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  • The dry cleaning business requires installing several pieces of very expensive specialized equipment. These machines prepare, dry clean, finish and maneuver the clothes around the plant. Acquiring these machines can involve paying out a tremendous amount of cash. Business leasing is an attractive alternative to buying these dry cleaning machines. Leasing companies will offer terms for new and used equipment. Anyone wanting to acquire dry cleaning equipment without a credit history, however, may have to take a few extra steps to qualify for a business equipment lease.

    Adequate Collateral

    As with any loan type, leasing companies look at the collateral on the lease. The equipment should be equal in value to the lease amount. A person without a credit history, however, may offer to include additional equipment or assets on the lease. These assets can include real estate, other equipment or vehicles owned outright by the lessee (the person getting the lease). This additional collateral insures the lessor (the leasing company) will recoup its cash outlay plus costs if the lessee defaults on the lease terms.

    Cosigner

    A cosigner can help with any effort to use someone else's money. This person does not necessarily have to be involved in the dry cleaning business with the primary lessee. The co-signer, though, should have a good credit history and the ability to pay the lease if the lessee fails to make good on the terms. The co-signer can also have the collateral owned outright to add security to the lessor's cash exposure. The lessor will need adequate documentation showing ownership of the assets used for collateral and also be able to run a thorough credit check of the cosigner. Cosigners are typically friends and family of the dry cleaning business owner. Occasionally, though, a vendor or even a customer will cosign a lease to ensure the dry cleaner's continued profitable operation.

    Adequate Cash Flow

    If the lessee owns an existing business and can prove a demonstrated cash flow (bank statements, portfolio contents, owned assets), the leasing company may forgo a credit history in lieu of the business's performance and proven ability to pay the lease terms. Leasing companies realize many business owners have operated on a strictly cash basis and as such rarely if ever borrowed money in the past. The leasing company will supply the funds necessary for necessary equipment to such companies if there is adequate documentation revealing the business' success.

    Discuss Situation

    Before making a formal application for a lease, it's advisable to first discuss the situation with a leasing company representative to determine what's to be expected for a satisfactory transaction. The leasing company may have other available programs to aid and assist dry cleaning business owners with no credit history to get needed equipment.

    Source:

    Business.gov: Equipment Leasing: Weighing the Pros and Cons

    SBA: Lease Equipment

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