New Info Blog

Soon after Mr. Ecker took the helm of the Metropolitan Life Insurance Company, Leroy A. Lincoln, at the age of 49, was made Vice President. He had come into the company in 1918, and in little more than a decade had demonstrated his capacity to handle a variety of complicated administrative problems.

He had a broad and intimate knowledge of the entire insurance business, having previously served as Counsel to the New York State Insurance Department. He brought to his duties not only a keen analytical mind but also a warm sympathy for the men in the field, and special enthusiasm for the social service program of the organization. When, in March 1936, Mr. Ecker became Chairman of the Board of Directors, Mr. Lincoln succeeded to the Presidency, continuing the policies of his predecessor in office.

Frederick H. Ecker became president of the company at a period which then looked to many like a “Golden Era.” All business was at a high peak, and the Metropolitan shared in the general prosperity. Toward the close of this period many people seriously believed that a new order of living had arrived in America and that prosperity, along with low cost life insurance, was to go on forever.

One measure of this buoyant state was the rise in prices of common stocks, particularly those dealt in on Exchanges. Under such promising conditions, it is not surprising that common stocks were seriously urged as suitable investments even for life insurance companies; and one or two companies not subject to the restrictions of the New York Law purchased sizable blocks of well selected common stocks for their portfolios.

It was at this juncture, in September 1929, that President Ecker, in an address before the National Association of Life Underwriters at Washington, analyzed the proposal that life insurance funds be put into common stocks, and took a firm position against such “investments” by the life insurance companies. There were some who challenged his position; but not long after Mr. Ecker’s address had been published and put into circulation there came, in October 1929, the first of the Stock Exchange crashes. His judgment as to the dangers of common stock investments for life insurance companies was vindicated almost overnight.

The full import of this disaster was little understood at the moment. It was not for weeks and months that the country came to understand that its entire economy had suffered a shock which could not be overcome for years. As the first overturns in the Stock Exchange deepened into a well defined national depression, the life insurance companies shared the difficulties of the times with other financial institutions.

Large numbers of people lost their savings on the Exchanges. Many banks closed their doors, foreclosures increased rapidly, and employment began to drop sharply. As a consequence, many people borrowed on their policies, whether it was individual health insurance or life insurance to obtain the cash which they could find through no other source. This situation was further complicated by moratoria on policy loans and surrenders enforced in a majority of the States-limitations which were not sought by the Metropolitan.

The company continued to make all payments where no restrictions existed, and met every obligation as soon as the curbs were lifted. During the decade from 1930 to 1939 the Metropolitan paid out well in excess of $5,000,000,000 to life insurance policies or beneficiaries. These payments saved from the ignominy of public relief many thousands of individuals who had set up their own protective plans through insurance during more prosperous years. Contemporary with the efforts of the Federal Government to afford relief to the destitute members of the population, they certainly lightened the public burden.

Sarah Martin is a freelance marketing writer specializing in the history of business, finance, individual health insurance, and life insurance. For more information on life insurance policies or for no medical exam life insurance, please visit http://www.equote.com.

Tags: Ast, bank, banks, beneficiaries, business, cash, cia, circulation, consequence, Coul, country, curbs, dea, depression, disaster, Doors, ears, Economy, Elance, Employ, federal gov, federal government, finance, financial, financial institutions, Foreclosure, foreclosures, Fre, Gold, Health Insurance, heir, history, inc, informat, institutions, insurance, insurance business, insurance companies, insurance policies, investment, investments, Irs, Jud, judgment, knowledge, Life Insurance Policies, loan, loans, locks, lost, many people, market, marketing, met, obligation, People, Plans, population, portfolios, Proble, promis, rash, Rate, sit, stock, stock exchange, stocks, Target, variety, writ, Yea

With the sharp decline in the stock market and the failure of many financial institutions, many people are very worried about their savings and retirement accounts. If you are worried about your financial nest-egg, then you probably need to know more about how the government already has safeguards in place for you, depending on where your money is invested.

Here are some tips and pointers about making sure your money is safe:

Banks and Credit Unions

If your money is in an account that is FDIC insured AND your account balance is less than the FDIC insurance limit, then you are as safe as you can be. The same goes for credit unions, except they are insured by NCUA. It’s the same idea, but a different organization. They are both backed by the federal government, so the government is going to make sure your funds are there when you need them.

Certificates of Deposit, Bonds, etc.

These really depend on who is backing the bond. If you have a treasury bond, you’re all set. Those are bonds issued by the government, so they are backed by the financial resources of the government. Most bonds and CDs fall into this category, so you should be safe. These fall under the same FDIC insurance as savings accounts, except that CD insurance is (currently) at $250,000 per institution, instead of the $100,000 limit for checking and savings. Keep in mind that a little investigating may save you untold heartache, so it would be good to ask about your specific CDs.

If your CDs are backed by a financial institution that is not FDIC insured, then you may consider breaking the certificate and paying the penalty to get your money out early. You can then put the remaining money into CDs and Treasury Bonds that are fully backed by the government. This will allow you to know that your money will be safe, even if the bank that holds the certificate falters.

Stock Portfolios

If your money is in the stock-market (i.e. it is in a 401(k) plan), then you’re not so lucky. Then again, you’re very lucky. It depends on how you want to look at it and how much time you have until you need that money.

If you need the money now (or within the year) from your stock-market portfolio, then you may be in trouble. The value of those stocks may be worth considerably less than they were even a year ago. The longer you can leave them sit, the better off you should be.

However, if you have five to ten years to leave the stocks alone and let the stock-market rebound, you’re in great shape. In fact, you could actually see a profit in this situation. You see, for every dollar you put into the market right now, you’re buying more shares of stocks than you were a year ago for the same dollar. In some cases, two-to-three times the amount.

Now, this doesn’t mean to dump everything you have into stocks. The market is still a bit too unstable for that, and the stock market is – after all – a gamble. But if you can just hold on and keep contributing to your retirement plan just as you have been, the odds are in your favor to come out ahead.

Of course, it is always a good idea to know where your stock-purchases are going. You may want to make some adjustments to your portfolio to ensure that the dollars you are investing are going to solid funds, but don’t panic. You just need to sit tight with the patience to let the market rebound.

Jerry Hanel is a freelance writer, computer programmer, and over-all financial scrooge… but in a good way. You can find more frugal living tips and financial information at Jerry’s Frugal Living Tips.

http://www.jerryandcheryl.net/financial

Tags: Ahead, Ally, bank, banks, bet, bett, bonds, certificates, certificates of deposit, cia, Coul, credit, credit unions, current, dea, Decline, Diffe, Dollar, ears, Elance, failure, fdic, federal gov, federal government, financial, financial information, financial institutions, financial resources, fit, Fre, freelance writer, heart, heck, heir, informat, institutions, insurance, investing, Mai, many people, market, money, odds, patience, People, pointer, portfolios, rent, retirement, retirement account, retirement plan, safeguards, savings account, shape, sit, stead, stock, stock market, stock portfolio, stocks, sure your money, Target, Three Times, tips, Valu, writ, Yea

Commodity ETFs (exchange traded funds) are made up predominantly of things derived or cultivated from the Earth. These include energies, such as oil and natural gas, agriculture, which includes crops and livestock, and metals, like silver and gold. Commodity ETFs are also made up of currency exchange traded funds. An exchange traded fund is similar to a mutual fund with one major difference being that it is traded on the market like a stock.

A Gold ETF was launched in March of 2003. Gold ETFs are shares of gold issued as a certificate. This is appealing to some gold investors (coined gold bulls in the marketplace) because they can own gold without having to store the physical inventory.

The gold exchange traded fund inventory is securely stored by their holders in vaults. The holder that launched the first gold ETF is StreetTracks Gold Shares. Incidentally, they are also the largest holder of the fund. The corporation holds such a vast amount of gold that it has recently had to find a larger vault in which to store it. Currently StreetTracks Gold Shares stores about 584 tons of gold, with a value of almost 18 billion dollars. When the ETF launched in 2003 they had only 8 tons.

Gold ETFs are considered a good hedge fund for a commodity exchange traded fund portfolio because of the stability gold has shown over the years. Gold’s value has kept up with inflation for more than 100 years. Recently gold ETFs have been up and down, but as a long term investment, gold is thought by many to be one of the safest.

1/10 of an ounce of gold is equivalent to one share. The average cost to trade a gold ETF is about 0.4%. This is a full percent less than other commodity ETFs. Gold is considered to offer the most liquidity of commodity ETFs, making gold the savvy investors choice.

Recently the name of StreetTracks Gold ETF was changed to SPDR Gold Trust, though its symbol, GLD, remains the same. This was a re-branding done to pull all of the corporations commodity ETF funds under one umbrella, making it simpler for investors to find all of the products they offer

SPDR Gold ETF declined by 12.5% in April of 2008, the steepest since the inception of the ETF. It is expected to be back on the rise with analysts suspecting it will hit record highs by the end of the year.

There are financial advisors who advise against gold ETFs because they feel the funds are a bad choice. Other than for making jewelry, they say, gold is a useless commodity. They also warn that the capital gains tax on gold is almost double that of other commodity ETFs. Some advisors are concerned that the storage of the gold is so secretive, making it impossible to know if the gold is adequately secure.

Most financial advisors and analysts praise gold ETFs as a safe, secure investment because the price of gold, they claim, cannot decline due to political uprise or the fall of financial institutions. They say that gold will always have a value. The global demand for gold ETFs is in a constant upswing, even in the current troubled financial state. Gold ETF, the experts tell us, is of the most secure and trusted assets to invest in today. Consider adding a gold ETF to your commodity ETFs, chances are you won’t regret it.

Ryan helps you understand gold ETFs and how you can profit from investing in a gold ETF

Tags: aim, Ally, assets, Ast, billion dollars, capital, capital gains, cia, commodity, corporations, currency, currency exchange, current, Decline, Diffe, Dollar, ears, earth, etfs, exchange trade, exchange traded funds, expert, financial, Financial Advisors, financial institutions, fit, Gold, heir, inc, inflation, institutions, inventor, investing, investment, investor, investors, Irs, Liquidity, long term investment, Mai, market, met, oic, ounce of gold, pita, politic, price of gold, rent, stock, Swing, Target, Tax, term investment, ups, Valu, Yea

Getting business financing is tough when the economy is doing well and almost impossible when the economy is doing badly. There is a reason for this, lending money to a business is considered risky, especially for financial institutions. This is why most institutions will ask for audited financial statements and will insist that your business must have good collateral. What qualifies as good collateral? Usually real estate, machinery and accounts receivable in some combination. Furthermore, institutions also want to see a multiyear track record in which your company shows substantial growth.

But – what if you own a startup? Don’t have hard collateral? Or, what if your business is in a turnaround situation? Usually, you’ll be out of luck. Fortunately, there are other options.

There are alternate business financing solutions that can work well in many instances. For example, let’s say that your commercial clients take 30 to 60 days to pay their invoices. This can create a challenge for most businesses. If you can’t get a conventional business loan, a good alternative is to use factoring. Factoring, which has been gaining traction recently, provides an advance against your slow paying invoices. It provides the working capital you need to pay business expenses and eliminates the timing challenges of waiting for payment.

Here is how it works. Let’s say that you sell a product (or service) and then invoice your client expecting payment in about 45 days. A factoring company can advance about 80% of what is due to you within days of invoicing. You get the remaining 20%, less a service fee, once your client pays the invoice in full.

Stated differently, you get about 80% soon after invoicing, and the remaining 20% (less the fee) once your client actually pays.

For most businesses, getting an 80% advance spells the difference between being able to run the company and going out of business. It provides the liquidity to pay employees and suppliers in a timely way. For many, it allows them to take new clients without worrying about their payment terms.

Factoring companies consider your invoices from good credit worthy clients to be excellent collateral. This enables them to advance money against them. Now, this does not mean this is the only criteria they will look at. Most factoring companies will want to make sure that your company is free of judgments, lawsuits and liens.

One critical advantage of invoice factoring is that it works very well for startups. Most factoring companies are happy to work with clients whose biggest asset is a roaster of good paying clients.

About Commercial Capital

Looking for factoring financing? Commercial Capital can provide you with a competitive factoring quote. To learn more about our invoice factoring program, please call (877) 300 3258

Tags: advantage, Ally, amp, Ast, Aud, bet, business, business financing, business loan, capital, challenges, cia, Collateral, commercial, credit, Diffe, Economy, Employ, Employe, Expenses, factoring companies, factoring company, finance, financial, financial institutions, financial statements, financing, Fre, going out of business, heir, Instances, institutions, Jud, judgment, judgments, lending, lending money, Liquidity, loan, lows, Mai, money, oic, pita, Real Estate, reason, rent, risk, sit, Spell, Suits, t pay, Target, Terms, ups, work, Worry, Yea

The current financial crisis

The public have a common understanding that the subprime mortgage crisis has leaded to a far more serious consequence, so called ‘the financial crisis’ recently. To be exact, It has been going on for seven months. But how will that be happened? This is the question. The subprime load crisis is relatively simple to understand. People bought homes they couldn’t afford, and now they are falling behind on their home loans. This has caused the loss of related financial institutions.

However, the amount of loss is not the major cause of the financial crisis. US government has already announced to take over Fannie Mae, Freddie Mac and AIG, and have injected the capital over that amount into the market. Besides, the majority of homeowners are still doing just fine. The conventional mortgage market is still healthy. So, how is it that a mess concentrated in one part of the mortgage business: the subprime loans, has frozen up the whole credit markets in United States? How would that crisis caused such a big impact to the stock market, causing the collapse of Bear Sterns, Lehman brothers, etc, and left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression in 1923?
 
In order to have a big picture of this incident, I think this could be explained in this way. First of all, behind the whole financial crisis, there are actually 3 major components: the subprime mortgage, Leverage (or gearing), and the Credit Default Swap(CDS). We have mentioned about subprime mortgage before. So, what is leverage? In the finance industry, leverage is a common way to use in such a way to magnify the outcome of the investments. This can be done by various financial instruments such as options, futures, margin or borrowed capital, to increase the potential return of an investment. 
 
At present, many investment banks use leverage to operate more then 20 times of their capital. For example, if bank A have an asset of 5 billion, then 30 times of leverage means that bank A can operate 150 billions of money, in which most are borrowed. It is obvious, if there is 5% of profit in the investment, then bank A has a profit of 7.5 billion. However, on the other hand, if there is 5% loss in the investment, then bank A loss all it’s 5 billion of asset, and still owe the lender 2.5 billion.
 
The third component is CDS. What is CDS? As explained above, the operation of leverage is very risky. So some bankers think of a way to take insurance on these leverage. This insurance is called CDS. It is a specific kind of agreement which allows the transfer of third party credit risk from one party to the other. One party in the swap is a lender and faces credit risk from a third party, and the counterparty in the credit default swap agrees to insure this risk in exchange of regular periodic payments. For example, Peter borrows $100 from John. John wants to get insurance on this $100 debt in case Peter was unable to return the money. The John goes to Jane and asked for Jane to insurance that debt. Jane agrees to do so if John is willing to pay her an insurance fee of $5 per year. That is exactly the most simplified scenario of CDS.
 
Now, apply that in the world of banks. Recall the example of ‘bank A’. Bank A operates a leverage of 30 times. To reduce the risk, it goes to bank B and asked for bank B to do CDS insurance. After analysis the market data, bank B knows that the breach of contract case is less than 1%. Therefore, bank B is willing to take that insurance to earn the insurance fee. However, this is not the end of the story. Although bank B agree to accept the insurance, it can not have the insurance fee immediately. At the same time, some other banks such as bank C, bank D, etc. are interested to these CDS contracts. So bank B is willing to re-sell them to other banks to have the cash immediately. This is the scenario. The CDS contracts being sell and re-sell continuously among different financial sectors. In the mean time,
the market value of the CDS has reached 62 trillion.
 
However, you may see that, all the banks A, B, C, etc are making money. So, where is the money comes from?  The money comes from the revenue generated by the subprime mortgage business. So why the honey moon period can continue in the previous few years? It is because the real estate prices keep rising in the previous few years. In that period, home owners and buy and re-sell the real estates easily, who can earn good money at the same time. It just likes snowball or bubble. The market keeps rocking until 2006. When the downturns came, the prices of the real estates dropped. People who are lack of financial ability was unable to pay the high interests of those subprime loans. In that case, the subprime mortgage market started collapsing, which in turn affecting the CDS market. Banks and financial institutions who are involved in those products is unavoidably being affected. In fact, nearly all I-banks and most of the commercial banks are involved in this storm, or more appropriates, the tsunami. 

George C. (http://www.finance-database.com)

Tags: Ally, amp, bank, banks, big picture, billions, Breach, business, capital, cash, cia, collapse, commercial, consequence, Coul, Counterpart, credit, current, debt, depression, Diffe, downturn, e finance, ears, Economy, face, federal reserve, finance, finance industry, financial, Financial Crisis, financial institutions, Financial Instrument, fit, Fre, futures, heir, high interest, home, Home Loan, honey moon, inc, institutions, insurance, investment, investment bank, investment banks, investments, Irs, laps, Leverage, loan, loans, lows, Making Money, Marg, margin, market, markets, money, mortgage, People, pita, Rate, Real Estate, Recession, rent, risk, s market, stock, stock market, sun, Target, trillion, united states, us government, Valu, Yea

Fact: In 2006 banks ripped off their Australia customers $4 billion in bank fees.
Fact: Bank fees are costing us all too much.
Fact: We mistakenly believe we can’t do anything about it. Wrong.

The worst rip-offs include:

*Periodic payment dishonour ($35 – $50) The bank stings you with this when you have insufficient funds and a regular transaction is declined. Watch those bank balances.
* If the minimum repayment on your card isn’t met you can expect to be stung $25-$35. Be careful as this can sometimes his twice in the period of one statement.
* Authorise a payment that will overdraw your account and the bank will hit you for $30-$40.
* Over-limit fee ($25 – $35) Exceed your credit limit by even the smallest amount and the banks will charge you for it.
* If you write cheques, there needs to be enough funds to cover it when its presented otherwise the banks will hit you with a $35-$50 dishonour fee.
* The bank will even get you for $15 if you cancel a cheque after its been written
* And the best one: the cheque dishonour fee (up to $20) An inbound cheque to your account does not clear because there are insufficient funds to pay it. You didn’t even have to do anything to cop that one!

How to beat the banks fee rip-offs:

*Learn how to avoid the fees by studying the card or account information.
*Just call the bank and ask them to reverse the penalties. Doesn’t hurt to ask!
*Arrange to automatic payments for the minimum monthly amount to be made to your credit credit so they don’t get you with late payment fees.
*If that all sounds too hard and you think you’ll destined to be paying penalties, shop around for an account that doesn’t charge so much for them. Basic accounts tend to have low fees and charges.
* Use your own bank’s ATMs to limit fees and charges. You might have to walk a bit further but under a new set of guidelines, the Reserve Bank has allowed “foreign” ATMs to levy a fee on the cardholder, as well as the fee charged by the cardholder’s home bank. How many times can you be stung in the same transaction!!

How mistakes are made:

Computer related errors are estimated to account for about half the errors made by financial institutions. Among the worst offenders are coding errors which occur when a staff member enters the wrong interest code. Remember, if you’re not sure about something on your bank statement, ask the bank – they can’t charge you for that…yet.

http://www.barefoot.com.au

Tags: bank, banks, cancel, cia, credit, Decline, Dish, financial, financial institutions, foreign, heir, home, inc, informat, institutions, met, mistake, Smal, stake, Stu, Target, writ

Getting business financing is tough when the economy is doing well and almost impossible when the economy is doing badly. There is a reason for this, lending money to a business is considered risky, especially for financial institutions. This is why most institutions will ask for audited financial statements and will insist that your business must have good collateral. What qualifies as good collateral? Usually real estate, machinery and accounts receivable in some combination. Furthermore, institutions also want to see a multiyear track record in which your company shows substantial growth.

But – what if you own a startup? Don’t have hard collateral? Or, what if your business is in a turnaround situation? Usually, you’ll be out of luck. Fortunately, there are other options.

There are alternate business financing solutions that can work well in many instances. For example, let’s say that your commercial clients take 30 to 60 days to pay their invoices. This can create a challenge for most businesses. If you can’t get a conventional business loan, a good alternative is to use factoring. Factoring, which has been gaining traction recently, provides an advance against your slow paying invoices. It provides the working capital you need to pay business expenses and eliminates the timing challenges of waiting for payment.

Here is how it works. Let’s say that you sell a product (or service) and then invoice your client expecting payment in about 45 days. A factoring company can advance about 80% of what is due to you within days of invoicing. You get the remaining 20%, less a service fee, once your client pays the invoice in full.

Stated differently, you get about 80% soon after invoicing, and the remaining 20% (less the fee) once your client actually pays.

For most businesses, getting an 80% advance spells the difference between being able to run the company and going out of business. It provides the liquidity to pay employees and suppliers in a timely way. For many, it allows them to take new clients without worrying about their payment terms.

Factoring companies consider your invoices from good credit worthy clients to be excellent collateral. This enables them to advance money against them. Now, this does not mean this is the only criteria they will look at. Most factoring companies will want to make sure that your company is free of judgments, lawsuits and liens.

One critical advantage of invoice factoring is that it works very well for startups. Most factoring companies are happy to work with clients whose biggest asset is a roaster of good paying clients.

About Commercial Capital

Looking for factoring financing? Commercial Capital can provide you with a competitive factoring quote. To learn more about our invoice factoring program, please call (877) 300 3258

Tags: advantage, Ally, amp, Ast, Aud, bet, business, business financing, business loan, capital, challenges, cia, Collateral, commercial, credit, Diffe, Economy, Employ, Employe, Expenses, factoring companies, factoring company, finance, financial, financial institutions, financial statements, financing, Fre, going out of business, heir, Instances, institutions, Jud, judgment, judgments, lending, lending money, Liquidity, loan, lows, Mai, money, oic, pita, Real Estate, reason, rent, risk, sit, Spell, Suits, t pay, Target, Terms, ups, work, Worry, Yea

Forex robot software is software where the forex trades are automatically traded without any human intervention. The software is based on highly specialized and sophisticated algorithms. The software’s are designed by highly trained and experienced traders and forex managers. There are a number of these softwares available online. The minimum lot size can differ from one software to another. Many of them charge $10,000 as the minimum account size.

Some of the benefits and advantage of this type of software are:

It relieves the traders of constantly monitoring the system. The Forex software will trade and manage the account according the specific instructions and customization by the trader.

The robot software is designed to look at the short term opportunities that are present during the day for trading of the currency pairs. The software uses highly advanced algorithms to execute and place the orders.

Forex software is used by traders to diversify their portfolio including forex, stocks, mutual funds and real estate. Many existing forex managers and traders use the Forex robot software to trade a portion of their funds while trading on rest of the capital using other forex trading software.

Robot software is also for those who aren’t very comfortable their own capital and would rather let someone else trade for them. It’s also for those traders who can devote only part time for trading in forex. Also many financial institutions want alternative places where can invest money. For them Forex software provides the opportunity to trade in forex.

Many forex brokers also offer software to let their customers minimize their losses.Good Forex software offers the trading companies customers alternative choices.

Forex software usually trades in the major currencies of the market and not the minor currencies. The software is also managed by professional forex dealers. It also offers trading opportunities in rising and new markets. All the reporting is done in real time and the reports can be generated at any time by the customer.

Many of the Forex robot software packages also allow the customers to participate through the Individual Retirement Plan (IRA) and though certain customer retirement plan. Forex is a high risk, high gain investment.

Currency markets are extremely volatile and liquid. Traders are also allowed to take out their money as and when they require it making it one of the most liquid investments. With this type of software you would think that you may be able to take over the world with all your money but the truth is while Robot Software is good, it is not the be all and end all otherwise forex traders would rule the world.

If you would like to to see some of the best automated forex software around simply visit the site below.

For more tips and tricks on how you can make large amounts of money by trading forex, visit our Forex Software Review site where we show you the newest and hottest Forex software on the market including our Forex Tracer Review.

Tags: advantage, algorithm, algorithms, Ally, automated forex, avail, Benefit, Benefits, Best Auto, broker, capital, choices, cia, currencies, currency, currency market, currency markets, currency pairs, dea, Diffe, Diversify, experienced traders, financial, financial institutions, fit, forex broker, forex brokers, forex dealer, Forex Dealers, Forex Robot, forex software, Forex Trade, forex trader, forex traders, forex trades, forex trading, forex trading software, heir, high risk, human, inc, institutions, Invest Money, investment, investments, Irs, losses, lot, market, markets, minor currencies, money, mutual funds, oic, part time, pita, profession, Rate, Real Estate, Real Time, retirement, retirement plan, review, risk, robot, robot software, Rsi, s trading, sit, Software, Software Package, software packages, stock, stocks, Target, tips, tips and tricks, trader, trades, trading, trading forex, trading software, train, truth, vote

Financing options encourage customers to commit to larger purchases on average, providing equipment vendors an advantage over their competition. To increase your business, you may consider adding leasing as an option for your customers, or modifying your current leasing program to better serve your customers. As you consider your options, keep in mind that not all leasing partners are the same and you need to find a partner which will be best for and your customer. The following pointers will assist you in making the right choice for your business.

Tip #1: Prepare to Compare

When choosing the leasing company, it is important to understand the unique needs of your business. Leasing may not work well for you if your product offerings do not meet the following criteria:

Product Offering Suitability
Equipment value is below $5,000 in value Equipment under $5,000 is not enticing for a company to facilitate because these amounts are typically paid with credit card or net accounts.
Equipment value is below $100,000 If your products are below $100,000, most companies are not going to require financial statements. They will generally use a credit scoring program to render approval.

Above $100,000 in equipment cost:

Typically most leasing companies will want to review financials statements in order to approve a customer when the equipment cost is over a $100,000.. In general they would like to review 2 years financial statements.

Expected contract length based on useful life of equipment A leasing program may not prove viable if it requires a contract length that exceeds the life of the equipment. For example, it would not make sense to finance a laptop computer for 7 years, but it might make sense to finance a large printing press for that long of a term.

As a vendor, it is important to package your offerings to a specific time period, because it creates another opportunity to upgrade the customer at the end of the lease term.

Tip #2: Know the Players

There are 3 main players in the equipment leasing industry: brokers, independent leasing companies, and financial institutions. All three funding source alternatives provide excellent opportunities for financing the lease of equipment.

Broker – Brokers are financial intermediaries that work with multiple funding sources.

The advantage for your customer is a broker will have a large array of financing options for your customers. They will most likely have the ability to finance your customers due to the fact they work with a few funding sources who have contacts. The disadvantage of working with an equipment leasing broker is once the lease is funded with the broker, they are out of the picture in terms of any decisions involving that lease going forward.

Independent Leasing Company – Independent companies get their funds from bank lines and/or investors.

An independent leasing company usually will bill or collect the rental payments and will have control of the decision process for their customers, as well as any subtle changes to the documentation if needed. In addition, will also allow you to create a more customized program for your customers.
Financial Institution Financial Institutions are the big boys in the equipment leasing space such as Wells Fargo, US Bancorp, and GE Capital.

These institutions are going to have specific programs available. However, they will be more rigid in most cases on their lending requirements: If you and your customers fit within their parameters, this is an excellent option. The downside is that big institutions can make quick changes, especially in the current market. You could be out a leasing partner overnight if they decide they no longer want to finance your specific equipment. Most larger banks and institutions are going to have a more rigid policy for credit and documentation.

As you and your company grow, you might find that a broker is the best option forever based on your requirements. Perhaps a financial institution may work best as your company grows. Consider each of these contributors to make sure you’ve maximized the service you can provide your customer and your own business advantage.

Tip #3: Know What Is Required of You and Your Customers

Most leasing companies will allow you to include services outside of the equipment cost such as warranties, installation, and training. A majority of leasing companies will want to keep these costs under 20% of the total cost of the lease of equipment. Some leasing companies will go as high as 50%. It’s a wise business choice to discuss the options with your potential partner upfront so they understand your business.

Pre-funding is the ability for the vendor to advance funds on the contract as soon as the contract is sent back to the leasing company. Some companies will advance 50% and some as high as 100%. Let your leasing company know your specific cash flow needs, along with your desired delivery time. A leasing company might not want to advance funds if it takes 6 months for your product to deliver and install, but if you have a shorter window, like 2 weeks, they should be willing to advance you funds.

Leasing companies can also use a residual to help lower your customers’ payments and give them the ability to return the equipment at the end of the lease, or purchase if they like. The purchase option is an excellent way to create a selling opportunity for you at the end of the lease. Some companies will also allow the vendor to re-purchase the equipment from the leasing company.

Tip #4: Staying Safe & Smart

- Ease of Contract
Ask to see a copy of the contract the leasing company uses for funding. Make sure that you understand the terms and the options for your customers. If you are well informed with the leasing contract, the smoother the process will be to get the equipment you need for your company to excel. It is also important to understand the implications of the contract, such as notification policy for residual payment and purchase options. Most companies have easy to understand lease contracts, but be aware that some have hidden conditions.

- Get References
Ask the leasing company you’re working with for references. Compare other leasing companies to find similar dollar amounts and annual sales amounts so that you can find the leading leasing company that complies with your business.

- Check for Qualifications
Whichever you choose, make sure they are members of at least one of the leasing associates such as NAELB, UAEL, EAUL, or ELFA.

- Don’t Let Your Customers Go it Alone
At a minimum, you should have a leasing company to refer your customers to if you don’t have an established relationship. Any effort you make now to create a relationship will pay off in big dividends. Having financing options shows your customer that you care about their needs.

The world of equipment leasing does not have to be intimidating or a black box process. By taking a few minutes to talk to leasing partners, you will see the process is very easy. Like any relationship, especially in business, it is important to make sure you know what you need and what you want.

By knowing this, you can provide your laundry list and see if the leasing company can accommodate you or at least meet you halfway. It has been demonstrated over the years that companies that offer leasing sell more equipment. Equipment purchasing and leasing go hand-in-hand because it’s all about cash flow, and the relationship between your customer, your company, and the equipment leasing company of your choice.

Tom Williams is President and CEO of eLease.com. eLease provides equipment leasing and equipment financing to a wide variety of businesses and can be found on the web at http://www.elease.com

Tags: advantage, Ally, amp, Array, Ast, avail, bank, banks, bet, bett, Big Boys, broker, business, capital, cash, Cash Flow, ceo, cia, contact, Control, Coul, credit, Credit Card, current, current market, Decisions, Desire, dividends, Dollar, ears, few minutes, finance, financial, financial institutions, financial statements, financing, fit, heck, heir, inc, institutions, investor, investors, laptop computer, lending, Mai, market, met, mmi, offerings, oic, pita, pointer, Purchasing, Rate, relationship, rent, review, Right Choice, sales, Target, Terms, Time Period, train, Training, Valu, variety, warranties, wells fargo, work, Yea

Beginning or expanding a business can be an exciting venture. But to do so successfully, a business owner is going to need capital. That comes from either the owner’s personal check book or financing extended through a bank. To secure financing through a bank, a business owner must understand the 5 C’s of Credit. These guidelines are used by financial institutions as a way of analyzing a borrower’s request for a loan. The 5 C’s: Cash Flow, Collateral, Capital, Character and Conditions are the major elements a bank uses to examine a business and its owner during the loan process. Each can have an impact on a funding request.

Cash Flow
A business owner may feel he or she needs additional capital to run a business, but they must also demonstrate the ability to repay the loan being considered. In determining this, a bank will analyze the company’s projected and historical cash flow in comparison to its debt. A commonly used method, the “EBITDA” ratio looks at a business’ Earnings Before Interest, Taxes, Depreciation and Amortization. Broadly speaking, it’s the measure of the cash flow generated by a business. This is the cash flow available to repay the debt once the company has met its other payments required to sustain the business.

A bank may also be interested in how much capital has been invested by the owner, which requires calculated risk. Financial statements and personal credit assist bankers in knowing how much an owner’s personal resources can support the business as it is growing. For companies that have yet to make a profit, elements such as an excellent customer list and payment history also come in to play. Bottom line: the business should be perceived by a bank as solid.

Collateral
Bankers also look at collateral, or the secondary source of repayment. Collateral are assets offered by a company as an alternate repayment source. Typically these assets include real estate, accounts receivable, inventory, and equipment. In a liquidation scenario, accounts receivable can be used to pay down a loan, while equipment and real estate can be sold to generate income to pay down the loan as well. Until a business is established, a business owner will need to pledge collateral that may be linked to personal assets, such as a house. No one wants to be in the position of losing a home because a loan has turned sour. A business owner needs to think carefully about how he or she will handle the collateral element when borrowing money from a financial institution.

Capital
Banks essentially are looking for sufficient equity in the company on the part of an owner. Sufficient equity can aide a business when times are soft. It’s important a company be able to sustain itself during tough times. Additionally, banks want assurance that an owner is truly invested in the company and will do what it takes to turn things around if cash flow becomes a problem. When examining capital, banks typically analyze the company’s total liabilities compared to equity, or the Debt to Equity Ratio. Most banks like to see the Debt to Equity Ratio no higher than 2 to 3 times.

Character
It’s not hard to understand why investors want to invest with those who possess impeccable references and credentials. This is where the character of the loan applicant comes in to play. While the character card can be challenging to assess, a bank will carefully review business and personal credit reports, as well as communicate with vendors regarding a business owner’s dealings with them. Owners need to demonstrate that they are indeed effective leaders and can conduct themselves professionally in challenging times. Securing a business loan from a bank is based on trust, to a large extent. Banks need to know that a business owner will act in good faith at all times to honor any and commitments.

Conditions
Bankers must always take a look at current economic conditions surrounding a business as well as issues surrounding its industry to determine key risk factors. It’s important, therefore, for the owner to make evident the ability to manage these risks to ensure the future viability of the business. Banks will examine the competitive landscape of the company, customer and supplier relationships, and other industry factors that may impede the company’s growth. Business owners should be prepared to describe the primary threats to the business and what measures are being taken to protect the company from these risks.

The 5 C’s of Credit form the back bone to a bank’s analysis when considering a request for a loan. A clear understanding of a bank’s requirements should help a loan applicant be prepared to provide appropriate information and successfully position the company in a way that results in the approval of a loan for the future growth of the business.

American Momentum Bank is a progressive, Florida based bank that strives to offer a deep understanding of our commercial, retail and online banking clients’ immediate and long-range goals, unparalleled personal service, and solutions tailored to our Clients’ specific needs. Experienced, professional management and Associates, combined with flexible decision making, is essential to the success of our Clients. Our banks’ success is a result of our Clients’ and Associates’ success. For more information, please visit http://www.americanmomentumbank.com

Tags: Ally, Amortization, assets, avail, bank, banks, bottom line, business, business loan, business owner, business owners, Calculated Risk, capital, cash, Cash Flow, cia, Collateral, combine, commercial, commitments, credentials, credit, credit report, current, dea, debt, Earnings, economic conditions, element, Elements, extent, Faith, financial, financial institutions, financial statements, financing, fit, goals, heck, history, home, inc, informat, institutions, inventor, investor, investors, liabilities, loan, measures, met, mmi, money, Personal, personal assets, personal credit, Personal Resources, pita, Pledge, Proble, profession, Rate, Real Estate, Regard, relationship, relationships, rent, review, risk, Risk Factor, sit, Success, Target, Tax, Taxes, tough times, viability