Can anyone qualify for a commercial vehicle and construction equipment lease? Whether you have bad credit, little money or no down, a startup business or a business with little time in business, we are going to discuss how to get financing no matter what the situation is.

 In today’s economy, lenders have changed their lending requirements as times have become worse. Many Americans are struggling to stay afloat with their normal bills and salaries and wages that aren’t rising. Additionally, many people have been laid off or fired because of employers either cutting back or going out of business. The blue chip companies of yesterday, Ford, GM, General Electric have seen their stock prices fall to new lows. High flying companies such as Starbucks are closing old non producing stores and reevaluating their future expansion plans.  Federal back government agencies such as Freddie Mac and Fanny Mae have financial problems due to eroding lending portfolios and are now being assisted by the Federal Reserve…What does this all mean to getting financed in the commercial vehicle and construction industry….

 Because banks recognize first hand that the U.S economy is in trouble, they have tightened their lending requirements in all industries. Many lending programs that were available yesterday are gone or changed dramatically that many potential customers will not qualify. Rates of interest charged by these lending institutions have jumped and more down payment money is required to start any lending program….The seasoned and startup business now must look at other alternatives in obtaining financing. Today, very few people have A+ Credit and must adjust their thinking based upon the times.

 One of the unique facts that has occurred during this economic recession is the large number of repossessions and foreclosures. Banks are taking back homes, commercial trucks and heavy construction equipment back by the droves. These lending institutions must recondition these foreclosed and repossessed items and get them back into revenue income producing stream ASAP. Every day that these items that are sitting on the financial institutions books are another day they are losing money..

 Obviously as financial institutions have tightened up their lending requirements for normal business, many people will not qualify for a new loan/or lease.  As lenders have absorbed huge volume of repossessions, they have come up with alternative financing to get them back into their revenue stream.

 For Americans that don’t have good credit, very little money available for a down payment or little or no time in business, these bank repossessions have created an opportunity for many. Prior Bankruptcies within seven years for many lenders are no longer a major stumbling block for the potential customers as long as credit has been reestablished. Today, lenders will look at

Customers that have credit as low as 600 and into the 500s with special provisions.  The market place today will offer customers as low as nothing down to deferred payments for 60-90 days on selected inventories.. Some lenders will even ignore the credit scores as long as the customer has healthy cash balances in the bank or a story to tell to explain past problems away. If you have terrible credit and very little money available down, some lenders will consider a financing arrangement as long as you have adequate additional collateral to put up such as other equipment, vehicles or real estate. Time in business and other mitigating factors that precluded you from a prior opportunity are now eliminated.

 

The types of items to be get financed in the above paragraphs are the following:

 

Dump trucks, garbage and water trucks, day cabs, over the road and semi trucks, boom trucks, box vans, bucket trucks, articulated trucks, concrete and cement trucks, fuel trucks, excavators, backhoes, bulldozers, forestry equipment, concrete pumps and concrete equipment, tow trucks, septic trucks, end and bottom dump trailers, flatbed and dry van trailers, etc

 

Many lenders have application only programs that don’t require financial statements, tax returns or bank statements. These financing programs could lend as much as $250,000 for seasoned businesses. Available credit on other repo programs could run as high as $100,000 for a startup business. Some lenders may require full documentation packages which shouldn’t be a hardship for a person that can now get into the financing arena.

 

There are many alternatives in the market place, once you understand that normal lending probably isn’t your answer. In the repo market, credit is always important but not always the answer to everything. You have the

ability to shop price and financing. Startup as well as seasoned businesses have any opportunity to acquire commercial trucks, heavy equipment and commercial trailers. The down payments, financing length, regardless of age,  and terms may be more flexible than you think. Startup businesses have a good opportunity to enter this market and not have to put 20-30% down, regardless of credit.

 

This is possibility a win-win situation both for the lender and the potential customer, whether startup or seasoned.

 

 Happy hunting for your acquisition.

 

 http://www.cclgequipmentleasing.com/DealerFinancing.htm

In today’s economic environment, asset rich cash poor is a familiar term. Many businesses, due to economic conditions, have put themselves in awkward working capital positons. Their income statements might show a small or large net profit but their balance sheets reflects a company that is not liquid. Their working capital is OK, in the total sense, but the liquidity of the cash flow cycle doesn’t turn fast enough to generate a sound healthy company. Many times you will see a balance sheet where  a profitable company can be overdrawn at the bank by hundreds of thousands of dollars at any point in time. This is a company that may have a large working capital problem.

An example of this is when cash reflects a zero balance, accounts receivable is $1,000,000 and the outstanding accounts payable is $700,000. The working capital is $300,000 which seems Ok unless the accounts receivable collection drags on beyond the payment of the outstanding accounts payable. The bottom line  cash flow could be out of wack and cause a large working capital problem.

In today’s environment where the economy is weakened by various problems, customers are not paying their bills on time, therefore rippling back to the businesses holding the receivables. In turn, the tardiness of the payment and/or no payment at all has caused the businesses holding the accounts receivable to be tardy on paying their bills…This is caused a major working capital problem that the businesses must resolve.

Another type of working capital problem is where businesses have invested alot of dollars in construction and truck investments in prior years. The liabilities on these related assets have been paid off and has created an equity position in these unencumbered assets. As the economy has changed as we discussed above and any current investments in this area can cause a major working capital and cash flow concern. Now we have two major problems, substantial dollars tied up in accounts receivables and the rest in hard assests like bulldozers, dump trucks, excavators, boom trucks, etc….

The solutions to these problems can be resolved by either factoring your receivables, securing a line of credit on your accounts receivables/inventories and/or securing a hard asset money loan on your hard assets, heavy equipment, yellow iron, trucks etc…..Each one of these areas have pro and cons and will be discussed on a limited basis below…..

Factoring has been around for centuries, you are basically selling your accepted receivables to a factor and they are collecting  the monies for you. Each factor is different and advance you a certain money upfront once you have completed certain requirements for the factor. At the end of the collection process, the factor usually will keep somewhere between 2-5% of the original receivable. The business gets their infusion upfront of money to keep their cash flow process going and the cost to do business is either passed on the customer or absorbed by the business.  The types of industries that qualify for a factor are changing and it is a good idea to do your homework before you select a factor….

Another way to generate upfront money is to go to your bank and obtain a line of credit against your accounts receivables and inventories. Usually qualifying banks will lend up to 75-80% on the eligible accounts receivables and 50% against the inventory up to a maximum amount….This can be a tedious process for the business with cross quarantees and additional collateral required. Their are many qualifying procedures to go through including personal and business credit checks. Additionally, in many instances, the bank on demand can call in the loan for various reasons.. One should consult his attorney and accountant on this type of loan,

In many instances, businesses are sitting on substantial amount of equity on heavy equipment such as bulldozers, trucks, production line equipment, excavators etc that is either paid off and/or could be refinanced. Niche lenders will come up with an internal house formula for how much is the liquidation value. Base upon this liquidation value, either orderly or forced, will come up with a lending base the lender will advance on. For the most part credit isn’t really an issue, the underlying assets are the key to how much money is available for working capital purposes. Obviously, the lender will do their due dilengce on any liens or encumberences against the qualifying assets..

These are three basic ways a illiquid business can look for alternatives in obtaining working capital. Additionally, there are other types of bridge loans, construction loans, debt/equity loans etc that are out in the market. Some additional lenders look at purchase orders or large binding contracts to lend money on. One should consult an attorney and/accountant when they enter these areas. It is good prudent advise……….

Happy hunting for your loan………………..

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As the economy has weakened and defaults have occurred at all levels, lenders Have put themselves into a very difficult position how to do business. On one hand, the lender has taken back tremendous amounts of repossessions due to default of payments or non-compliance of terms with the lease. The lessee can't afford to make payments when the revenue base isn't there and the costs of doing business has sky rocketed. The lessee has either walked away from his obligation to pay the lender or the lender has taken back the acquisition. Either way, everybody is a loser and the future looks no brighter.



The lender must recondition these repossessed items and either re-lease them or auction them off at a discount. This isn't a good scenario because the lender is losing time and dollars on every repossession. As this problem has leveraged itself, it has put some lenders into financial crisis. At the present time, some lenders have had to reevaluate their financial models and make dramatic changes. Their normal lending requirements have become more stringent and fewer prospects will now qualify for commercial trucks and construction equipment than one year ago. Many lenders will not lend on new acquisitions unless your personal credit score is above 650, 680 or higher. This has caused a problem on buyer acquisitions but also limited the lenders' growth which might be his survival. Additionally, financially strapped lenders require time in business of at least two, possible three years. This additional requirement has eliminated a big pool of potential buyers of heavy equipment and trucks.



As the lenders normal credit models have changed, this has caused potential buyers to be cautious and/or nervous of lender's intentions. Every week, information is in the news pertaining to a bank/lender and for the most part this information is damaging to the lending industry. In some instances, some lenders have transformed itself overnight into a different type of lender.



For the startup business, this has caused them to be almost locked out the trucking and construction industry entirely unless they have a personal credit score of 700 or higher. Additionally, the risk/reward factor that is presented at this level has required the lender to require a 15-20% down payment to consider a startup transaction.

One of the solutions that is available to the start up or the seasoned business without stellar credit is repos offered by these strapped lenders. These trucks and heavy equipment can be attractive to potential buyers because the front money may be minimal and the lender may be more flexible in its financing and credit requirements. This expanding market should be examined by all potential buyers because unique opportunities can exist for all different levels of the customer wants and needs. Seasoned businesses with stellar credit and time in business could be rewarded handsomely in the price, financing or both. .



This following types of work trucks and construction equipment is described in this article:



Dump trucks, bucket trucks, day cabs, concrete and cement trucks, boom trucks, water and vacuum trucks, articulated trucks, garbage trucks, tow trucks, excavators, bulldozers, forklifts, concrete equipment, concrete pumps, forestry equipment, backhoes, etc



In conclusion, when shopping for financing on commercial trucks and construction equipment, it is important that you acquire as much information pertaining to your lender. Times have changed and your contract that you signed must be carefully read and understood. These lenders that exist today may be completely change its lending model in a year or so and/or possibility Be out of business. Boy, times have changed..



Happy hunting for your acquisition and related financing...

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In today’s economy, start up and seasoned businesses have an unique opportunity to acquire an attractive deal for any type of Kenworth truck. The first option, for the buyer, is to visit their local dealer and find his truck there. This is great place to start and obtain pertinent information that will be used later in the data gathering process. From there, it is recommended searching the internet and its mass volume of data that is available. The potential buyer can visit such sites as truck paper and  truck trader etc to view thousands of listings of trucks available across the United States. He is able to sort and sift through this vast data and should be able to find a truck, in any city and/or state across the U.S, that meets his acquistion requirements. Once he has located a source of trucks available to him, he is able to contact these sellers and negotiate a deal that might be able to meet his needs. Once he is agreed to a price and its particulars, his next hurdle is to find adequate financing in today’s complex lending world of this commodity.

The type of Kenworth trucks we are identifying for this article is the following:

Kenworth dump trucks, Kenworth semi trucks, Kenworth garbage and refuse trucks, Kenworth Tow trucks, Kenworth Cement Trucks, Kenworth Concrete Trucks, Kenworth Flatbed Trucks, etc

Today, the financing arena for Kenworth trucks has become much smaller, especially for over the road trucks.. Lenders, in the past, that use to finance this niche market have either pulled their portfolio funds out of this area or have modified its lending requirements. It is not unheard of today that a start up business must commit to a down payment of between 10% - 30% of the acquistion cost of the Kenworth truck to enter this market. The seasoned business with good credit might be able to get in as little as one payment down plus documents fees but must have either A or B Credit. Other seasoned businesses that don’t meet these credit requirements, may be required to put up 10-20% down or either put up additional collateral as their credit scores fall below 600. Most buyers don’t enjoy these tightening financial requirements, are locked out of this market, and will start looking for alternatives that are available due to market conditions. In addition to the market requirements of substantial monies due upfront, the conventional lender has modified his risk/reward factor for the failure and possible repossession of these trucks. Therefore, the rate and/or interest factor that the lender charges has gone up making it a bigger challenge to complete the financing end once the want to be buyer locates his acquisition….

As the economy has weakened due to market conditions, including diesel gas reaching $5.00 or more per gallon in certain states, the route of conventional financing has changed as we know it. The lender has acquired another problem that makes their equation a little more complicated. In the past year as the price of food has gone up, the real estate markets have taken a toll for the worse and other world factors have caused the banks to be more unstable, the trucking industry has become more volatile. As the increase of defaults on the payments of Mack and all other trucks have risen to all time highs, the lenders have been taking back these trucks by the droves that are earmarked as repossessions. This has caused a problem with normal lending practices and trying to balance it with a non producing income portfolio. If these lenders don’t act swiftly and prudently, the combination of these two type of portfolios can be devasating to the lenders’ bottom line.  A third factor to consider is the off lease truck. These trucks are being returned to the lender and they must act accordingly with this third factor.

 

By definition, a Kenworth off lease Truck has been returned to the lender as the lease has expired. The lessee has made a decision to return the item in lieu of exercising the buyout option. A repossession is different than an off lease because it has arisen due to a default of the lessee for non payment terms or a violation of the terms of the lease. Either way, the lender has taken these trucks back and/and now must recondition these trucks and either sell these trucks or re-lease them. The lender can either advertise their off lease and repo inventories through their internal sales force, trade journals such as truck paper, truck trader etc or utilize outside professionals such as brokers to move their inventories as quick as possible. Sometimes, as these inventories either sit or whatever reasons aren’t moving, the lender will put these items up for auction.

 

At the present time, the lenders have two different types of financing portfolios to consider and must act accordingly. Normal lending on new business deals still require stringent lending practices based upon the credit markets and the risk/reward factors lenders perceive out there in the financial markets. The second type of portfolio, for the off lease and repos, require possibility a more lenient approach to liquidating their inventories prudently and recreating the income stream for the lenders. This will be discussed below.

Today, some of the lenders in the financial market have advertised personal credit qualifications as low as 600 prior bankruptcy rules amended or ignored, and start up businesses welcome.  Additionally, the front money to commence a lease can start as low as first payment only to whatever you might able to negotiate. Some of the lenders have application only programs up to $250,000. There are no financial statements, income tax returns or bank statements required. Additionally, some lenders may defer some of payments to get the semi trucks financed. The buyout clauses on these over the road trucks can range from a $1.00 buyout to 10% to 20%, Trac leases to possible fair market value buyouts. One should understand these clauses because they have an impact on the passing of title.

 

These favorable financial arrangements by the lender has stimulated the buyers wants and needs to either enter the trucking industry as an owner operator and/or possibility an expansion of a existing business. First Time buyers, whom were locked out of this market in the past, now has an unique opportunity to earn more revenue by acquiring a Kenworth truck for himself. A $50,000 over the road Kenworth truck might require as little as $1400 down to commence the financial obligation. Other lenders that might have required up to 30% down in the past might accept as little as 10% to acquire one of their repos and/or off leases…..Additionally, some lenders may offer favorable monthly payment terms vs standard lending to acquire their off lease and repos vs. the buyer looking to acquire a  truck at a dealership..

 

 In conclusion, this is a buyer’s market for Kenworth trucks. One should evaluate all the factors relating to this acquisition including gas costs, air emissions, environmental type requirements., buyout clauses acquisition costs and its related financing. Additionally, there are two distinct financing markets out there, one for the normal acquisition from the dealership and the possibility of acquiring a repo and off lease from a lender at favorable market and financing terms. As always it is advisable, if possible, to locate financing prior to truck shopping, it could save a lot of time and stress.

Happy hunting for your acquisition and related financing…

http://www.cclgequipmentleasing.com/Kenworth_trucks.htm