipment provider to your company. They have a business model that supports and understands that the needs of businesses are different and will work to cater a solution that’s appropriate. Intermec provides supply chain solutions for a variety of industries including retail, healthcare, and transportation. From barcode printers to rfid readers, Intermec has a solution for you. You can review the companies website and see complete transparency of all their services. They offer education and training on all products and work to complete a seamless implementation in to your business. You can review case studies and white papers right from the company website and be sure that if you have questions regarding a fixed printer or one of the many other services and products offered, that they will provide a timely resolution to your requests.

Intermec has a worldwide network of distributors convenient to your location that represent the company and its products. Contact Intermec today and find out how they can offer technology as well as solutions for your business.

Monday, December 22, 2008

Visa Covers Lawsuit Charges

Visa Inc. just deposited $1.1 billion into its litigation account to cover legal charges. Visa recently became a publicly held company, the giant set aside $3 billion to cover lawsuits, but the company has already spent $2.1 billion in a settlement with American Express Co for anti-competence practices. In addition, the credit card network agreed in October to pay $1.89 billion to Discover Financial Services over the next year for a similar settlement, surpassing the funds initially separated to cover legal charges.

Southern Lending Solutions

Visa Covers Lawsuit Charges

Visa Inc. just deposited $1.1 billion into its litigation account to cover legal charges. Visa recently became a publicly held company, the giant set aside $3 billion to cover lawsuits, but the company has already spent $2.1 billion in a settlement with American Express Co for anti-competence practices. In addition, the credit card network agreed in October to pay $1.89 billion to Discover Financial Services over the next year for a similar settlement, surpassing the funds initially separated to cover legal charges.

Cutting Back On Unnecessary Spending

The holiday season is upon us, so is the temptation for frivolous spending.
It may be necessary to spend on gifts for family and friends but to often we waste money on things we really don’t need for ourselves. In the back of our minds we know that we should be saving but can’t seem to resist the urge to spend on things that make us look or feel better.

A few questions that one should consider before purchasing. Is this item necessary for my family and I to survive? Is this item crucial for my family and I to get back and forth to work every day? Don’t laugh its important! A few items to look at that just aren’t necessary for survival these days. It is true that the $5 dollar cup of coffee at Starbucks is delicious, I love it myself, but we can certainly get the same result every morning by brewing a pot at the house. It’s great to spend money on manicures, new hairdos etc., but the family will appreciate you just as much if you do it yourself at home. Bottled water serves a good purpose and looks great in the package, but a $14 water filter can do the same at a greatly reduced cost. It’s truly is amazing that in spite of the economic conditions we all face, that people will some how find the money to spend on some of these ridiculous items.

We are all guilty of unnecessary spending but now is the time to take a hard look at how you and your family spend money. By making a few of the simple changes listed above, you might find yourself in a better position to weather the economic storm. As the new year approaches, take a good hard look at the family balance sheet and consider where cut backs can be made. There are free resources on the web that can also help with this task.

Friday, December 19, 2008

Small Ticket Funder Goes Down

Reprinted from The Leasing News

Readers called Leasing News that they were informed Pentech was closing down.

Looks like Ben Millerbis, CLP, President & CEO of Pentech Financial, did not return with good news from the East Coast. He met with the “powers that may be” at Wachovia and Wells Fargo. His problem,his main bank Wachovia went under and was purchased by Wells Fargo, who looked at the what they acquired and evidently Pentech did not fit in, just as Ira Romoff experienced and others, too. Talk was the loss ratio was too high.

Millerbis did not return numerous telephone calls and Ron Wagner, CLP, head of the Navigator program wanted to defer all comments to Millerbis. Brad Brisbin, his high school friend and vice-president Brad Brisbin was on jury duty, the foreman. Cell telephone messages were made, which he always returned in the past can only mean it did not go together. They don’t know what to do.

Salesmen were automatically sent notices on their payday of December 16th with information if any changes, they certainly would be back. There has been no funding now for almost a month of leasing transactions.

It appears the company of 85 employees will be cut back to a winding down operation. Doesn’t look like a Merry Christmas. The Navigator program basically accepts the “rejects” of US Bank Manifest, so they could not get involved. Navigator status is unknown.

Wagner has personally been through many “close down” of leasing companies, the last being Commerce Security Bank Leasing in Sacramento, California. Millerbis who was been with Bob Jacobson, III, at Tri-Continental Financial, Mountain View, California (now selling time shares in Hawaii), in 1978 formed Pentek Financial, San Jose, California, which he sold in Alaska Pacific Bancorporation in 1982. He was also founding director of Silicon Valley Bank, Santa Clara, California. With the backing of John Otto of Heritage Leasing fame, he started Pentech Financial. Later Otto bowed out for Cambridge Partners backing (who reportedly are having their problems, too. Leasing News working on this story. editor)

Editor's Note: Pentech was a very good funder in the B/C paper space and a partner of US Bank Manifest Equipment Leasing (US Bank's Small Ticket Equipment Leasing Subsidiary). This sign is telling of some of things that are happening in the small ticket market even though many in the A-D space are still doing ok and actively seeking deals.

Southern Lending Solutions

Revisiting The Payment Portal

In earlier posts we discussed the benefits of e-commerce and internet processing. As a reminder, businesses that accept credit cards are often unfamiliar with "the payment gateway". A payment gateway is a web based solution for credit card acceptance. Logging into a secure website allows the business to enter a credit card transaction and get instant approval all from the pc or laptop. It is an exceptional opportunity specifically for those industries that bill on invoice or have reoccurring business. Simple parameters can be set to automatically handle specific customers differently, an option that certainly is not available with the standard credit card terminal. The ability to access a merchant account remotely at anytime, adds a great value to an already popular service.

Southern Lending Solutions

Credit Card Education

How many times have you received phone calls from companies offering credit cards with a great interest rate? You probably receive just as many pieces of mail offering the same service if not more. The ads portray a very convincing message but it’s certainly hard to know what to believe. has a home on the web were consumers can go to get advice on all of the spin on credit. They don’t charge any upfront fees to the consumer and are proud to say that their service truly is offered with the customer in mind. From consumer cards for poor credit, to cash back credit cards, provides understanding in this market. Review the question and answer section and get answers to the most commonly asked questions in the industry. They provide very detailed information on all of the major card offers including detailed reviews along with company history. The company offers very powerful search features that include searches by consumer or business needs, to searches of the banks themselves. You’ll know what you are qualified for and where to get it after reviewing their website. Fill out a simple questionnaire right on the website, and receive quotes and pricing from all of the big companies. From consumer to cash back credit cards, offers the right information to navigate the credit card industry.

Being Informed About Auto Insurance

If you are interested in reviewing information and receiving quotes on car insurance rates, than CarInsuranceRates.Com has your needs covered. Since 1997 the company has been providing tips and tools on how to navigate the auto insurance industry. They offer many educational articles discussing everything that you will need to make an informed decision when purchasing auto insurance. Use the advanced search feature to find specific information indexed in their archives. After reviewing the wealth of resources on the website, you can take that information and make an informed decision when purchasing insurance. Answer a few quick questions on their website and receive car insurance rates from multiple lenders. The company provides the consumer with a very detailed state by state insurance guide so that you can be sure that you are well informed of all the hurdles you might face in your state. has a question and answer section that outlines and answers all of the most commonly asked questions regarding car insurance rates. You can also review the glossary of terms on the website so you will be familiar with the language of the industry. Being informed when purchasing car insurance is a necessity. offers everything you’ll need to make the best decision possible.

Thursday, December 18, 2008

What Determines Lease Rates??

Lease rates are often determined by two things that most people are not aware of. Those two things are 3 and 5 Year Treasury Rates and 3 and 5 Year Treasury Interest Rate Swaps.

3 and 5 year Treasuries are something many people are aware of. They are bonds issued by the Federal Government with a 3 or 5 year period until maturity, when the repayment of principal occurs. Interest payments are made in the interim on a quarterly or annual basis. They are the basis for some lease rates because the average lease period is 3-5 years.

An Interest Rate Swap is An exchange of interest payments on a specific principal amount. This is a counterparty agreement, and so can be standardized to the requirements of the parties involved. An interest rate swap usually involves just two parties, but occasionally involves more. Often, an interest rate swap involves exchanging a fixed amount per payment period for a payment that is not fixed (the floating side of the swap would usually be linked to another interest rate, often the LIBOR). In an interest rate swap, the principal amount is never exchanged, it is just a notional principal amount. Also, on a payment date, it is normally the case that only the difference between the two payment amounts is turned over to the party that is entitled to it, as opposed to exchanging the full interest amounts. Thus, an interest rate swap usually involves very little cash outlay.

Southern Lending Solutions

Auto Loan

With increasing pressure on the credit industry comes the tightening of underwriting guidelines to get approved for auto financing. Consumers are forced to hold on to their vehicles long past their prime. Get The Best Auto Loan is a resource that consumers can turn to when dealing with auto loans for bad credit. The company provides an on-line blog discussing issues and facts about financing in today’s market. The site helps you get prepared and become more educated in facing the hurdles you might face in obtaining an auto loan. Shopping around for the best pricing can be pain staking and time consuming. Why shop for auto loans one at a time? The company provides a simple questionnaire on the web so that you can receive auto loan quotes from multiple lenders. Answering a few simple questions such as interest rate preferred, payment schedule as well as other features. You can compare rates against each other and find out who has the best package to suit your needs. Your information is safe and secure and is not outsourced accept to provide the best rates and pricing. Get The Best Auto Loan also offers car refinancing as well. A complete one-stop shop for all of your auto financing needs. When shopping for auto loans for bad credit, Get The Best Auto Loan offers a safe and secure environment to get the best lender for your needs.

Wednesday, December 17, 2008

Survey Shows Small Business Owner Optimism Lowest in Five Years

Reprinted from The Monitor

According to the recent Wells Fargo/Gallup Small Business Index surveyed in November, small business owners’ optimism fell to its lowest level since the survey’s inception in 2003. The score now stands at 10, a 35-point drop since last quarter. The Index has been declining since mid-2007.

“The Index hit a record low last month, which appears to be the result of a sharp decline in consumer and business spending,” said Dr. Scott Anderson, senior economist at Wells Fargo. “Despite the significant decrease in overall optimism, four of every five small business owners said they did not perceive credit as difficult to obtain. It appears that the Fed’s injections of capital and liquidity in the banking system may be having some effect on maintaining credit flow.”

The Index dropped a total of 104 points from its highest score of 114, recorded in December 2006, and 73 points since January of this year. The Index is the sum of “current situation” and “future expectations” of small business owners for six key measures, including financial situation, cash flow, revenues, capital allocation, job hiring, and credit availability. The “present situation” score fell to three this quarter — down 16 points from the last survey conducted in July — and “future expectations” dropped to seven, down 19 points from July. Five out of the six measures contributed to the Index’s overall drop, with “cash flow” showing little change (both for present situation and future expectations).

Southern Lending Solutions

Understanding Debt Consolidation

The growing debt problem in this country is exceeding the billion-dollar mark. Reaching a credit card settlement with your creditor is becoming increasingly difficult. It often requires intensive negotiating, coupled with a lot of patience. It’s important to consider all options when going with a debt settlement service. There are many options out there for the consumer. It just requires a little time and effort in doing research on your part.

Increasing credit card debt has resulted in more and more borrowers falling behind on their payments. The consumer debt bomb is already beginning to wreak havoc throughout the financial markets, further weakening the U.S. economy. Some banks and credit card companies are adding fuel to the fire by hiking interest rates ahead of upcoming regulation changes. It’s important that consumers be aware of the balances they owe and at what rate.

So what is the consumer to do? Becoming debt free is no easy task and is often an uphill battle. There are services out there that can help. Understanding your options such as credit counseling and debt consolidation are available and waiting. Knowing you’re available choices and choosing the appropriate debt settlement services assures protection in this weakening economy. Asking questions will result in making wise choices with your financial independence.

Examining The Merchant Cash Advance

The economy is continuing to sour and credit is becoming increasingly more difficult for businesses to attain. The merchant that accepts Visa/MasterCard Payments has a viable option on the table and often a hidden treasure. A business can be advanced money based on its projected electronic payment transactions. This maybe the solution for the law office in need of new furniture, or the medical practice in need of an upgrade to outdated medical equipment.

The merchant cash advance is therefore a way for businesses to receive funding without having to fork over huge down payments or jump through hoops at their local banks to secure a loan. Merchant cash advance is receiving serious airtime in market badly in need of solutions.

Southern Lending Solutions

No Debt Today

Growing debt is an unfortunate byproduct of today’s economy. Increasing costs and rising interest rates have caused many people to go into debt resulting in unwanted calls from collectors and fewer opportunities to gain more credit. No Debt Today is a company that provides help to people all over the US to deal with their financial strains. They specialize in debt consolidation loans, credit repair, and other services that will help you get back your financial independence. No Debt Today never turns away a client regardless of their unique credit history. They are interested in working with you on an individual basis to find a program that suits your needs. Other creditors often charge exorbitant monthly fees to use their service. No Debt Today works with many of the countries lenders to reduce your balances owed, and is only paid if an agreement can be made. The company has a very specific technique of organizing and structuring your monthly bills thus reducing the amount of time it takes for you to get out of debt. Contact No Debt Today for a free debt consultation. A professional will contact you to find out what your needs are and if credit repair, debt consolidation loans, or one of their other programs may be a fit for you.

Has the rising cost of insurance got you down? It’s hard to know when you’ve been paying too much. Often people remain with their current provider because they don’t know where to look to get affordable rates. provides a solution to this ongoing problem. The company was established so that consumers would have a place to go on the web to learn about general insurance rates. They are not an insurance company, which creates a different experience that you would get from going directly to an insurance provider. covers the spectrum from auto to renters insurance. Their approach is unique. Other on-line companies providing similar services receive a kickback if a sale is complete. offers unbiased reviews of companies with the lowest rates so that you can be sure that you are getting the best quote on the market. Don’t like a particular rate? Feel free to shop the competitors listed on the site. The company does not obligate you to purchase, and shoppers have the ability to cross compare rates throughout the entire US. Fill out a simple form today and receive quotes from at least 5 of the top insurance providers. Your information is secure, and your business is valued. Go to for all of your general insurance needs.

Tuesday, December 16, 2008

More on The Small Ticket Market

Most funders who work with the small ticket market specialize in it and prefer to work with these smaller firms who still have equipment needs. Since only 3 things are required: the credit app, the credit check and the purchase order from the vendor of their choice for the equipment they need; the strength of the owner is the biggest requirement.

The owner's personal credit is important and in many cases, the owner is the business so a personal guarantee is always required except for those companies with a long operating histories or willing to back the lease in some other form like with a bank letter of credit.

Southern Lending Solutions


For those of you who wear glasses it comes as no surprise how expensive purchasing new ones cost. Unless you have been ignoring the rising costs of everything, you’ll know that necessities such as eyeglasses have become extremely expensive. Let me suggest a place to go that has quality eyeglasses at a price everyone can afford. Optical4Less has a home on the web where everyone can go to get a great deal on prescription eyeglasses. Some of them as low as $15 usd. Wearing a different style of eyeglasses everyday of the week becomes a reality. They also offer a variety of tinted and bifocal glasses as well. Traditional eyeglass stores can’t compete with the selection and price that Optical4less offers. Optical4less provides a Virtual try-on system, a feature unique to their company. Upload a picture of yourself to their website and you can actually view what particular eyeglasses would look like on you. You can adjust the tint, size, etc… Just one more may that Optical4less sets them selves apart from the competition. Order more than one pair of eyeglasses and receive free complimentary shipping worldwide. Optical4less makes it possible to get through these tough economic times. Take advantage of this great service.

Sunday, December 14, 2008

The Small Ticket Market

The small ticket equipment leasing market is generally 2 years Time in Business and a need of $100,000 in equipment or less. With the exception of serious credit issues, the bulk of these applicants fall under Application Only guidelines with our 2/3's of our funder partners that have Application Only programs. This means all we use is:

1) Credit Application
2) Credit Check of owners who own at least 20% of the company
3) Purchase Order from Equipment Vendor/Dealer of choice for the equipment they want

These are all that are required and the lack of personal financials, business financials or tax returns means a simpler more streamlined process and allows for a quicker turn from start to finish. A win/win for everyone involved.

Southern Lending Solutions

Saturday, December 13, 2008


Acobay has recently launched a home on the web where you can quite simply discuss and review “Stuff”. Acobay provides a great opportunity for you to give and receive input on just about any product under the sun including restaurants, hotels and destinations. How many times have you bought something only to show it off to an uninterested audience at work or the gym? You now have a captive audience of subscribers just like yourself interested in hearing reviews and ratings. The site provides easy drop down categories for anyone to browse at their leisure. There is also a top and hot list section to find out where all the hype is on all sorts of stuff. Reviews will not only have ratings but will often have pictures as well so that you can be sure that you are looking at the right thing for you and your family. Since Acobay is a consumer network, you will find out about other people who have the same likes and wants as you and your family creating a niche for you to call upon whenever you have stuff to share or when making a tough decision on a purchase. Acobay is a fluid and constantly expanding network of products and people. If you happen to login one day and you don’t see a product or category listed, feel free to contact Acobay and they will consider your request to add it. Be a part of a growing movement and discuss your stuff with Acobay.

Friday, December 12, 2008

Auto Bailout Fails; Bank-Rescue Fund Seen as Last Resort

Reprinted from The Monitor

The Senate rejected the $14 billion bailout for General Motors and Chrysler after a 52-35 procedural vote, well short of the 60 votes required to break a Republican filibuster threat. Both General Motors and Chrysler have said they could run out of cash within weeks and have few options left.

The Wall Street Journal reports today (12/12) that GM has tapped a team of bankruptcy and restructuring professionals in an apparent signal the company is preparing for the worst. GM reportedly hired bankruptcy veteran Harvey Miller of Weil Gotshal & Manges as well as restructuring veterans Jay Alix of Alex Partners, William Repko at Evercore Partners, Blackstone Group's Arthur Newman and attorney Martin Bienenstock at the firm of Dewey & LeBoeuf.

Ford has said it does not need federal help now, but could face collateral damage if one of its domestic rivals fell. With the economy in recession, the auto industry has struggled under the weight of lackluster sales and choked credit markets. GM's shares dropped as much as 39% in early trading as talks failed in a dispute with Republicans over how quickly union wages should be cut.

The United Auto Workers union refused demands for aggressive wage reductions. The Bill's demise late Thursday prompted immediate calls from lawmakers in both parties for the Bush administration to tap into the $700 billion bank-rescue fund. Bloomberg, citing data from the Center for Automotive Research, noted in a related story the job losses would total 2.5 million to 3.5 million from an automaker failure in 2009, including 1.4 million people in industries not directly tied to manufacturing GM in a statement said it is "deeply disappointed that agreement could not be reached despite the best bipartisan efforts. We will continue to pursue a workable solution to help ensure the future viability of the company", the automaker said.

Editor's Note: The only source of funds available to help the automakers now if a revised version of the bill does not pass is some of the $700MM under the TARP program that was targeted for Wall Street firms.

Southern Lending Solutions

Thursday, December 11, 2008

Ripple Effect of the Auto and Mortgage Industries: GMAC

Reprinted from The Monitor, this article shows how GMAC, GM's financing arm, is having trouble adjusting its business so it can be eligible for funds under the gov't bailout plan known as TARP (Troubled Asset Relief Program).

GMAC Struggling to Satisfy Capital Requirements to Become a Bank

GMAC Financial Services (GMAC) said it has extended the early delivery time with respect to its separate private exchange offers and cash tender offers to purchase and/or exchange certain of its and its subsidiaries' by three days to 5 p.m., New York City time, on Friday, December 12, 2008, in order to provide investors with a final opportunity to consider the GMAC and ResCap offers.

The Federal Reserve has required GMAC to, among other things, achieve a minimum amount of total regulatory capital of $30 billion in connection with its application. In order for such condition to be satisfied, among other things, the estimated overall participation in the offers would be required to be approximately 75% on a pro rata basis. The Federal Reserve has informed GMAC that if GMAC is unable to meet these capital requirements, it will not approve GMAC's application to become a bank holding company. To date, approximately $6.3 billion in aggregate principal amount (or 22%) of the outstanding GMAC old notes have been tendered in the GMAC offers and approximately $2.0 billion in aggregate principal amount (or 21%) of the outstanding ResCap old notes have been tendered in the ResCap offers.

The company said if its unable to successfully convert to a bank holding company and complete the GMAC and ResCap offers by December 31, 2008, "it would have a near-term material adverse effect on GMAC's business, results of operations, and financial position."

Editor's Note: GMAC's exposure to the auto and mortgage industries have severely weakened the company such that it had to consider going into a more regulatory environment (Banking) in order to get some of the bailout funds. This is a sure sign of trouble for GMAC.

Southern Lending Solutions

Tuesday, December 9, 2008

More on Use v Ownership

To continue the argument of Use v Ownership and why Leasing benefits the small business owner, I have gotten down to some raw numbers based on yesterday's example. We have a 50k piece of equipment financed through a loan v leased for 36 months. The other assumptions are use of MACRS accelerated depreciation and a sales tax of 7%. This tells the story better than I can but please feel free to email me @ with any questions or for the more detailed chart outlining this study.

Loan Lease
Equipment Value 50000 50000
Down Payment 5000 3000
Sales Tax 7% 3150 0
Amt Financed 48150 47000
Rate 8% 11%
Monthly Payment 1629 1665

Depreciation 3 Yrs 35500 0

Tax Deductibility 35500 59940

Southern Lending Solutions

Monday, December 8, 2008

The Basis of Equipment Leasing: Use v Ownership

I often get asked 'Why should I lease equipment that I need in the course of my business'?

Here is an example I often use to explain to people why:

Imagine yourself as a business owner that makes and sells widgets. This year the big widget making machine is the Widget Pro 1000 and it costs $50,000. You need this machine (or one like it) to make the widgets that you will then sell. You have 2 options:

A) You buy the equipment either with your own cash or through a loan with a bank
B) You lease the equipment instead over 3 years with a 10% Purchase Option at the end of the period

Each has advantages and disadvantages. With Option A, the overall cost is less over that same 3 year period and you get to depreciate the 50k cost over 5 yrs with one of the 3 depreciation methods previously discussed. Those are the advantages.

With Option B, you are paying a little more than a loan and thats the big disadvantage. The advantages? One advantage is every dollar of every lease payment is tax deductible, so we are not limited to the 50k purchase price. Let's see the biggest advantage though:

2 Years From Now, the Widget Pro 2000 comes out and provides 15% more output for the same cost or saves 15% for the same level of production, a significant technological upgrade. What can we do about it?

Human nature dictates that when we pay for something and own it, we want to get maximum use out of it so since there is likely 5-6 years use in the WP 1000, it means we are likely to keep it another 3 yrs even though we know better is out there? Why? Because we feel like we are throwing our $$ away if we don't. The biggest hidden disadvantage of ownership is right here, feeling like we are locked into outdated, obsolete equipment because we bought it. If you think you would make the smarter business choice of the immediate upgrade, then think about how many break/fix computer guys there are to help extend the life of computers and you know its just not true.

With a lease, we are locked into one more yr, use the purchase option to RETURN the equipment that is now outdated, and upgrade to the WP 2000 right away so we can increase output, lower our costs, or both.

So which way is really cheaper in the end?

Southern Lending Solutions

Friday, December 5, 2008

More on Black Friday

So IRS Section 179 lets you depreciate the entire cost of the equipment even when written in a certain lease structure known as a Capital lease. So how does it work??

Let's say you had a better year than expected and since expenses stayed the same, you now have a taxable profit to the Feds of $50,000 instead of Zero like you had last year. If you are in the 28% tax bracket, then you owe the gov't and extra $14,000.

If you know you will need $40,000 of additional equipment for 2009, and you get that equipment delivered before Dec 31, then that $40,000 can be immediately deducted from your taxable income, reducing your taxable income to $10,000 and your tax liability down to $2800, a tax savings of $11, 200. That's real $$ that can be used for other purposes.

The last important thing to remember is thanks to the Economic Stimulus Act of 2008, passed in the spring, this year only, the limit of how much can be deducted this way goes from 128k up to 250k.

Southern Lending Solutions

Thursday, December 4, 2008

Black Friday for Equipment Leasing

We all have heard how last Friday, as in the day after Thanksgiving is known as Black Friday. Its a huge shopping day for retailers and is the kickoff of the holiday buying season. Well we have a Black Friday period in the Leasing business and its here now.

This week, the first week of December, is the time to assess how good a year your business has had. Many businesses across many industries are struggling, however lots of businesses are thriving as well. A number of business owners that I talk to, and not just collections companies, foreclosure auctioneers or locksmiths, are having their best year ever since they were able to take advantage of the opportunities that come with an economic shakeup.

This week is Black Friday because for those businesses that did unexpectedly well, they can start their holiday buying for equipment they will need in 09 and going forward, yet deduct the entire equipment cost this year, in 2008, despite not getting the equipment until December. Timing is key though as the equipment has to be received and 'put into service' by Dec 31.

So why buy now? Thanks to IRS Section 179 and the Economic Stimulus Package passed by Congress in the spring, businesses can deduct up to $250,000 of equipment for this year only. Last year, the limit was $128,000 and the increase is for this year only.

Some of our most common lease structures, the capital lease (also known as a finance lease) is treated by the IRS like a purchase. This means this lease type is eligible for Section 179 deductions.

Now is the time to assess what new equipment needs are forthcoming and be able to lower tax liability all at the same time thanks to this program and the IRS code.

Southern Lending Solutions

Tuesday, December 2, 2008

Business Credit Scores

Businesses can develop a credit score independent of their personal FICO score. Dun and Bradstreet is largest collector of business credit data in the nation. Their credit scoring system is known as Paydex and scores from 0-100. I was recently quoted in an article about this topic on, one of the largest personal and small business websites on the web.

More information on this topic and my contribution to the informative article can be found HERE.

Southern Lending Solutions

Monday, December 1, 2008

5 Questions of Todd Rome

The driving force behind our merchant processing business is our director of BankCard Services, Todd Rome. Todd is an industry veteran who has seen lots of changes in the industry and unlike many in the field, has gone about his business honestly and ethically. Let's check in with him and see how he answered my 5 Questions.

1. How has CC processing changed in recent years?

There has been so much change its hard to know where to begin. The Federal Trade Commission has really cracked down on which businesses are able to accept credit cards creating stricter guidelines for merchant approval.

The technology itself has really come a long way as well. Businesses use to run transactions on the old Zon Jr. terminal (a dinosaur). It was a huge box that sat on a counter or desk and made lots of loud noises. Not only were they extremely overpriced due to their novelty, they often lost lots of crucial data during the transaction creating many charge back type situations. Today, the equipment is not only affordable but lightning fast as well. Some of the new newer terminals are the size of credit cards. Often credit transactions take place today on the internet via a web portal.

2. What do you offer in your program thats unique and different?

Although I can set the typical retail shop up for processing as I certainly don't discourage any type of business, my core clients are more on B2B. They include attorneys, CPA's, Medical Practices etc... Those types of business are little bit more tricky to understand since they historically have not accepted electronic payments. Often these types of businesses require a different pricing structure as well as specialized equipment to complete transactions.

3. How can a merchant protect themselves from the pirates and other shady characters in the industry?

One thing that the industry is considering doing is registering all agents similar to stock brokers. Making them pass a stringent test etc....

As far as the merchant or business owner is concerned....ask lots of questions. Although my business model is unique to certain businesses, the bankcard industry as a whole is still a commodity. What I mean is, if you don't like any of the answers that you are getting from your agent or rep., go elsewhere. You should do business with a person not only because they are reputable, but because you like them.

4. How do professional firms benefit from CC processing?

This is a great question and one that I love to answer. To this day there seems to be a stigma that credit card acceptance is for the local pizza or flower shop. In today's market, this couldn't be further from the truth. In fact one of my biggest advocates is the US Government. They will often complete a 5 to 10 million dollar transaction with nothing more than a card. The reason being is that it makes the whole process so much more simple. Simple in terms of tracking and paperwork, simple in terms of funds being approved and delivered within a timely manner. I take this model and I move it into the professional firm. Wouldn't it be great to receive payment for services or products in less than 4 business days? The whole process is no less than astounding.

5.)How can we contact you?

I can always be reached on my office line which is 770.309.0979 or by email which is