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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

Options for Financing Your Business During Economic Downturns

By Kevin Clune, CLP, President and Owner of Clune & Company, a Kansas City based leasing firm

In the wake of Bank Failings and continued news of many solid lending institutions placing limits on capital equipment loans, equipment vendors may increasingly recommend the option of a lease finance product to their customers. For business owners who are unfamiliar with this means of funding, I would encourage them to give this suggestion some serious consideration. With proper research of this financial tool, a business owner may find that leasing allows them to achieve their strategic goals for growth, even in these challenging times.

While economic experts argue the causes of our troubled economy, most agree that the primary culprit is the toxic Sub Prime loan. Those institutions who hold a portfolio of failing loans with declining value, have compromised their ability to lend to even Grade A Credits, as their resources are designated to cover their losses. Reduced liquidity has forced many banks to close their leasing departments and even caused some manufacturers to close or severely limit their in-house leasing divisions’ ability to fund equipment. Additionally, some dedicated Leasing Companies have been forced to either close their doors or reduce their lending capability.

Fortunately, businesses that need to finance new equipment still have options. However, it is essential that business owners shop leasing companies, as they are not all alike. Some independent lessors such as Clune have the financial strength to use their own capital to fund deals, as opposed to a broker who goes out and looks for a funding source for each lease contract.

Leasing companies originated in response to a need for capital equipment funding that a traditional bank could not offer, due to the restrictions/regulations imposed on banks. Unlike banks, leasing firms are not regulated. Unfortunately, many have engaged in practices that alienated clients and caused others to shy away from considering future lease contracts to finance their equipment acquisitions.

Luckily, there are professional leasing firms who understand that customer retention is dependent on honest, straightforward contracts. How can a customer be confident that they won’t be the victim of hidden charges, unexpected fees, and other surprise conditions? Begin by asking about a lessor’s professional qualifications and longevity.

In an effort for lessors to be regarded as a serious partner for business growth, the leasing industry has developed professional standards and created an educational certification program for those industry leaders who wish to undergo the training and testing to be designated, "Certified Lease Professional." There are only about 200 “CLP’s” in the country. Clune employs three of them.

Be sure to look beyond the monthly payment. It is important to be aware of any hidden charges, such as automatic renewals, forced insurance, late fees assessed at one day late etc. It has become incumbent upon those leasing companies who have adhered to honest business practices to constantly overcome these understandable prejudices.

Finally, it is always good to do business with a company who is accessible and flexible. If it is hard to communicate with your lease provider or have your questions answered satisfactorily and in a timely manner, you should consider looking elsewhere. Also, for those businesses that would prefer a non traditional payment structure that best suits their budgetary requirements, it would behoove them to locate a lease financier who will offer flexible terms.

As business owners face the challenge of limited access to capital, a lease can certainly be a more viable option than outright purchase. Because equipment leases rarely require a down payment, business owners can obtain the goods they need without significantly affecting cash flow.

Additionally, lease payments can frequently 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 also preserves their credit lines - which may have been reduced in these economic times. A lease also offers benefits for items that tend to become technologically outdated in a short period. A lease passes the burden of obsolescence onto the lessor, enabling the business owner to more easily acquire new, cutting edge equipment.

Investigating and trusting your leasing service suppliers and knowing the market is critical to a successful financial partnership. Research your leasing supplier of choice and learn their business practices. Ask questions and expect your questions to be answered fully. With a reputable and trustworthy firm handling your leasing needs, your equipment acquisitions will pay for themselves, resulting in financial flexibility for you and will allow you to attain 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. Visit them on the web and sign up for their bi-monthly newsletter at www.clune.net.