Specialty Funding Alert!!

What you should do about the Equifax Breach

BE EXTRA CAREFUL ABOUT EMAILS AND LINKS

You should avoid clicking on links or downloading attachments from suspicious emails that claim to be updates from Equifax or connected to the breach.

Equifax will send paper mail to consumers whose credit card numbers or dispute documents with personally identifying information were impacted. It has also created a dedicated website for consumers to see if they were affected at www.equifaxsecurity2017.com. They can also call the Equifax call center at 866-447-7559. 

Hackers often use news of big breaches to conduct “phishing” campaigns, sending official-looking emails that make it seem as if the affected company or other legitimate services are asking them to supply information or click through to a link to repair any damage.

When in doubt, call or email the company that appears to be sending the message separately, don’t go through the email you’ve been sent.

Leasing your Company Vehicle

A company vehicle can be a real asset to the business depending on the industry. When deciding to lease a company vehicle there are many factors you must consider:

 

Type of vehicle

Age of vehicle

Use of vehicle

Tax implications

Lease structure and term

 

Type of vehicle

When a business or a self-employed/contract worker needs a vehicle, he or she may feel they

have free reign to lease whatever they want as long as their cash flow is sufficient to cover the debt. That is not necessarily the case. First, the Federal Government may see it as unallowable expense or asset to be claimed by the business – check with a tax professional. Second, most lenders will only lease a true business asset, meaning a Ferrari, Maserati, or Bentley may not be the right vehicle, unless your business is to race them. The type must be appropriate for the business both for leasing and tax implications.

 

Age of vehicle

In most cases the vehicle must be high enough value to have a useful life, meaning after

accounting for depreciation the vehicle still has value. Most vehicles depreciate beyond their value in about five years. I know, the GEO Metro you drive as your personal vehicle is nearing three hundred thousand mile and still works great. Yet for a business it must have a useful life. Leasing in most cases will only go to five years old on the vehicle however older vehicles often times can be an exception.

 

Use of vehicle

The use of the vehicle needs to be appropriate. Having a Lamborghini to get from home and work may not classify as a needed business expense or asset. Be sure it makes sense to be financed as a business lease, if you’re not sure, contact a tax professional.

 

Tax implications

This may be the most important aspect for leasing because at the end of the day the biggest

reason you are requesting a company vehicle as a business expense – to get the tax benefit. The

things to consider we have already discussed have a great impact on leasing a vehicle and if it is an allowable business expense/asset. You wouldn’t want to lease something and find out later you can’t expense the lease or interest and depreciation.

 

Loan structure and term

In most cases the maximum lease term will be five years. Three years may be more appropriate for a smaller purchase amount or a used vehicle. If the vehicle is significant amount of $100,000 or more and an appropriate expense, seven years might be warranted. Be prepared to have a down payment, especially if the purchase is over $100,000.Typically, 20% is the standard down payment requirement but in many cases a 100% lease amount is available.

If you are ever unsure about whether a company vehicle will be considered a true “Business

Expense” consult your tax professional.

Specialty Funding excels in commercial vehicle leasing programs. Vehicle and fleet leasing is the foundation of our business. We have always favored vehicle leasing as our core business because that is what we do best. Going on 40 years of vehicle leasing experience our team knows how to tailor a leasing contract to best fit your business needs. We are always happy to work with you and your accountant to find the best solution for your business.

Get trade terms from vendors and suppliers

Boost your small business’ finances and build strong credit. Get trade terms from vendors and suppliers.

Even if business is great, it can sometimes seem like the “exit” door to your bank account is bigger that the entry. Negative cash flow, although it doesn’t necessarily mean you have poor business performance, can crush your company. If there’s not enough cash coming in to cover what’s flowing out, your business’ cash reserve will dwindle and continuing to operate will be difficult.

If cash flow is a problem for you, you may be able to leverage your business relationships to stop serious problems before they start. It all starts with one simple question you can ask your vendors and suppliers: “Do you offer trade terms?”

What Are Terms?

When a vendor or supplier offers terms, trade terms or trade credit to its customers, it’s really offering customers a chance to delay payment for the length of the specified term. In some cases it’ll be a short term (e.g. seven days), but it can be longer (30, 60, 90 days). If a vendor offers you “net-20” terms, it means that you have 20 days before you have to fork over the money you owe for the product or service provided.

In this way, trade credit is actually a form of financing. The supplier is the lender, the customer is the borrower, and the trade terms are the repayment terms specified in the agreement.

Some suppliers or vendors will specify in their agreement a discount for earlier payment. For example, you might have net-30 terms, but if you pay within 10 days you get a 2% discount. On your trade agreement, this will look like: 2/10, n/30

If you can manage to pay early and keep a cushion of cash in your bank account, this is a great way to save some money. Depending on the trade agreement and how often you work with the vendor in question, it may even be worth getting an emergency line of credit or business credit card in order to take advantage of this discount. You’ll pay interest on any funds you use from the line of credit, but the discount may offer more in annual savings than you pay in interest for the line of credit.

How to Take Advantage of Trade Credit in Your Business

Your ability to get trade credit is often closely linked to your business credit scores and reports. Here are a few things you can do to make sure you’re getting the best terms.

  1. Apply for a DUNS number.

A DUNS number is a unique identifier for your business used by vendors, suppliers and lenders to access information about your company. When you apply for trade terms, your vendor or supplier may want to look up your DUNS number to inquire about your business’ payment history.

Generally, the score they’ll check is your Dun & Bradstreet (D&B) PAYDEX score, which uses your business’ payment history (early, on-time and late payments) to calculate a score for your business. Making sure you have a DUNS number is a crucial first step toward establishing a profile with D&B.

  1. Ask suppliers if they offer terms and open trade accounts with suppliers that do.

The vendors and suppliers you currently work with may offer terms to customers that ask about them. It’s possible that they’ll start with a short-term arrangement and, if your business pays on time, offer a longer-term one. Don’t be shy about negotiating if you’re a dependable customer!

Some big-name business vendors that might offer terms to your business are Staples, Quill, AutoZone, Comcast, Verizon, Home Depot and UPS.

  1. Make on-time payments so you are offered even better terms in the future.

Here’s some great news if you make on-time payments on your trade agreements: Accounts with terms are often reported to commercial credit agencies like Dun & Bradstreet. D&B will then take your payment experiences into account when calculating your business credit score.

This is a good way to start building business credit. With strong business credit you’ll put your company on track to qualify for the best terms and to secure financing you may need in the future.

Making Sense of the Financing Process

The financing process runs like clockwork here at SFG. After all, we are in the financing trenches all day, every day. We understand that to people on the outside of the financing world, the process might not be second nature. In fact, it’s typically quite the opposite. That’s why we have put together this guide to cover the ins and outs of the equipment financing process.

Inside this guide you’ll find:

  • What you should know before you begin working with a lender
  • How to select a lender you can trust
  • What you should know about the application
  • How to decipher the financial documents
  • How funds are distributed from the lender

 

The Plan

Approaching a lender for financing isn’t something you should do on a whim. You will need to prepare first.

Know what you need and why you need it. Simply walking into the lender’s office and saying “I need four trucks” likely won’t get you very far. Why do you need those four trucks? Has your bakery business picked up so much in the last several months that you can’t handle all of the deliveries with a single truck? Do you need to replace your current fleet of delivery trucks because they are ten years old and constantly breaking down? The key here is the reason. It may be obvious to you, but your lender is going to want to know how the new piece of equipment is going to be beneficial to your business.

Consider your time frame. If you have to make that massive amount of deliveries in your single truck tomorrow, you’re going to need financing a lot sooner than if you’re just looking to upgrade your fleet. It’s important to have an idea going into the financing process of how soon you’re going to need the equipment. That way, your lender will know from day one if they are going to have to move mountains to speed up the process for you – in many cases, they will.

Know where your finances stand. Before you go waltzing into that lender’s office, you’ll want to pull your credit report and recent financial statements. That way you’ll have an idea of any errors or blemishes that might be red flags to your lender and you’ll be prepared to talk about them. On top of this, you should be prepared to answer questions about your monthly, quarterly and yearly revenue, average bank balances, and credit history.

Select a Lender You Trust

Now that you’re certain that you need financing, the next part of the process is to find a good lender. Before you run right into your nearest bank, be sure to consider your options and do some research.

There are many different types of lenders, from a traditional bank to a non-traditional “alternative” lender. Consider what you are looking for and the benefits of each. Be careful, though, some banks will not finance used equipment and will likely put many more restrictions on your loan.

Once you’re settled on the type of lender and think you’ve found a good place, go online and check out their website. Is there any­thing there that raises a red flag or doesn’t sit right? Do a Google search and read all that you can about that lender. See if you can find reviews of other peoples’ experiences. The more you know the better.

Complete the Application

You’ve selected a financing partner you’re excited to work with and you’re ready to sit down and tackle the application. Easy, right? Maybe. Making a mistake at this part of the process could mean your funds are delayed, which could be costly if you’re count­ing on that money for an important business need.

Remember, the lender is going to want to learn a number of things from your applica­tion – most likely the length of time that you’ve been in business, your overall revenue, an average bank balance, and your credit score. It’s important to give the lender only and exactly what they ask for. If the lender wants to see bank statements from the last three months, don’t send bank statements for the entire last year, even if it might paint your business in a better light. This will only give the lender more paperwork to sift through and could confuse the process.

On the same token, don’t withhold critical information about your business. If they ask for bank statements for John Doe’s Tasty Bakery, but you give them bank statements for your other operation, John Doe’s Bread Shop because both businesses will be using the new equipment, but you didn’t tell them about your second business in the first place, then you are going to slow down the process.

Submit the Application

In the end, the timeframe depends on you as well. If the lender sends you the appli­cation, and you sit on it for four days before you send it back, you are slowing down the process for yourself. Be prepared for the lender to come back and ask for more information or clarification on parts of your application.

Once you have submitted your application, and it has been approved by the credit team (usually within 1-to-48 hours), the lender will begin to assess your options and what programs might be a good fit for your needs.

The Financial Documents

This is when the lender will draw up the financial documents. The documents will include information on payment terms and your financial responsibility.

It’s usually not necessary to have a lawyer go over the paperwork, but don’t be afraid to call in counsel if there’s something that doesn’t sit right with you or something you just don’t understand. Be sure to read the entire document carefully. Don’t worry! Though it may seem like there is a lot of financial jargon in the financial documents, almost all of it has to do with consequences and actions the lender may take if you don’t pay your bill on time. As long as you pay on time, you generally won’t have anything to worry about.

Remember, if you do have an issue paying, call your lender first before just skipping out on your bill. Chances are they will be much more willing to work with you if you call and explain your situation.

The Funds

Once the signed documents have been returned to the lender, the lender will ensure that the documents are signed in all of the correct places and that nothing has been altered. Now, the lender may begin the funding process.

The lender will call the vendor for the delivery date of the equipment and request their payment terms. At this point, the vendor will likely deliver the equipment to you. It is your responsibility to look over the equipment and ensure that it is exactly as advertised and free from damage. Look carefully, as this is an important step!

If all is well with delivery, you’ll give the lender a verbal authorization and funds will be released to the vendor. In almost all cases, the contract will start when money leaves the lender’s hands.

Repayment

Once the funds have left the lender, the financing process is complete and the responsibility for repaying the loan lies in your hands. Be sure to make payment in accordance with your contract terms.

If your financial agreement is a lease, you will most often return the equipment at the end of the lease term, but in some cases you may be granted the opportunity to purchase the equipment at “fair market value” or at set a price outlined in the initial contract.

Now, you’re ready to finance your next piece of equipment!

2017 Best of Albuquerque Award

Specialty Funding Group Receives 2017 Best of Albuquerque Award

Albuquerque Award Program Honors the Achievement

ALBUQUERQUE July 11, 2017 — Specialty Funding Group has been selected for the 2017 Best of Albuquerque Award in the Equipment Leasing Service category by the Albuquerque Award Program.

Each year, the Albuquerque Award Program identifies companies that we believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and our community. These exceptional companies help make the Albuquerque area a great place to live, work and play.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2017 Albuquerque Award Program focuses on quality, not quantity. Winners are determined based on the information gathered both internally by the Albuquerque Award Program and data provided by third parties.

About Albuquerque Award Program

The Albuquerque Award Program is an annual awards program honoring the achievements and accomplishments of local businesses throughout the Albuquerque area. Recognition is given to those companies that have shown the ability to use their best practices and implemented programs to generate competitive advantages and long-term value.

The Albuquerque Award Program was established to recognize the best of local businesses in our community. Our organization works exclusively with local business owners, trade groups, professional associations and other business advertising and marketing groups. Our mission is to recognize the small business community’s contributions to the U.S. economy.

 

Should You Let People “Pick Your Brain”?

“Would you mind if I picked your brain?”
You get this question, I’m sure. You’re an attorney. Or an accountant. Or a doctor. You’re a senior manager or a business owner. You have experience. You have knowledge. And now someone wants to tap into that knowledge. For free. Do you let him?
This is how you earn your living, isn’t it? And now, just because it’s after hours and drinks are being served, this complete stranger thinks it’s OK to basically get free advice from you. He has a problem. He’s looking for help. He knows that you charge for this kind of advice. But he doesn’t seem to care. What are a couple questions, anyway, between friends? What other reasons are there to network than to meet new people and learn new things, right?
So what do you do when this situation occurs? You can be a jerk and tell the guy that you’re more than happy to help him if he wants to call the next day to schedule an appointment. Or you can just give in and offer him the advice that he wants. You can act annoyed. Or you can be gracious. You can turn and walk away in disgust. Or you can put down your drink, ask the guy to take off his shirt, and examine that strange looking hairy mole on his back right there in the middle of the party. What’s the best move?
How about this move: you thank the person for asking and offer whatever advice you can.
You earn plenty. You have customers and clients. You’re doing fine. Yes, of course you’d like to be doing better. And yes, it’s human nature to not want to give something away for nothing. And sure, there will be some people that will take advantage of your kindness. But you’re fortunate. You are making a living. And here’s a complete stranger that is asking you for help. And you genuinely may be able to help this person. So help him. Let him pick your pick brain, because two things will come out of it.
1. You’ll feel better about yourself because giving is always better than getting. That’s your humanitarian and benevolent side. You’re a good person. And you care about others. This is doing something nice.
2. You’ll get your money in the end. Maybe you’ll never see that guy again. Or maybe that guy will appreciate your advice and think you are so smart that he’ll be calling you first thing the next day to offer a million dollar contract. That probably won’t happen. But what will likely happen is that he will eventually walk away appreciating your help and valuing your knowledge. He will tell others. He will remember. Someone in his network of friends will have a similar hairy mole on their back and ask him for a recommendation or remember that he liked you. What comes around really does go around.
So let people pick your brain. Give your advice away for free. Don’t get defensive and don’t be annoyed. Be grateful instead. This is not a burden. It’s an opportunity to help. You’ll get your compensation someday. I guarantee it.

Interest rates sure to rise this year

With interest rates sure to rise this year, is now the right time to borrow? If you’re going to need that money, you’d better think seriously about it.

 

You don’t need a crystal ball to conclude that interest rates will rise significantly in 2017. If you think your business will need money in the next 24 months, the time to borrow is now.

The price of money is going up. Way up. Since late 2008, our economy has lived in an “interest-rate fantasy world” where the cost of borrowing money was extremely cheap. Everyone from Joe Smith looking for a mortgage to Uncle Sam financing a deficit has been able to borrow money at historically low rates.

The price of money is going up. Way up.

It’s no coincidence that rates have been so low. A confluence of factors has led to this:

  • Over the past eight years, the Federal Reserve has maintained a policy to keep the target federal funds rate (FFR) at between 0.0 percent and 0.25 percent, the lowest ever. This interest rate sets the benchmark for all other interest rates in our economy. The lower the FFR, the cheaper the interest you’ll pay on your loan.
  • The Federal Reserve also implemented several rounds of quantitative easing, which means it purchased debt securities from banks for cash. This added trillions of dollars in available lending money. With the “supply” of money available to lend increasing, the price of lending that money went down.
  • Foreign investors have had limited options for parking trillions of dollars in cash in safe places. The European economic crisis that started with Greece in late 2009 spread to other countries in the region. Suddenly, lending money to European governments—or even having money in euros—was seen as risky. This led to hundreds of billions of dollars being transferred to the U.S., creating an even greater supply of money here.
  • The havoc caused by the housing and financial crises devastated consumer finances, cutting off people’s ability to qualify for loans and making businesses think twice about borrowing to expand. This led to a precipitous decline in the demand for money just as the supply was increasing tremendously.

A Change Of Pace

This year, however, has been marked by significant changes in the global economy and in U.S. economic policy, which started reversing its history of low interest rates.

Earlier this year, the Federal Reserve announced that it would begin tapering off and eventually cease its quantitative easing program. This will drastically reduce the amount of new capital available for lending. But as the supply of money goes down, lenders will be able to charge more.

Conditions in Europe have also improved significantly. As of the second quarter of 2016, Germany’s economy, the largest in the region, has been growing and is no longer in a recession. Surveys taken of business owners and executives across the region indicate they’re feeling optimistic about the future and plan to increase investments and hiring. These positive signs point to an overall stabilization of the European economy, making it a viable investment alternative to the U.S. once again. As a result, foreign investors have already begun taking money out of the U.S. and investing it in Europe, thus impacting the supply of money available for lending here.

China and Japan are dumping U.S. Treasury securities. Earlier last year, the two countries sold a net $40.8 billion worth of U.S. Treasuries. The U.S. owes nearly $2.4 trillion to these countries, so the sale is relatively small compared to their overall holdings, but relative to what the U.S. needs to borrow every month to keep paying its bills, it’s significant.

The reason they sold is precisely because they expect U.S. interest rates to go up. The price of a Treasury security goes down as interest rates go up. In order to avoid a drop in the price of their investments, these countries are trying to get out as much as they can as soon as they can. This presents a significant problem for the federal government. In order to make lending attractive to us, they’ll need to raise the interest rates they offer on the money borrowed, which will lead to a general rise in rates.

 

So after all of this is sitting on the sidelines as the cost and availability of money really making sense?

Business Credit Myths That Can Cost You Money

Business Credit Myths That Can Cost You Money

Start building your business credit the right way.

You know the adage: A little bit of knowledge can be a dangerous thing. That’s certainly true when it comes to credit, where a misstep can affect your credit scores for months or years, making it more difficult and expensive to get funding when you need it. And when it comes to business credit, many small business owners have little experience or frame of reference, making it easier to fall for bad advice.

Here are some common business credit myths that can trip up small business owners:

Myth: Building Business Credit is Just like Personal Credit

The overall process of building business credit is similar to that of building personal credit: Establish accounts with companies that report payment information, then pay on time and keep debt low. But there are some differences between the two you should know. One major difference is that payment information for business credit may be much more detailed than that of personal credit. Unlike personal credit, where payment history falls into 30-day buckets, if you pay a business account even a few days late, it may be reported as a late payment.

Myth: My Business Needs to be Two Years Old & Turning a Profit

While it’s true that many banks prefer to lend to successful businesses with at least two years of experience and solid financials, there is nothing stopping you from establishing a commercial credit history as soon as you start your business. And why wait? Similar to personal credit, an older credit history will be considered lower risk than a newer one, so the sooner you start, the better.

One easy way to get the ball rolling is to get a business credit card to use for your business purchases. Most business credit cards report to one or more commercial credit agencies; however, the application is usually evaluated using the owner’s personal credit scores. And personal income can also be used to help qualify. That means that if you have decent personal credit and sufficient income from a variety of sources, you can probably get a business credit card—even if your business is not yet profitable.

Myth: I Pay My Bills on Time So I Have Good Credit

Paying your bills on time is a great habit, but it only helps your credit history if those accounts are reported to business credit bureaus. Some lenders and vendors report to one or more of these agencies, but others do not report.

 

Myth: I Don’t Need to Borrow So I Don’t Need Credit

Your business credit information may be used to evaluate your business for a variety of opportunities beyond loans, such as working with new partner, a major retailer, or landing a government contract. It may be reviewed when you apply for business insurance.

You never know when your business credit reports will be reviewed, or when business credit scores will be used to make a crucial decision about your business. Establishing that credit rating before you need it will give you one less thing to worry about when opportunity comes knocking.

 

Setting all myths aside if you have questions ask your accountant or a lending professional for direction, that’s what they are there for.

Sell Financing

10 Tips to Help Your Sales Rep Sell Financing

I have spent a good part of the last 30 years training the sales teams of my vendor partners on how to use equipment financing to help sell their products. While the product types have range from software to construction equipment, selling financing as part of equipment sale remains much the same.

Below are 10 tips to help your vendor’s sales rep sell more equipment:

  • Control the sales process from beginning to end.

Many equipment sales are lost when the equipment sales rep does not offer financing and leaves it up to an outside party like the customer’s bank. If the bank turns the customer down, chances are the customer will look to the equipment company that offered them financing in their proposal to try to obtain the equipment. This loss of control during the sales process is an open door for the customer to entertain other proposals because the equipment rep did not keep control of the sales process from start to finish.

  • Bring up financing early in the selling process.

The biggest mistake equipment sales reps make is to wait until the end of the sales process to bring up financing. Waiting until the end of the sales process leads to wasting time on customers that don’t qualify for financing and don’t have cash to pay for it. Another downside of waiting until the end of the sales process is that the equipment sales rep has stripped out any gross margin upside that could have been used to pay for a finance promotion like a 90-day skip or interest rate reduction, that would have put them over the top and win the deal.

  • Ask these 3 questions.

Train your equipment sales reps to ask these 3 questions at the beginning of the sales process. It will help them sell more products:

  • Do you plan on financing your equipment purchase? (Starts the equipment finance discussion on the front side of the sale.)
  • How long do you plan on using the equipment? (Lets you know the term of the finance contract).
  • What do you typically do with old equipment when purchasing new? (Good indicator of need for FMV financing if they typically trade it in or sell it).
  • Include a monthly payment on every equipment quote. 

At the beginning of my dealer training sessions I always ask how many of the sales reps use leasing to sell equipment. Many hands will go up, but very few hands remain raised when I ask if they offer a finance quote on every deal. While the excuses vary, most have to do with equipment sales reps fear/ignorance of being asked a question they can’t answer about financing from their customer. Including a finance quote on every deal at very least let’s your customer know that financing is available.

  • Memorize the 36-month rate factor.

Great equipment sales reps are not afraid to ball park a monthly payment verbally during the initial part of the sale. This allows the equipment sales rep to judge their customer’s reaction to pricing.

  • Sell the monthly payment, not the equipment price.

In the copier and forklift industries, where more than 50% of the equipment is financed, the best sales reps will quote a monthly payment without ever discussing the equipment cost.  This allows them to maintain higher gross margins by using the flexibility of leasing to maintain pricing margins.

  • It’s easier to justify productivity gains or cost saving with a monthly payment.

I am always amazed by equipment sales reps that will try to justify the price of their equipment through features and benefits, and completely ignore using a monthly payment to minimize the price shock.  I once helped a dealer increase the sales of a $5000 add on by calculating that the cost was less than $5 per job when leased ($100/mo. lease divided by 20 jobs per month) The sales of this equipment add on jumped when the sales reps found out that it was easier selling $5/job than $5000.

  •  Get a credit app completed before you leave the meeting.

There rarely is any level of commitment if the end user is just window shopping. Getting a credit app completed increases the customer’s level of commitment to the sales process.

  • A question that will help avoid any credit surprises.

Equipment sales reps can avoid the aggravation of not being able to get one of their customer financed by asking one simple question “Are there any problems in your history that I need to explain to the finance company?”  You will be amazed by the number of companies that forgot they had a bankruptcy a few years back.

  • Offer to get financials for bigger deals.

If there is one thing that intimidates an equipment sales rep more than anything it’s the fear of asking their customer for 2 years of financial statements. Alleviate this stress by telling the equipment rep to tell their customer that you will be calling them for some follow-up credit information. It will be easier for you to justify the need for the financials to the end user.

Upgrade equipment? Follow these steps to decide if it’s time.

It’s best to start the process well before you actually need it. You increase your likelihood of landing your loan when you’re not in crisis mode.

Whether you run a fledgling company or you’ve been in business for years, investing in equipment upgrades can be an anxious process — from the time you first identify an issue to waiting for the bank to approve your loan or lease application.

Should you upgrade? Seven factors that might influence your decision.

  1. Is old equipment hurting productivity?If your systems struggle to perform tasks they were never designed to do in the first place, you could be at risk of losing potential revenue or prospective customers because your administrative systems can’t keep up with you.
  2. Is it prone to breakdowns or a struggle to repair?Aging equipment is bound to be less efficient and require more frequent repairs when it’s pushed beyond its useful life. If you’re limping along with an obsolete system that is unsupported by the vendor or you’re finding it increasingly difficult to locate consumables or replacement parts, you can only delay for just so long before you’ll be forced to upgrade. Better to proactively upgrade before your equipment fails completely and you — and your customers — are left in a lurch.
  3. Are you experiencing frequent bottlenecks?If performance is suffering because too much demand is being placed on a particular resource, then you’d be well advised to expand the existing system to make it accessible to more users.
  4. Is it preventing upgrades in other areas?Dependencies often develop between various systems or equipment so that, even when you’re eager to upgrade one piece of equipment, you can’t make the switch until you upgrade another piece of equipment that, in many cases is far more expensive to contemplate. For example, you’d like to implement a new administrative management system but you can’t do that until you upgrade and expand your server array. One upgrade can have a domino effect on other systems but sometimes you just have to tap that first tile to set the entire thing in motion.
  5. Is your image suffering?In any competitive environment, customers come to expect a threshold level of products and services. If you can’t offer services, features and benefits that have become an industry standard, you could be driving current and prospective customers away because they perceive you as outdated and unprofessional. Your antiquated systems and processes could be hurting your reputation. Customer confidence, once lost, is difficult to recover, so upgrades may be a necessity to maintain your competitiveness and a modern, professional image.
  6. What are the costs of action versus inaction?The benefits of an upgrade are usually apparent because you’re already highly aware of the problems the upgrade should solve. However, there may be hidden costs and unintended consequences that result from an upgrade. Be sure you’ve examined the upgrade from all angles and are aware of any interdependencies in your systems that could be affected. Create detailed projections on cost savings or revenue gains against the replacement cost and the expense of servicing and maintaining the new equipment.
  7. Does the timing seem right within the larger marketplace?Do things appear generally stable for the near term? Nothing is guaranteed in today’s economy, but pay attention to basic economic indicators that provide you clues about whether to proceed or delay. An announcement about lowered interest rates, a new financing program soon to be released or a change in a relevant tax deduction, are just a few of the factors that may influence your choices about whether to take action now or delay for a time.

Next steps: Funding for your equipment upgrade

Applying for a small business loan will require some effort on your part. It will take time to prepare and assemble the required documentation, so it’s best to start the process well before you actually need it. You’ll increase your likelihood of landing your loan when you’re not in crisis mode. Here’s what you can do to prepare.

  • Consult the professionals.Talk to your accountant about the best options for you and discuss the tax advantages or liabilities you should be aware of when considering whether to purchase, lease or finance. Work with your lender to determine the best type of loan for your needs and the loan terms that fit your situation.
  • Prepare the loan package.Loan programs differ slightly in their requirements, but nearly all will require the loan package to include your business plan, profit and loss projections and current financials. You’ll need to be able to clearly articulate why you need a loan, how much you need and how you plan to use it. Be sure your business AND personal finances are in order because, for small business loans, many lenders will use your personal financial position to help gauge how well you might manage a business loan.
  • Present your loan package.Request an appointment with the commercial lender you’ve selected, rehearse your presentation and make your case to the lender about how the loan will be put to use. You may want to invite the lender to your place of business for a tour of the operation and to illustrate your plans for upgrades, improvements or expansion.
  • Follow-up.Stay in regular contact with your lender while the loan package is under consideration. Respond to any subsequent requests from your lender for additional documentation as quickly as possible. Your rapid response indicates your desire to achieve a successful outcome.
  • Obtaining a small business loan or lease can be an intimidating, time-consuming process, but by educating yourself about the options and investing the time to create a compelling package, you’ll increase your odds of success.