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They have developed customized leasing programs specific to the needs of our industry. Clune has taken away many of the inherent dangers associated with presenting a lease that eventually end up holding our customers hostage. The beauty of Clune is that they have taken away the pain of the past and packaged a solution that will offer overall long-term value for our customers and us. We are also better protected against losing a customer's future business.

James O'Keefe, R.S. Knapp Co Inc

How to grow when sources of capital tighten

By Kevin Clune, CLP, Clune & Company

Clune is a Kansas City based professional in the leasing industry.

Even in economically challenging times, business must finance essential equipment. In our current economy, however, fewer firms have the cash reserves or access to bank financing to fund their equipment acquisitions. The recent turmoil in the capital markets has similarly affected some in the leasing industry. All of this may result in business owners struggling to acquire the equipment their company needs.

When navigating the financial field knowing some behind-the-scenes information will help you select the best form of financing and help you secure that funding.

Some larger leasing companies access capital through securitization of their portfolio, or the issuance of Commercial Paper. Securitization has all but dried up and there are very few buyers of Commercial Paper. This leaves many lessors scrambling for the capital they need to fund leases.

With diminished capital, the cost of funds go up, as do their rates. Additionally, lessors will be choosing to exit some markets and discontinue some vendor relationships because they no longer have the capital to fund them.

Fortunately, businesses that need to finance new equipment still have options. A true, independent lessor - such as Clune & Company - with traditional funding sources, have capital resources with the depth to meet the needs of their clients.

For business owners who have limited capital, leasing can certainly be a more viable option than purchasing. Because equipment leases rarely require a down payment, the business owner can obtain the goods needed without significantly affecting cash flow or having a negative impact on the balance sheet.

Additionally, lease payments can usually be deducted as business expenses on the tax return, reducing the net cost of the lease and creating a faster tax write-off. When leasing capital goods, a firm preserves their credit lines and no additional collateral is required. Cash purchases on the other hand reduce a firm's cash-asset position.

Leases also have more flexible terms than loans for buying equipment and leasing allows easier budgeting and many firms can fiscally function more effectively when they have a fixed monthly payment, an option that leasing allows.

Finally, leasing offers benefits when used to acquire items that tend to becoming technologically outdated in a short period, such as computers or other high-tech equipment. Conventional wisdom holds that the useful life for equipment that is vulnerable to technological obsolescence is rarely over three years. A lease passes the burden of obsolescence onto the lessor and the business owner is free to lease new, higher-end equipment after the lease expires.

Investigating and trusting your leasing service suppliers and knowing the market is critical to a successful and on-going financial partnership. Research your supplier of choice and learn their business practices. With a reputable, trustworthy firm handling your leasing needs, your equipment acquisitions will pay for themselves with financial flexibility and attainment of your strategic goals for growth.

Kevin F. Clune, CLP, is the second generation owner of Clune & Company, a 50 year-old capital equipment leasing firm located at 5950 Roe Avenue, Mission, KS 66205. Kevin Clune can be reached at 913-498-3000 or via e-mail at kclune@clune.net.