How To Choose An Equipment Leasing Company

Leasing has become a … form of … … … for more than 30% of business … … Each year, … of U.S. … face the … of finding attrac

Leasing has become a preferred form of equipment financing,Guest Posting accounting for more than 30% of business equipment acquisitions. Each year, thousands of U.S. companies face the challenge of finding attractive financing to acquire business equipment. Many of these companies approach the lease sourcing process seeking the lowest lease rate. While securing a low rate is a worthwhile goal in choosing a leasing arrangement, it alone is usually not a reliable standard for obtaining the best lease transaction or leasing experience.

To obtain attractive lease proposals and to avoid lease blunders, make sure you choose the right leasing companies to bid. Ultimately, the wrong lessor choice can result in a slow approval, inability of the lessor to deliver, hidden fees, substandard lease terms, or worst. To secure the best lease arrangement, you must do your homework in pre-qualifying bidding leasing companies. Give this aspect of obtaining an attractive lease arrangement your highest priority.

How Leasing Companies Differ

Leasing companies can vary in a number of ways. Some specialize in specific industries, some in lease types, some in certain equipment types, and still others in transaction sizes. For example, some leasing companies specialize only in a single industry like health care, printing, agriculture, or transportation. Others focus exclusively on a lease type. They may only offer operating leases for equipment with attractive residual values. Some lessors specialize in full-payout finance leases. Still others focus on small ticket transactions with equipment cost under $ 100,000. It is important to understand the specialization of the lessors bidding on your lease transaction. To get the most attractive deal and to avoid the run-around, stick with lessors who focus on the type of transaction you are seeking.

Leasing companies also differ in resources and capabilities. Many large leasing companies are owned by banks, financial companies, or other large industrial concerns. These firms usually have abundant resources and expertise in a number of leasing segments. Mid-size and smaller leasing companies greatly outnumber large lessors. While these companies cannot match the resources of their larger brethren, they often have highly skilled professionals, sufficient resources and more flexibility to meet lessee needs. The goal is to obtain the best leasing arrangement for your firm. By establishing priorities for the leasing arrangement you are seeking, you will be able to determine whether a leasing firm with sizeable resources or one that is nimble and flexible is a better choice.

When And Where To Look

The time to start your search for a leasing company is early in the lease-planning phase, once you have established criteria for a leasing arrangement. Some criteria to consider for a leasing arrangement are: pricing, monthly cash outlay, financial statement impact, the appropriate lease type, lease term, lease flexibility, lease facility size, and whether your equipment will be accepted for lease. Use criteria like these and the qualities you are seeking in a leasing company to start your lessor search.

A great starting point for finding bidding leasing companies is through professional and personal referrals. Check with your attorney, your accountant, bank contacts and colleagues in your industry. Also ask friends and acquaintances who use leasing in their businesses. Asked them for contacts at leasing companies that specialize in your industry or that offer the type of lease you are seeking. Call your industry association and ask whether they have names of leasing companies serving others in your industry.

Another approach is to call a couple of the major equipment leasing trade associations. Major association websites include:,,,,,, and Describe the type of equipment and the industry you are in. Ask whether they are in a position to provide you with a list of members to contact regarding your lease. If you receive such a list, you may need to narrow the candidates based on further homework and the criteria you have established.

Evaluating Leasing Companies

Qualities to look for in any leasing company you consider include: 1) experience and expertise; 2) reputation; 3) ability to perform; and 4) a relationship approach.

Interview prospective bidders carefully. Discuss their expertise and experience in the leasing business. Ask about experience with the type of transaction you are seeking, involvement with similar firms in your industry, and the types of lease products they offer firms like yours. Discuss your equipment needs. Find out whether they will be able to lease most of the equipment you need. Ask whether they will finance your lease using internal funding or whether they will broker the lease to another funding source.

Get enough information from and about bidding lessors to decide whether to include them in the bid process. If possible, ask for financial information from potential bidders to evaluate their financial condition. Also, if you can, obtain a Dunn and Bradstreet report (“D&B”) for each bidder. In the D&B report, look for lawsuits filed against the lessor, judgments, severe payment delinquencies, poor financial performance and similar issues that might impact performance on a new lease transaction.

Posted in Uncategorized | Tagged , | Comments Off

Leasing Real Estate in Macedonia

The introduction of leasing in Macedonia would deflate real estate prices.

The subprime mortgage crisis in the United States is spreading into Europe,Guest Posting notably the United Kingdom. Real estate values are deemed inflated throughout the continent. One exception may be Macedonia. Purchase prices here have stagnated in the last few years and rental rates have actually declined considerably. There is good reason to think this will change and soon: new financing vehicles are on offer and, as real incomes increase, there is a stark mismatch between geometrically-growing demand and arithmetically-increasing supply. Moreover, impressive improvements in the business climate led to the entry into retail, manufacturing, and services of global giants as foreign direct investors. These need or build shopping malls, office space, and parking lots. Peter Roth, the General Manager of Soravia Macedonia, which bought the Business Center in Skopje last year, predicted, in a statement quoted in “Vecer”, a Macedonian daily: ” I expect the development of real estate, bigger competition, but also higher prices. I think that in the future investments will flow not only to Skopje, but also to Ohrid, Gevgelija and other cities, near the border with Greece.” “In the near future small shops in buildings will disappear, problems with parking spots would be overcome, and expensive rents would grow further,” – concluded the exuberant article. This may all depend on the introduction of real estate leasing. Currently, it is a negligible portion of the activities of companies such as NLB Leasing and Hypo Alpe Adria Leasing. The latter’s brochure doesn’t even mention it. “Under the terms of current legislation, we are able to offer leasing.” – says Maja Lape Trajkova, director of NLB Leasing, which was established in 2000 and is owned by NLB Group, essentially a Slovenian bank. Gjorgje Vojnovik and Oliver Zintl, the Macedonian and Austrian managers of Hypo Alpe Adria Leasing agree. Their firm is owned and fully capitalized by an Austria (Klagenfurt)-based multinational which operates in 14 countries. NLB Leasing offers financial and operational leases of up to 15 years to firms and individuals, on all types of properties, second-hand and new: residential, commercial, and industrial. Hypo Alpe is more selective and limits its financing to new construction. Equity ranges from 10 (Hypo Alpe Adria Leasing) to 30 (NLB Leasing) percent, depending on the creditworthiness of the lessee. Financing is procured from various sources, but mostly from the mother companies, NLB and Hypo Alpe Adria Leasing, respectively. NLB Leasing’s “typical leasing contract is with fixed rates and not with adjustable ones, (but) a change (in the) previously agreed terms is possible, of course. When it comes to being flexible and to adjusting to the client’s financing needs, the whole package is considered: period, equity, rates, IR, etc.”- says Trajkova. Hypo Alpe Adria Leasing prefers the safer route of sticking to fixed rates exclusively. So, why hasn’t real estate leasing taken off, as it has in many other developing countries? Macedonia’s banks offer mortgage financing but under onerous terms: multiple collaterals and guarantors, high fees, and an immediate transfer of the title (and of the risk associated with it) to the client. On paper, leasing is a more attractive proposition. The problem is a quirk in the tax laws: lessees pay VAT up front on the entire amount of the contract, interest included. There is no VAT payable on interest payments made to banks, the leasing companies main competitors. “The law still protects the three major banks with a 75% share of the market,” complains Vojnovik. Zintl concurs: “he private customer is at a tax disadvantage” Even worse, expounds Trajkova: as far as the VAT law goes, financial leasing is a taxable exchange of goods. While firms can deduct the VAT or reclaim it (in one year’s time or longer, if the firm has just commenced doing business in Macedonia), individuals incur it as a net out of pocket expense. Additionally, all lessees have to pay a “real estate turnover tax” twice: once when they have signed the contract and once when they receive title to the property, having paid the lease in full. The turnover (or transfer) tax ranges between 3 and 5 percent, depending on the municipality. This and similar problems render certain types of leases (such as lease contracts incorporating leaseback or buyback options) untenable. Trajkova compares this costly double taxation to the situation in Slovenia, where individuals pay only a property tax once. She met with officials at the Ministry of Finance, but they had no information as to when this hindrance will be removed. She claims to have formed a joint lobby, within the Chamber of Commerce, together with Hypo Alpe Adria Leasing and others. Hypo Alpe Adria Leasing beg to differ: they decry the lack of coordinated initiative by other leasing companies and in their own meetings “with this business-friendly government”, as Vojnovik puts it, they were reassured that the problem will be solved in the first quarter of 2008. Trajkova notes a growing awareness of leasing even among individual buyers of residential property, owing to a string of scandals involving swindlers who took advantage of Macedonia’s chaotic and incomplete cadastre (the central registrar of land and real estate property). “People trust us and are willing to pay more,” – she explains. Vojnovik and Zintl also describe an overwhelming interest: the foreign ownership of leasing companies, the fact that title (and the risk it brings) remains with them until the end of the lease, their clean record, and their plans to enter the real estate scene as contractors and financiers have drawn considerable interest from would-be buyers. Still, foreigners are not allowed to own land in Macedonia – I observe – although local subsidiaries of foreign firms are treated as domestic entities and can freely transact in both land and real estate. This renders cross-border transactions somewhat complicated – Trajkova and Vojnovik agree, though Zintl adds that “there are no legal obstacles” to cross-border financing and that such transactions have come to dominate the portfolios of leasing companies in countries such as Croatia (1.7 billion euros annually) and even Serbia (with 1 billion euros a year). How does one go about leasing real estate in Macedonia? – I enquire. The procedure is simple: the applicant must produce an extract from the cadastre (called “property list”), proof of monthly income (Hypo Alpe Adria Leasing demands proof of the income of the entire family), and some other basic and easy to obtain documents. Companies provide business plans with detailed projections. Lessees sign promissory notes on their monthly income and on the property. This covers the leasing company in case the property’s value declines, “for instance, as a result of arson,” – says Trajkova. As opposed to practice in the West, in Macedonia, it is the client who must insure the property. On the bright side, these conservative practices guarantee that Macedonia will not experience its own version of a subprime mortgage crisis Yet, while the leasing contract itself can be signed within days, dealings with the tax authorities and the cadastre can stretch into 3 months or more. This red tape poses difficulties as “sellers want their money immediately,” – sighs Trajkova. Moreover, only 60% of all real estate in Macedonia is registered with the cadastre. About one third of owners have no proof of ownership. Existing liens are not updated anywhere. Much of the land is owned by the state and is designated as agricultural. The processing of requests for construction licenses is tortuously long. Both NLB Leasing and Hypo Alpe Adria Leasing emphasize commercial, office, and industrial real-estate, but regard residential property, including single family housing, as the area of future growth. Both leasing companies embarked on their own construction projects. This spring, NLB Leasing will start constructing residential property in Skopje’s coveted center. They act as principals, both in financing and in contracting the work, thus avoiding having to pay taxes. Hypo Alpe Adria Leasing has similar plans, but they intend to rent the property out. The projects will be completed in about 2 years time. Zintl describes the varied activities of the Austria-based Hypo Adria group in building and managing shopping malls and hotels. The availability of leasing in Macedonia will facilitate the entry of foreign investors, including his own group, replete with Austrian anchors in its newly constructed shopping malls, – he says. Are residential real estate prices in Macedonia inflated? Are we witnessing an American-style bubble? “Prices are exaggerated in terms of average monthly wages and taking into consideration macroeconomic conditions,” – says Vojnovik. “Still, there is a big mismatch between demand and supply” and the scandal-ridden scene has made it difficult to find property with clean provenance and credentials. “When th

Posted in Uncategorized | Tagged , | Comments Off