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AnnuAl Funding Source iSSue

newslineNational Equipment Finance Association

A Publication of the National Equipment Finance Association

MAY/JUNE 2009Vol. 1, No. 3

NEFA3525 Piedmont Road NEBuilding 5, Suite 300Atlanta, GA 30305

inside this issue:StrEtchiNg YoUr LitigAtioN DoLLAr

QUALiFYiNg LESSEES For EFFiciENcY & ProFitAbiLitY

ArE YoUr oPErAtioNS rEADY For thE tUrNAroUND?

newSline | MAY/JUNE 2009 3

contents

NEFA hEADQUArtErS3525 Piedmont Road NEBuilding 5, Suite 300Atlanta, GA 30305404-760-2843 main404-240-0998 [email protected]

ExEcUtiVE DirEctorSteven [email protected]

ASSociAtioN coorDiNAtorKali [email protected]

MEMbErShiP DirEctorAlison [email protected]

MEMbErShiP DirEctorJoe [email protected]

DESigN & ProDUctioNLisa RafterR&W Associates705 Carpenter LanePhiladelphia, PA [email protected]

ADVErtiSiNg SALESLisa [email protected]

NEFA Newsline ©2009 is published by the National Equipment Financing Association. All rights reserved. All opinions expressed in the articles, analysis, interpretations, etc. within this publication are solely those of the individual. For editorial information, please contact Lisa Rafter at 215-765-2646.

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MAY/JUNE 2009 • Vol. 1, No. 3

newsline

10 FroM whErE i Sit: A brokEr FUNDiNg SoUrcE PoiNt oF ViEw By Jim Brady

13 who’S iN coNtroL hErE? By Skip Wehner

16 EFFEctiVELY QUALiFYiNg LESSEES For MorE EFFiciENcY, MorE ProFitAbiLitY By Tom Martin

20 workiNg togEthEr – A NoN-rEcoUrSE LESSor’S gUiDE iN chALLENgiNg tiMES By Bruce J. Winter, CLP

30 2009 VErSioN oF “cYcLES oF UNcErtAiNtY” By Joe Woodley

34 bUiLDiNg bUSiNESS FroM thE iNSiDE oUt By Tim Mathison

dePArTMenTS

19 legAl line StrEtchiNg YoUr LitigAtioN DoLLArS By Meghan O. Serrano, Esq.

28 Service line ArE YoU rEADY For thE tUrNAroUND? By Van Wrenn

32 BroKer line EMbArkiNg oN NEw oPPortUNitiES By Scott Wheeler

38 MeMBer line:chris enbom, Allegiant Partners


neFA FinAnce SuMMiT:A Huge SucceSS!

On April 4-7, the National Equipment Finance Association hosted is inaugural Finance Summit in Orlando, Florida at the Hilton Walt Disney World Resort. Simply put, it was an outstanding event with great attendance, networking,

sharing of best practices and top notch speakers, panels and discussion groups. If you did not attend, you certainly missed out on an exceptional industry event.

Attendance for the three-day event was 160 leasing industry professionals. The number of companies exhibiting and sponsoring at the event was 26. The Summit focused on three key areas of the leasing industry: portfolio management, credit and funding, both on what has already happened, as well as what experts are forecasting to happen in the future and what the duration of 2009 will most likely bring. The large turnout is a testimonial to the strength of our industry and of the NEFA organization as a whole.

I would like to personally thank all of you who attended the event, as well as a special thank you to the planning committee, which was chaired by Denise Castagna with Nassau Asset Management, and all of our speakers and sponsors. We could not have had such a successful event without your support.

The NEFA Summit provided an excellent opportunity to interact informally with executives from some of the industry’s leading funding sources as well as many prominent independent lessors and brokers. The conversations were more expansive than usual, and allowed attendees to discuss implications of the topics covered rather than the more transaction focused interactions you experience during the normal course of everyday business.

The theme, ‘Survive and Thrive,’ was witnessed throughout the conference with our commitment to provide added value to all attendees and provide attendees with great networking, sharing of best practices, and education on how companies are dealing with such an array of challenges in these uncertain times. Attendees left the conference with a new sense of confidence in the economy and our industry as well as good ideas and best practices that they could put in place at their business.

The conference was kicked off with key note speaker Keith Hembre from U.S. Bank. Keith is a Chief Economist and did an outstanding job of outlining what is really going on in the economy as a whole and more specifically how these forces are affecting banking and finance. Joseph C. Lane, Principal, Sinter Partners and past-Chairman of the Equipment Leasing and Finance Foundation concluded the conference and provided conference attendees with a first look at the Equipment Leasing & Finance Foundation’s Industry Future Council Report.

In closing, awareness and association are important now more than ever, so if you missed this event, please save the date and register early for the National Equipment Association Fall Summit which will be held at the Marriott Monterey, September 24 – 27, 2009. I am confident our Fall Summit, which will focus on funding and networking, will be bigger and better than our overwhelmingly successful spring Summit and will be a must attend event for every professional in the leasing industry.

To learn more about NEFA and our upcoming educational and networking events, please visit us at www.nefassociation.org or call or email me directly at 404.760.4236 or [email protected].

I look forward to seeing you in Monterey and remember, please renew, join, and invite others to join NEFA. Membership information is available on our Website or you can contact one of our Membership Directors, Joe Woodley at 404.760.2842 or by email at [email protected] or Alison Pryor at 404.760.2841 or by email at [email protected].

LEttEr

From NEFA’s Executive DirectorPrESiDENtbrENt hALL, cLPPiNNAcLE bUSiNESS FiNANcE, iNc.

VicE PrESiDENtbriAN bJELLAgrANDViEw FiNANciAL, iNc.

trEASUrErgEorgE PArkErLEASiNg tEchNoLogiES iNtErNAtioNAL, iNc.

SEcrEtArYrANDY hAUgLEASEtEAM, iNc.

PASt PrESiDENt

brUcE wiNtEr, cLPFSg LEASiNg, iNc.

BoArd MeMBerS

chriS ENboM, cLPALLEgiANt PArtNErS, iNc.

NANcY gEArY, cLPEcS FiNANciAL SErVicE, iNc.

VALEriE JEStErbrANDYwiNE cAPitAL ASSociAtES

brAD kiSSLErStrADA cAPitAL corPorAtioN

cUrt koVAShU.S. bANcorP MANiFESt FUNDiNg SErVicES

JiM MErriLEES, cLPQUiktrAk, iNc.

FrANk PErEtorEPErEtorE & PErEtorE, P.c.

chriS SANtYPAtriot cAPitAL corP.

hUgh SwANDELSwANDEL & ASSociAtES

chriS wALkEr, cLPgrEAtAMEricA LEASiNg corPorAtioN

Scott whEELEr, cLPwhEELEr bUSiNESS coNSULtiNg LLc

brUcE wiNtEr, cLPFSg LEASiNg, iNc.

neFA 2009 BoArd oF direcTorS

National Equipment Finance Association

Steven R. Hughes

6 newSline | MAY/JUNE 2009

PerSonnel

FiVE PoiNt cAPitAL hirES PrESiDENt, cEo

Five Point Capital has named Greg Wells chief executive officer and president of the company. Wells joins Five Point Capital from Vistage International, a chief executive development organization based in California. At Vistage, Wells was a member of the executive team and served in a range of general management, operations and sales leadership positions, most recently overseeing Vistage’s U.S. field operations.

Prior to Vistage, Wells spent 18 years in leadership positions in the financial services industry, including senior vice president and division manager of Wells Fargo’s Southern California Business Banking Group. He also oversaw retail operations in several regions for Wells Fargo, including San Diego County and the Inland Empire.

wArrEN cAPitAL hirES FiNANciAL & StrAtEgic ADViSor

Warren Capital Corporation has hired Patrick “Pat” Kilkenny as an independent advisor to counsel the company and its clients. In his new role Kilkenny will focus on providing financing options advice to North Bay and California clients with an emphasis on healthcare, food processing companies, distribution businesses, professional firms, and the wine industry. In addition, he will provide strategic and operational advice to Warren Capital to assist with an expansion program for 2009-2010.

Kilkenny comes to Warren Capital after 36 years as a commercial banker most recently serving as chairman, president and CEO of National Bank of the Redwoods (NBR). He was also an executive officer of NBR’s parent, Redwood Empire Bancorp.

grAPhic SAViNgS groUP APPoiNtS AMPort to SErVicE MAStEr LEASE PortFoLio

Graphic Savings Group (GSG) has hired

Members on the moveNational Equipment Finance Association

National Equipment Finance AssociationDouglas Amport as the newest member of the company’s account management team.

Amport will be charged with handling the organization and servicing of GSG’s master lease portfolio.

Amport brings to GSG a diverse background in customer service and account management. He previously served as a senior producer for TRG-RAGAMUFFIN, a boutique film and video production company. As a producer, Amport developed and managed a department of production talent, providing service and support to well know brands including Hilton Hotels, Disney, The Rolling Stones and more.

PUgEt SoUND LEASiNg hirES SVP, LEASiNg DiViSioN MANAgEr

David M. Johnson has joined First Sound Bank’s Puget Sound Leasing Division as senior vice president and leasing division manager. He will be responsible for daily operations and strategic business development initiatives tied to continued growth of the division’s national small-ticket leasing business.

Johnson most recently served as vice president of credit and operations for Irwin Commercial Finance’s Small-Ticket Leasing Division, where he oversaw credit policy and risk management functions tied to broker and vendor business channels. Prior to that he was vice president of credit for the company’s U.S. and Canadian Small Ticket divisions.

Johnson began his career in 1991 with Verizon Wireless, where he served in varying operations and credit administration roles until joining Irwin Commercial Finance of Bellevue in 1999.

two iNDUStrY VEtErANS rEtUrN to iDS

International Decision Systems an-nounced the return of two equipment finance industry veterans. Joe Franco,

most recently a director in the financial services global business unit of Oracle USA, and Mark Belec, most recently a director at Third Pillar Systems, return to International Decision Systems in new roles.

Franco, a member of the company’s sales force from 1996 to 2002, returns to the company as director of strategic market sales, in charge of building relationships with partners and other service providers, as well as assuming key account responsibilities.

Belec’s 23 years of experience in the industry includes developing a program to monitor portfolio asset risk in 1989 based on case law. He worked in the International Decision Systems Professional Services group from 1996 to 2001 before departing to PricewaterhouseCoopers to help support their Like Kind Exchange tax program. Belec now takes on the role of product manager for the company’s Rapport software, a workflow, origination and pricing application.

oSg biLLiNg SErVicES NAMES cEo

OSG Billing Services, a provider of invoice presentment and payment services, has appointed Hank Riner as chief executive officer (CEO). Riner comes to OSG Billing Services with more than 30 years of experience in marketing and business outsourcing services. In his new position, he will be responsible for guiding the company towards new growth initiatives.

“The board of directors is delighted to welcome Hank Riner to OSG Billing Services,” said Michael Bonagura, board director and founding partner. “We undertook an extensive search and our Board believes that Hank offers the ideal set of skills and experience. He is a proven business leader who, together with our strong management team, will take OSG Billing Services to the next level.

Prior to joining OSG Billing Services, Riner spent three years as the CEO of

CoAMS Inc. and was instrumental in the creation of an online tracking tool to help channel marketers analyze their trade spending.

coLLAtErAL SPEciALiStS NAMES ExEcUtiVE DirEctor, MArkEtiNg

Collateral Specialists appointed Paul Hanson to executive director of marketing, reporting to Jim Jennings the CEO.

Hanson will be responsible for market analysis, strategy and communications along with customer acquisition and retention. Hanson’s professional career spans more than 25 years and includes managerial, operations, sales and marketing experience.

Most recently, as a senior leader of an undisclosed commercial lending organization, Hanson directed business processes, human resources and launched an inspection unit managing a group of 160 remote employees in two countries and 5 time zones.

MAzUMA cAPitAL APPoiNtS LEE to boArD oF DirEctorS

Mazuma Capital has appointed Michael S. Lee to the company’s board of directors. Lee, an attorney and partner with Washington DC-based law firm Howrey, LLP, previously clerked for Supreme Court Justice Samuel A. Alito, who at the time was on the U.S. Court of Appeals for the Third Circuit.

He also served as a clerk for the U.S. Supreme Court, and as general counsel to Utah Governor Jon M. Huntsman.

leASing ProgrAMS

NAtioNAL citY coMMErciAL cAPitAL, E-z-go to ProViDE goLF EQUiPMENt FiNANciNg ProgrAM

National City Commercial Capital (NC4), now a part of The PNC Financial Services Group, announced a three-year financing agreement with E-Z-GO, a Textron company.

Augusta, Ga.-based E-Z-GO is a provider of golf cars and utility vehicles for the golf industry and a major provider of personal use, industrial, turf and utility vehicles for a variety of applications and industries. NC4’s golf finance division, National City Golf Finance, has expanded its eight-year relationship with E-Z-GO and will provide its customers additional financing programs for acquisition of


AMEricAN cAPitAL coMbiNES PortFoLio coMPANiES to crEAtE corE FiNANciALAmerican Capital, a publicly traded private equity firm and global asset manager, has completed the combination of three portfolio companies within its Financial Services Group to create Core Financial Group, a diversified commercial finance holding company.

The strategic combination brings together Core Business Credit, an asset-based lender, Velocity Financial Group, a venture debt finance and middle-market equipment leasing company, and Oceana Media Finance, a film finance company. Each company will maintain its market presence under its current name while benefiting from the strong capitalization and synergies resulting from the combination.

“American Capital’s Financial Services Group invests in strong management teams to build industry leading enterprises within the financial services space,” said Bob Grunewald, managing director, Financial Services Group. “We are very pleased with the progress of Core, Velocity and Oceana. By bringing these firms together onto one platform we have created a well-capitalized, diverse commercial finance company that will take advantage of the attractive risk-return opportunities in this market.”

“Core, Velocity and Oceana are known for their creative, reliable and relationship-driven approach to lending. This combination will enhance our ability and extend our national reach to serve our clients,” said Michael Haddad, CEO of Core Financial Group.

golf cars, maintenance vehicles and other equipment manufactured by E-Z-GO.

The new financing program will offer E-Z-GO golf-focused customers special financing options for golf car products and other equipment, with a focus on financing structures and flexible.

“We worked closely with E-Z-GO to create financing models and processes that address the current market economics and changing budget and cash flow realities of golf course operations,” said Vincent Rinaldi, chief executive officer of National City Commercial Capital. “We are confident that our financing programs will meet the needs of E-Z-GO customers.”

DirEct cAPitAL PArtNErS oN NEw FiNANcE ProgrAM

Direct Capital Corp. has been selected as the preferred financing provider for Videojet Technologies, a provider of coding solutions for products and packaging.

This new partnership announcement comes after Direct Capital’s recent extension of a $100 million lease-backed commercial paper securitization. The company plans to utilize that capital to expand its funding capacity for U.S. businesses.

“Videojet’s selection of Direct Capital is another strong endorsement of

our innovative finance platform for equipment vendors,” said Steve Lankler, vice president of business development for Direct Capital.

MAzUMA cAPitAL ANNoUNcES trANSActioNS

Mazuma Capital is pleased to announce the following leasing programs:

- $7.65 million in financing for a comprehensive mining system for Appalachian coal producer.

The privately held company, which was not identified, controls mines in multiple states and has copious reserves of rich metallurgical-rated coal.

- $4.8 million lease facility for a western not-for-profit healthcare provider. In addition to capital equipment, 80% of the lease was for soft costs, and none of the company’s incumbent lenders could provide financing for such ethereal collateral. The company also had multiple objectives concerning the tax and accounting treatment of the lease, which Mazuma was able to provide.

- $2.7 million lease transaction with a national market research firm. The company’s knowledge-base product is aggregated data from various methods and sources synthesized into actionable data for its diverse client base. The financing was structured to meet the company’s nonconforming requirements.


legacy systems with the ASSET product, and with the support of Constellation’s business experts we look forward with confidence to taking our business to the next level.”

oTHer induSTry newS

boStoN FiNANciAL’S DEbbiE MoNoSSoN FEAtUrED iN boStoN hErALD StorY

In an article that appeared on the Boston Herald website, Deborah Monosson, president of Boston Financial & Equity Corporation (BFEC) is featured as someone who is “no shrinking violet” when it comes to doing business in equipment leasing and asset-based lending.

The article notes that Monosson, who is currently chairman of the Commercial Finance Association (CFA), having ascended from the presidency last year, was the first female president of the CFA in its 64-year old history. Monosson had been advocating for years that the association create a “pathway to the presidency” by providing opportunities for members - other than board or executive committee members - to aspire to rise to the top position in the association.

Commenting on the market, Monosson said, “This is an optimum time for non-bank lenders because we do lend and we take risk. We’re getting a lot of deals that the banks don’t want anymore. They’re for the most part good deals, but they’re small deals. The bank can’t take the time to work with a $1 million deal anymore - it’s not worth it.”

cLP FoUNDAtioN LAUNchES StiMULUS PLAN

The CLP Foundation, the official governing body for the Certified Lease Professional Program, has launched the CLP STIMULUS PLAN, a new reduced rate incentive package for lessors interested in becoming CLP certified.

Under the guidelines, participants may

Approximately 15% of the financed project consisted of computer hardware while the balance was approved for soft costs including software development.

- $6.8 million lease facility for one of the oldest precious metals mining companies in the country.

Lease proceeds will be used for underground mining equipment such as haul trucks, earthmovers, bulldozers and rough-terrain forklifts. This type of underground mining equipment is challenging collateral for most underwriters as it is difficult to locate for inspection audits and is subject to aberrant mining events.

SUMMit FUNDiNg groUP ENtErS FiNANciNg PArtNErShiP with SEAPiNE SoFtwArE

Summit Funding Group has entered into a partnership with Seapine Software, a provider of quality-centric application lifecycle management (ALM) solutions, to provide alternative financing options for Seapine’s software.

Available now through Seapine’s sales force, companies in the United States can select from a variety of funding options to tailor the financing to their needs. Companies can add additional years of software maintenance and services to the initial financing, ensuring uninterrupted technical support and upgrades for the life of their lease.

Summit and Seapine have also streamlined the financial review process and Summit has resources dedicated to guarantee a quick turn around on financing requests.

iNtEgritY LEASiNg PArtNErS with SNoM tEchNoLogY

Integrity Leasing and Financing has entered into a program agreement with snom Technology AG, a developer and manufacturer of advanced Voice over IP phones for enterprise, SMB and residential markets, designed to make it easier and more affordable for SMBs

to transition to IP telephony for their business.

The snom Leasing Program with Integrity Leasing and Financing provides its reseller partners who are selling IP PBX and hosted VoIP solutions to SMBs with the option to lease a “bundled package” of phones and VoIP services that can be offered to their end customers as part of a monthly payment plan with no money down and no payments for 60 days. All snom products are included in the leasing package that also incorporates standards based SIP VoIP IP PBXs snom partners and related VoIP equipment presenting VARS with the most complete end-to-end VoIP solution.

TecHnology newS

bANk wESt chooSES coNStELLAtioN’S LEASE SoFtwArE For itS AgricULtUrAL UNit

Constellation Financing System’s lease and loan management software, ASSET is selected by Bank West to support its agricultural operating unit, Agrifinance, headquartered in Winnipeg, Manitoba.

Agrifinance provides lease and loan finance to the agricultural community via a network of independent dealers and direct sales staff. Agrifinance will be using ASSET to manage its portfolio of assets.

David Taylor, vice president, Constella-tion, said, “Constellation is delighted to be working with Bank West to provide an industry-leading solution for agricul-tural finance to one of Canada’s most well respected financial institutions. We look forward to working side-by-side with Bank West as they extend their range of flexible financial products and first-class personal customer service to take maximum advantage of future busi-ness growth opportunities.”

Brian Leier, executive vice president, Bank West, said, “We are very excited to be taking this next step forward in the growth of our business by replacing our

Members on the moveNational Equipment Finance Association


register to sit for the CLP Certification Exam and receive The Certified Lease Professionals’ Handbook for a reduced fee of $495.00, which represents over $100.00 in savings.

The offer is valid from March 1 through June 30, 2009.

The CLP designation identifies and recognizes individuals within the leasing industry who have demonstrated their competency through continued education, testing and conduct. It is the only internationally recognized lease certification program.

LAkELAND bANcorP 2008 NEt iNcoME LoSS

Lakeland Bancorp reported net income for the year ended December 31, 2008 was $15.2 million, compared to the $18.0 million reported for 2007.

In 2008, Lakeland recorded a provision for loan and lease losses of $23.7 million compared to $6.0 million in 2007. The company said the higher loan loss provision included a $17.8 million provision for its leasing division and noted that during 2008, the bank was informed by two lease originators that they could no longer fulfill all of their obligations under contractual recourse provisions.

Lakeland said it had $37.8 million outstanding from one of the originators, representing 860 individual leases of which approximately 83% were current or less than 30 days past due.

Thomas J. Shara, Lakeland Bancorp’s president and CEO, said: “We are clearly disappointed with the performance of the leasing portfolio which we are aggressively addressing in this challenging economic environment. As of December 31, 2008, leases outstanding have declined $75 million or 19% since June 2008 to $311 million and represents 15% of the total loan portfolio down from 19% at December 31, 2007.”

LEASiNg coMPANiES FiLE bANkrUPtcY ActioN AgAiNSt wiLDwooD iNDUStriES

Creditors of Illinois-based manufacturer Wildwood Industries are seeking to force the company into involuntary Chapter 11.

On March 5, U.S. Bancorp Equipment Finance, Lyon Financial Services and Velocity Financial Group filed a petition in U.S. Bankruptcy Court for Central


District of Illinois claiming Wildwood owes them a total of $13.5 million in payments related to leasing agreements on manufacturing equipment.

The companies are hoping to force Wildwood into an involuntary restructuring. U.S. bankruptcy law allows creditors owned debts totaling more than $10,000 that remain unpaid despite collection efforts to file petitions to push the debtor into bankruptcy. Wildwood has until March 26 to answer the claim, and has reportedly asked the court for additional time.

According to local news reports, six federal lawsuits are currently pending against Wildwood for non-payment of debts, including a claim filed in February 2009 by Banc of America Leasing and Capital seeking $3.9 million.

Wildwood Industries manufactures home filtration and floor care products including vacuum cleaner bags, belts and filters.

oSg biLLiNg SErVicES ScorES high oN cUStoMEr LoYALtY

OSG Billing Services now has a Net Promoter Score (NPS) of 72 percent. The

score is a measure of customer loyalty and a system for using customer feedback for profitable business growth, according to www.netpromoter.com/.

Companies with the most efficient growth ratings operate at 50 to 80 percent NPS, but the average firm hold about 5 to 10 percent.

“As a service-based company, OSG Billing Services takes a great amount of pride in receiving such an impressive score,” said Ron Whaley, vice president of sales and marketing, OSG. “We are excited to have this metric to measure our customer satisfaction and look forward to continually striving forward.”

“While NPS is based on asking customers about recommending products or services, it is actually a comprehensive indicator of customer loyalty. NPS is a strong predictor of repurchase behavior and referrals through word of mouth,” said Laura Brooks, vice president of research and business consulting, Satmetrix, which is a co-founder. “It’s important that companies focus on the key drivers of loyalty to deepen customer relationships, grow revenue, and increase profits.”


A brave new world is being pen-ciled out for us in the commer-cial finance marketplace, most certainly characterized by a

dramatic transformation in sources and availability of funding and the definition of credit standards. Equally dramatic is the likely scope of the government’s role in our business. A newly energized sense of responsibility at the Federal level to protect us from ourselves, buoyed by po-litical popularity, will certainly result in unprecedented levels of government par-ticipation in the arenas of banking, finance and credit. Perhaps the most impactful factor, however, is the unprecedented de-mographic and psychographic transfor-mation unfolding in our society, driving our political and economic priorities, and shaping our ultimate way of life.

Money to lend comes from surplus cash flow and surplus cash flow is a bi-product of healthy commerce. Consumer spending, either directly or through spending on government in the form of taxes, is the only engine that drives healthy commerce. Although the short term pace of commerce has an impact on our business, the future spending habits of Americans are also being significantly and lastingly altered by more profound global economic, social,

environmental and energy market factors. Our concern with the short term direction of the economy, up or down, should take a back seat to our awareness of the unusual dynamics and metrics of this new market where we hope to earn our living and make our businesses prosper.

cycles versus Permanent changeEveryone reading this article will likely finish their careers in commercial finance before we ever again see market conditions like those that defined the industry for that last 20 years. A recent study conducted and published by Alexis Partners, a global business advisory firm, suggests that American consumers predict their “New Normal” for spending levels will be 86% of pre-recession levels. Even at half that rate, it still represents a 7% contraction of the baseline economy supporting our industry, going forward. Think of it in terms of an enduring 7% drop in credit applications and fundings, or, given the current trends in pricing, perhaps a 7% reduction in funding values. And this is the baseline for a recovering economy!

What’s perhaps most significant about these survey results is that consumers are

telegraphing their sense that this economic downturn is something more than the usual bump in the economic growth curve we have enjoyed for the last 10 years. Part of what colors their perception has to be the emerging competition between world economies for energy resources, or perhaps it’s the reality of home values diminishing so deeply and for such a protracted period. Lurking in the background of these non-cyclical factors is more evidence that our economy is in the early stages of a protracted transformation. The inevitable aging of America, for instance, carries with it reduced demand for larger homes, increased demand for health care, etc. A shrinking savings rate and lower overall consumption is also likely with people spending what they have been saving for retirement and living on reduced incomes. Other equally impactful new developments to consider include concern with climate change and the broad transformation of the energy industry and markets. Perhaps most significant is the apparent political transformation signaled by the latest election.

The Past is Truly Past Virtually all of my 20 plus years of experience in this industry have been spent

FroM wHere i SiT:A Broker Funding Source Point of view

A brave new world is being penciled out for us in the commercial finance marketplace, most certainly characterized by a dramatic transformation in sources and availability of funding and the definition of credit standards. Equally dramatic is the likely scope of the government’s role in our business.

bY JiM brADY

in service to the small and middle ticket Broker segment. I have always been proud of the role of the broker segment, a group of entrepreneurial small business people tending to the finance needs of other small and mid-sized business owners across the country. This small to mid-sized segment of our economy epitomizes the innovative, can-do nature of our country, while accounting for a substantial portion of new jobs in healthier economic times. For purposes of predicting our future vitality as an industry, I believe the broker segment is the canary in the coal mine.

Our industry’s immediate future will most certainly be defined by fewer money source options and fussier credit appetites. Besides the disappearance of many familiar funding sources in the segment, the persistent uncertainty of asset values and the direction of the economy have precipitated a near total undermining of old reliable credit yardsticks. The value of both credit scoring and full financial review models depends upon the past being a reliable and sufficient predictor of the future. Traditional credit work has assumed that nothing much is going to change for the next five years with short lived, shallow recessions being an expected part of that landscape. In addition to the worst economic performance since the Great Depression, we are presently dealing with the near collapse of what have been traditionally strong equipment leasing categories such as construction and transportation, and the resultant collapse in collateral resale values across a wide range of industries. Now add in the unprecedented levels of devaluation in real estate as a once reliable structuring enhancement and you have the perfect storm of 2009.

A Prescription for Forward ProgressThe new credit model will likely deal as much with a customer’s future as with his past. There will be more weight assigned to the client’s type of business and A/R aging, with greater emphasis on available working capital and current assets. We have begun to listen more closely to the client’s view of his future for the next twelve months, his current backlog of work and the strength of his customers and related contracts. Our review of the client’s financial information starts with the most recent 3 to 6 months of results, and the information has to be very recent. Until the economy finds new footing, we are also wary of categories of trade that are recession sensitive in nature, i.e. categories of business that are built on discretionary consumer spending.

For the time being, successful brokers need to think strategically in terms of marketing and selling what they can get funded, instead of trying to fund what has been sold in the past. Stop trying to squeeze the same old round pegs into the new square holes. Quit trying to convince funding sources that the world hasn’t changed. Many of the brokers we work with, demonstrating their enduring entrepreneurial nature, have embraced this essential strategic adjustment. Some have not. It just makes good sense to retool one’s approach to the market when faced with a near decimated field of funding sources, with each survivor offering a shrinking credit window.

Brokers can benefit from thinking like they have equity in the deal. Lately, we have been seeing more push back from some of our brokers on credit declines. The perception seems to be that our credit fear is irrational, and the broker simply has to talk us out of our fear. This kind of thinking can only be indulged in out of view of the monthly growth in number and aging of delinquencies, write-offs and deteriorating collateral values.

It has become clear just how many of our broker sources have people selling for them with little or no credit training, let alone


credit responsibility in their careers. Kit Menkin pointed out in one of his recent articles how credit scoring and automated decisions in credit made it possible for hundreds of people to enter our industry with little or no knowledge of credit. The time has come however, at least for the next few years, for everyone to learn enough about credit to work more effectively with their funding relationships. Steve Kiley with Fifth Third Leasing summed it up in a recent article for the Monitor. Steve wrote: “An organization should expect its sales people to be the important first link to the credit underwriting process…If you

have sales people...who don’t fully accept or aren’t qualified to take on this role… then you have two options…get them trained or get rid of them.”

Better yet, get equity in the deal. One could make a very strong case for the idea that the survivors in the broker segment will be the ones who step up and take a financial stake in the business they want to place. Admittedly, now is not the ideal time to be shopping for bank relationships, or to get started building one’s own portfolio, but there are still banks out there interested in hearing from us. Like everything else

in a “down” market, it just requires a little more work to find that bank. Many regional and community banks are still fundamentally strong and ready to lend in the equipment finance category, if for no other reason than to ease the pain of their mortgage portfolio. Short of going it alone with a bank, there are programs available to help brokers make the transition to a “Lessor”. The Trapezium Program from Orion First Financial for instance, creates an excellent gateway for this transition. These programs help brokers take an equity stake in a portfolio, a stake in the good as well as the bad results of their credit decisions.

Simply stated, for brokers and their funding relationships to survive, they need to close ranks and start working and thinking strategically about the future as a team. Part of the process should include attention to discerning the best prospects for leasing in this new economy. How does this strategic partnership best capitalize on the impending market growth in energy, medical, agriculture, infrastructure, etc. going forward?

One thing for certain is that sources of money for the foreseeable future will be relatively conservative. Whether it be the equity investor or the bank behind the funding source, leverage is precious and the days of reckless money are past. The survivors in this new reality will be the brokers and funding sources who work together facing these challenges and work smart to capture the hidden opportunities. n


AboUt thE AUthor

Jim Brady is Vice President and General Manager of ABCO Leasing in Bothell, WA. Jim’s history in the industry includes 7 years with Pitney Bowes Finance, as VP Marketing with

Colonial Pacific, perhaps the most successful and well known broker funding source in the history of the industry, and VP of Global Strategic Planning for Pitney Bowes Credit. He also launched and managed MetLife Business Finance as the broker funding arm of MetLife Credit Corp. Jim also worked on the technology side of our industry as VP of Market Development for Capital Stream. Jim also teaches MBA courses in Finance and Marketing at City University of Seattle. He is married and lives with his wife, two children and one dog in Bellevue, WA.


Let me set the scene for you. 5280 Financial’s offices are located in the historic section of Downtown Littleton just south of Denver.

We even have a Main Street address. We are a small broker focused on building and maintaining vendor based relationships. There are only a few of us located in our spacious 900 square feet, so when an inbound fax is received, everyone is alerted to the fax due to our close proximity to one another.

The deal is for $31,865 and comes in from one of our vendor partners. This one even came in with three months bank statements! Wow! The deal is quickly run through our credit system as we gather the Secretary of State listing; an infoUSA sheet, and credit bureaus on the owner.

eQuiPMenT - $31,865 of hardware that will

be used to “virtualize” their office. After speaking with the customer and vendor, the equipment is no doubt essential equipment and will be used to help the company expand their sales force to beyond the reach of the physical office as well as help support “work from home” days which helps support the company’s quality of life initiative along with saving some expenses. The customer also tells us that he’s already “done the math” on this equipment and with the savings he will get from being able to keep some employees working from home, he will save over $2,000/month. The increased sales presence will only help dramatically shorten his ROI timeframe on this equipment. Music to our ears as we priced the deal around $740/month!

BAnK – Three months statements indicate in excess of $100,000 of deposits the past

Not unlike every other industry, these are very turbulent times for everyone in equipment leasing; broker, funder, vendor, customer. That being said, take the time to educate yourself and control those things that you can control. Taking control is not only very freeing, but ultimately a very powerful sales/survival tool.

bY SkiP wEhNEr

wHo’S in conTrol Here?

three months with an average balance in the low five range.

TiMe in BuSineSS – Secretary of State dates back three years as does the infoUSA. A quick Google search reveals several press clippings documenting that the owner started the business three years ago after leaving a larger, but similar company to the one he now owns.

PerSonAl crediT – The ownership section on the application lists one gentleman as 100% owner. Again, a conversation with the customer confirms this. He has 30+ trade-lines on his credit bureau dating back to 1988. Clearly he had a couple minor struggles back in early 2000 as there are several revolving accounts and a car payment that went 30 days past due a couple times, but other than that, he’s paid everything clean. He is also a homeowner. His FICO is a 683 and he has $81,623 in revolving debt, but after backing out his HELOC of $50,000, he has $31,623 of which he claims a large portion is “company owned” and “company paid for.” He also claims that most of the HELOC is utilized by his company.

In the old days (and when I’m talking old, I mean something around six or so months

ago), getting a deal in like this one above was the toughest part of our job. Now, the toughest part of our job is asking, “Where the heck do I place this deal?” What used to be a slam dunk approval at any number of our lenders is now no longer.

Like most, we don’t operate in the past, we operate in the now. Today, the fact is, the above deal is a fairly difficult one to place when considering the credit, and the pricing that we believe the customer deserves. Most likely, this deal will get approved, but at pricing we are not used to (and the customer certainly is not used to).

So what is a broker supposed to do in these crazy, mixed up, and turbulent times? We still have vendors that need servicing, deals that need approving and certainly still need to pay our mortgages and support our families. So, without further adieu, here are a several guiding philosophies that 5280 Financial now, more than ever, operates under:

Accept that which you cannot change, but take the time to understandI can tell you that at 5280 Financial, this is a constant battle. We are still used to deals

getting approved and funded one way when in fact, that way no longer exists.

As those of us who attended the recent NEFA Summit in Orlando heard, lenders are buying deals the way they feel they need to buy. They are pricing them the way they feel they need to be priced. Both appetite and pricing are a function of how the lenders are funded and how portfolios are expected to behave and how they are behaving. What does that mean? It means that the changes put forth are adequately supported by what they are dealing with.

Stay close to your lenders. As brokers, we are good at calling our funding partners and asking them if they can “buy this deal or that deal,” but spend some time talk-ing to them about how they are weath-ering the current financial environment. Understanding their pain and where they get their funding from will help you un-derstand why they are buying like they are and why their pricing is set where it is. This type of education is important.

Keep focused on what you can control and use it to educateFocusing on the items we CAN control has helped us more than anything else.



Not unlike every other industry, these

are very turbulent times for everyone in

equipment leasing; broker, funder, vendor,

customer. That being said, take the time to

educate yourself and control those things

that you can control. Taking control is

not only very freeing, but ultimately a

very powerful sales/survival tool. Leasing

opportunities are still there and the funding

is still available. Leasing will survive, as

will most of us in the leasing industry, but

on whose terms? Take control. n

products lenders are putting out in the market. Take the time to educate yourself on not only what your lenders are buying, but why they are buying that particular product. Taking the time to understand how your funders come out with their pricing models (source of funds, portfolio pressures, etc.) is also very important to you and your customer. Your customer is no different from any other person on this planet. They fear or get frustrated with what they don’t understand. Help them understand and get the side benefit of closing more deals.

While we don’t control the policies and procedures of our lenders, we can control making sure we are educated on them. Understanding where lenders are buying in today’s environment is almost like playing Pin the Tail on the Donkey. You can, however, take control and stay up to speed what that credit window looks like.

Who controls what vendors/customers you are calling on and marketing to? (This is where you answer “I control who I market and sell to.”) Using your knowledge of what your lenders are buying is something you control and can leverage to help direct your marketing efforts.

How many times in the past six to nine months have you secured that coveted approval from your lender only to see that the lender’s pricing to you is what you expected to sell to the customer? Because you understand the underlying pricing, you can educate that customer. Your customer is out of touch if they think they will get the same pricing you gave them a year or two ago on that first deal. At 5280 Financial, we have found that closing a deal today is more about educating the customer than anything else, and because you spent the time to understand why pricing is where it is today, you can effectively explain that to your customer.

Back to basicsGet back to basics. If that phrase was said once in Orlando, it was said 1,000 times. For lenders, this means focusing on where they get their funding, collecting portfolios and adjusting their credit appropriately.

What does getting back to basics mean for a broker? By definition, a broker is an intermediary. We sell/market the

AboUt thE AUthor

Skip Wehner has been in the leasing industry in various capacities for nearly 20 years. He has worked for several national lenders on both the sales and operations side. Skip has been involved with UAEL since he started his leasing

career including being a presenter, Regional Co-Chair of the Rocky Mountain Region and also sat on the Board of Directors 2004-2006. At present, he enjoys working for the small broker firm he founded with his brother back in 2005. Skip can be reached at 303.800.1061 or [email protected]


What do you as a salesperson or broker gain by being able to quickly qualify a lease prospect? It’s pretty simple.

You can decide either to pursue the prospect right away or move on to a more promising opportunity.

Four marketing steps will help you to get a signature on a lease contract:

1. Finding – Getting the name of the proper contact to finance a specific piece of equipment

2. Qualifying – Determining if the prospect’s needs match what you can offer

3. Developing – Creating the relationship to collect all the data necessary to prepare a proposal

4. Closing – Convincing the prospect to finance the asset with you

why it’s HardInexperienced lease brokers struggle the most with qualifying because they are not sure of what specific funding is (or is not) available for the transaction. After a while, the lease broker will have talked to many funding sources, which bolsters its database by showing the “sweet spot” of each funding source.

The successful broker knows how to phrase both sales and credit questions and—just as importantly—when to ask them. Sales questions address such concerns as a detailed description and cost of the asset, delivery date, term, structure and competition. Credit questions are about the principals, financials, guarantees and additional collateral.

The funding sources look for the broker to qualify the financing opportunity. There are

What do you as a salesperson or broker gain by being able to quickly qualify a lease prospect? It’s pretty simple. You can decide either to pursue the prospect right away or move on to a more promising opportunity.

bY toM MArtiN

effectively Qualifying lessees for More efficiency, More Profitability

many qualifying questions in the areas of asset, credit, term, structure, competition and so on. It is important for a broker or salesperson to ask the right questions up front before securing any quotes or commitments on the broker’s part.

The vital QuestionsThe questions presented here should lead to a form that you as the broker or salesperson can use in phone interviews or meetings with prospects to size up the potential lessee and find it the best fit in regard to funding sources.

• Is there a detailed description of the equipment to be leased?

• What will this equipment do for the business? (e.g., increase profit or reduce costs)

• Is it intended as replacement equipment or an addition? (If the former, what is it replacing?)

• Who is the vendor? How long has it been in business?

• Does the customer want to own the equipment at the end of the term?

• Is residual value at the end of the term a consideration?

• What is the timing of the acquisition?

• How long has the prospect been in business and under the current ownership?

• What is the prospective lessee’s business structure? (e.g., S Corp., C Corp., LLC, Sole Proprietorship, Partnership)

• Who are the owners?

• Are they willing to guarantee the lease? Is there anything derogatory on their credit report?

• With respect to credit, what financial statements or tax returns are available?

• What is the current gross and net income?

• Who has the prospect had leases or loans with in the past? (This will help to determine potential competitors and the prospect’s creditworthiness.)

when the competition isn’t obviousYour competition may not be obvious. The successful lease broker finds out what the prospect’s options are and what the prospect thinks about each of them. Through skillful questioning, the broker finds out what the prospect has already ruled out. Moreover, the broker finds out who has turned the deal down—and more importantly, why.

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American Bank Leasing is a full-service equipment leasing and financing firm with a management team that has been fueling America’s business growth since 1985.

American Bank Leasing is a broker funding source that specializes in application-only financing up to $150,000.

Private Label Documents for High Producers Direct Funder A/B Credits New and Used Equipment Hard Asset Lender Competitive Rates AMERICAN BANK LEASING

555 Sun Valley Drive Building E5 Roswell, GA 30076 Jeff Schubert [email protected] 1-770-649-7474 www.abanklease.com


The broker always asks, “Have you considered doing the financing with your local bank?” Often the answer is that the local bank has said no. The broker should find out why. Don’t be afraid that the question will make the prospect think of a source of competition that he did not already come up with. The prospect thought of the local bank before you ever found him. If the prospect says he is talking to the local bank, be prepared to offer an advantage that is not based on price.

The lease broker needs to understand what type of transaction is difficult to fund. Here is a partial list of yellow flags:

• Start-ups—especially restaurants

• Less than two years in business

• Negative net worth of lessee

• Loss in prior year(s)

• Low FICO score

• Consumer as lessee

• Refinance (needed when the customer has low cash flow or low net worth)

• Select industries such as gaming, water purification, owner-operators of trucks

• Certain types of assets such as tanning beds, ATM machines, titled vehicles

• Anything with a value under $5,000

• Assets with a low residual value such as restaurant equipment or furniture

• The need for venture capital as opposed to financing of an existing business

Strategies for larger TransactionsFor larger transactions, try to get a commitment fee based on agreed-upon criteria (e.g., good credit, reasonable cash flow, collateral). This discussion of the criteria will usually bring out the inherent problems that need to be overcome quickly. Also, it will get the deal off the market until the broker has had a chance to obtain an approval from a funding source. This conversation will also ensure the prospective lessee’s commitment to providing all the needed information, such as the principal’s personal statements, tax returns and credit information.

The successful lease broker knows the criteria of its funding sources. The wider the variety of transactions the broker finds, the broader its needs for sources of funding.Initially, it may seem that the route of least resistance is to just place the

application. However, it is more efficient

for the broker, the funder and the customer

to answer all the pertinent questions in

advance. Credit people lose patience with

the back-and-forth of filling in the gaps to

see whether the deal makes sense.

To sum up, it’s always easier to continue down the path with the prospect that wants to have the broker place its deal than it is to know when to move on to a more promising prospect. But, this discernment is vital. Successful brokers have one common trait: they quickly recognize whether the transaction can be placed with one of their funding sources. n

18 newSline | MAY/JUNE 200918 newSline | MAY/JUNE 2009

AboUt thE AUthor

Tom C. Martin is the founder and President of CFI Financial Services. He is a member of the National Equipment and Finance Association. He is a frequent speaker at industry conferences. He has also written articles for Newsline

as well as other industry publications. Tom can be reached at [email protected].


LEgAL line

If the “Survive and Thrive” theme of the National Equipment Finance Summit held in April in Orlando is any indication, the equipment leasing industry is feeling the squeeze of the current economic climate. With the economy headed south,

more and more lessees are defaulting on their lease obligations, and equipment lessors large and small have seen an increase in the number of lessees they have been forced to sue. With everyone watching their bottom line, it seems appropriate to address ways to save time and money when litigation is your last resort.

This article will attempt to provide a guide and outline strategy considerations to get you to the courthouse and maximize the time and money spent on the lawsuit. To illustrate some of these considerations, here is an example: Two years ago, your equipment leasing company leased some equipment to Larry’s Laundromat, including several washers and dryers and a delivery van. Larry executed the four-year Master Equipment Lease as president of Larry’s Laundromat and also executed a personal guaranty. Last year, the lease was amended to acknowledge Larry’s Laundromat’s receipt of two replacement washers which were top of the line. UCC-1’s were filed when the equipment was first leased and amended once the washers were replaced. Larry signed a Delivery and Acceptance Certificate acknowledging his receipt of the equipment. The title documents for the delivery van show that your company is a lienholder. All of your attempts to work out some kind of payment agreement with Larry have failed, and now he is no longer returning your calls. It seems that your only option at this point is to sue Larry and Larry’s Laundromat. Now what?

Consider your options. Even if you have made the decision to sue, your attorney will need to review your lease documents to make sure that any appropriate notices are sent to the debtor before filing the lawsuit. If Larry has failed to make payments due under the Master Lease, this breach is a basis to declare the Master Lease in default and sue for damages, but it may not be the only breach. But even if you have a basis to sue, your attorney will need to make sure that all preliminary steps are followed and that the lawsuit is filed in the appropriate forum.

With two years left on the Master Lease, your lawyer probably will recommend that you sue for breach of contract. One of the first areas your attorney will need to research is to verify the correct, corporate name of Larry’s Laundromat. In a previous

column, “Potential Pitfalls of Fraud in Small Ticket Transactions,” authors Marc L. Hamroff and Terese L. Arenth discussed the rise in fraud in equipment lease transactions. Some of these fraudulent transactions involve a corporate entity executing the lease documents on behalf of a bogus entity.

In addition to suing Larry’s Laundromat, because Larry executed a personal guaranty, he can be joined as a defendant to this action and sued for damages. If the lease or any portion of the lease has been assigned, you may need to join the assignees as defendants to the lawsuit.

In order to sue based on the agreement, you will need to provide your lawyer with legible copies of the signed documents, including all amendments and schedules. In many of these transactions, the leases are executed in parts, so be sure to include all signature pages. If the lease is not legible, or any part of it is not legible, provide your attorney with a clean copy of the agreement. Don’t put your lawyer in the position of asking a judge to enforce the terms of an agreement that no one can read. The Delivery and Acceptance Certificate is an effective end-run around a potential claim that the lessee did not receive the equipment. Your lawyer can determine whether a copy of the Delivery and Acceptance Certificate should be included with the pleadings.

If you sue Larry’s Laundromat and Larry based on the Master Lease, you will need to determine the balance due under the lease. Have you communicated to Larry that you consider him to be in default of his and Larry’s Laundromat’s obligations under the Master Lease? Does the lease specify the manner in which a default must be communicated to the lessee, and any pre-suit steps which need to be taken? Does your lease provide for a different method of calculating interest owed before and after a default? The amount you are claiming in damages may be jurisdictional—that is, depending on the amount which you claim is due and owing, you may be required to file the lawsuit in a different court. Your lawyer will need to make that determination after considering all of the relevant information.

With the economy headed south, more and more lessees are defaulting on their lease obligations, and equipment lessors large and small have seen an increase in the number of lessees they have been forced to sue. With everyone watching their bottom line, it seems appropriate to address ways to save time and money when litigation is your last resort.

bY MEghAN o. SErrANo, ESQ.

Stretching your litigation dollars

AboUt thE AUthor

Meghan O. Serrano, Esq. is an attorney with Abel Band, Chartered. For more information about Abel Band, Chartered call 941-366-6660 or visit www.abelband.com.

Continued on page 37


Stand up and be counted. This year will continue to separate the long term participants in our industry from those that are just passing through. To ensure your stay in the industry, it is important to take to

heart what we believe are the continuing responsibilities of the non-recourse lessor.

Take responsibility for all of your non-recourse deals. From time to time I have to explain that even though I refer to an assigned lease or loan as “our” deal, the deal is owned solely by our funding source. In my heart, I know that the financial investment by our funders is very much like “our” money, as we need our funders to achieve a good outcome if we want them to stay in business to buy future transactions.

Stay connected. If you’re not already plugged in, call all of your funding sources today and request a current delinquency report on your accounts. If you don’t know the current payment status and history of each and every deal you have originated, you must get your arms around this situation today. Ask your funders how you can help. With rare exceptions, a funder will welcome your involvement in the collection of any account; just be careful to ensure you are not representing yourself as the funder and don’t cut any deals with lessees without your funders advance approval.

The same rules apply to “old” funding sources. You should stay in touch with funders that are no longer funding new business. In the long run, your involvement will be appreciated and even if you are not specifically acknowledged you can be sure that funders keep track of those lessors that are helpful

Stand up and be counted. This year will continue to separate the long term participants in our industry from those that are just passing through. To ensure your stay in the industry, it is important to take to heart what we believe are the continuing responsibilities of the non-recourse lessor.

bY brUcE J. wiNtEr, cLP

worKing TogeTHerA Non-Recourse Lessor’s Guide in Challenging Times

(and on the other side which lessors provide no support.) In today’s changing environment, you have no way of knowing whether a portfolio from an “old” funder might be purchased by a current funding source. And of course, many of the employees working for an old funding source will likely stay in the industry and move to another participant. Do you want to be known as a lessor that originates bad deals and walks away? Or would you rather be known as a lessor with a reputation for going above and beyond the call of duty? I can assure you that your efforts to help funders’ portfolio performance on each and every deal you originated will pay long term dividends, even if those dividends aren’t readily apparent today.

No surprises – funding sources hate surprises. Stay close to your lessee base (you’re doing this anyway to try to find the next deal, right?) and don’t be blindsided by defaults. This economic cycle has fueled a rising incidence of “instant shutdowns” (lessees that paid every payment on time and then suddenly and without warning announce they are going out of business). Funders are terrified of this new phenomenon. How might you and your funding source have avoided this type of meltdown if you had seen it coming? How could you have reduced the ultimate loss to your funding source if you had known?

In the event of a pending problem, think proactivelyHandle requests from your lessee. If your lessee is requesting any type of financial relief, request full financial statements on the lessee and all guarantors so that you and your funder can appropriately assess the financial condition of your customer. Get updated personal financial statements on personal guarantors. Run new credit reports, D&B’s, etc. to ensure you are fully up to date on the current financial position of your lessee.

Know your collateral. Confirm the collateral you financed is in its original location and in good working order. Double check the serial numbers against your original vendor invoices and your documents. Use your intuition to sniff out anything unusual. You might be distressed to identify a problem (or even suspect some type of fraud) but if there’s a problem you would rather know about it earlier and do everything in your power to remedy the situation before it becomes a major financial loss.

Audit your documentation file. In the event you made any mistakes when documenting the transaction, you may still have time to correct them. Make sure all required documents were properly executed and in the possession of your funding source. Double check lien positions to ensure there are no conflicting liens on your collateral. Order an updated lien search on your lessee to confirm not only your lien position but the liens of other creditors as well. If you relied on PMSI, double check equipment delivery dates to ensure another creditor won’t try to trump your lien position. Review insurance coverage to make sure it is current and fully covers your collateral. You don’t want your collateral to be uninsured in these times. Now is the time to fix any problems. While in some cases it may already be too late, in other instances you can correct documentation deficiencies you uncover. Know the warranty commitments you made to your funding source. Neither you nor your funder wants this non-recourse transaction to turn into a demand for the originating lessor to repurchase the deal.

Use Pacer to understand the position of bankrupt lessees, guarantors or vendors. If you have not already registered, go to www.pacer.gov to sign up. The federal bankruptcy courts mandate electronic filings, which can easily be accessed in real time. For a small investment, you



to fix a problem before it costs your funder, OR YOU, a major loss. No funder expects a zero percent delinquency rate, especially in today’s environment. The real measurement is how problems are handled. Your actions today, good or bad, will influence present and future funders for many years to come. Believe me, funding sources track your performance and involvement and share this information with other funders. Be a long term participant and do the right thing today, even if it costs you time, effort and money. The dividends from your investment will reward you for years to come! n

your funder liquidate collateral. This is especially true if your lessee is local to you, and your funding source is out of town. In the event you have a strong relationship with the original vendor, make sure the vendor understands why it is in their best interest to help achieve a good outcome for your funder.

So what are your rewards? For an investment of your time and resources, you will have the respect of your funding sources, including many employees working for your funding sources you may not even know. You may be able

can keep track of bankruptcy proceedings that you will undoubtedly find valuable from time to time.

Stay connected to your funder. Many funders are dealing with more delinquen-cies than ever. Are they properly staffed and dealing effectively with your deals, or are other priorities leaving your delin-quent transactions unaddressed? In the final analysis, no one will remember that your transactions were not “worked” as hard as others. History will only show the frequency and amount of the problems in your portfolio.

Support your funders’ request. Smart funding sources, especially outside of the small ticket segment, use a request for payment relief by a lessee as an opportunity to enter into an all encompassing forbearance agreement. A well written forbearance will clearly confirm the debt owed by the lessee, reconfirm collateral positions, confirm other agreements, reconfirm any original guarantees and waive lessee defenses. In addition, a funder may use this request as an opportunity to obtain additional guarantors and collateral. In many instances, you are the best advocate for “selling” your lessee on the wisdom of granting these provisions to your funding source. Be a team player and help your funding source with all reasonable requests. In the event of a reasonable turnaround, your lessee will be grateful for your involvement. In the alternative, if the lessee ultimately liquidates, your funding source will likely achieve a better outcome with these added protections.

Help your funder sell collateral, if necessary. In many cases, you and/or the vendor will provide a reasonable alternative to help

AboUt thE AUthor

Bruce J. Winter, CLP, is President of FSG Leasing, Inc., a middle market equipment leasing company he founded in 1991, headquartered in Laurel, Maryland. Mr. Winter served

as Co-Chair of the Joint Task Force investigating the merger of the Eastern Association of Equipment Lessors with the United Association of Equipment Leasing to form the National Equipment Finance Association. He now serves on the Executive Board of NEFA. Mr. Winter held numerous positions with the EAEL, serving on the Board from 1997-2008 and received EAEL’s “Most Admired Lessor” award in 2008. He has also served on the Board of The CLP Foundation and was an editor for The Leasing Professionals’ Handbook.


tidbitsNational Equipment Finance Association

National Equipment Finance AssociationneFA MAKeS HiSTory:Holds First national Meeting – Spring Summit in orlandobY DENiSE cAStAgNA, NASSAU ASSEt MANAgEMENtNEFA SPriNg SUMMit chAirPErSoN

In the first week of April, a little history was made in the equipment leasing industry, as the National Equipment Finance Association held its first national event. The Spring Summit provided warm memories of family fun at

Disney World, moments of camaraderie with peers and valuable information on the current state of our industry.

NEFA was formed to achieve this kind of exchange of ideas. By bringing together the United Association of Equipment Leasing and the Eastern Association of Equipment Lessors, we achieved a national scale to better serve our members. In this challenging business climate, that is more important than ever.

Clearly, our members felt the same way, as attendance was outstanding for the conference. With the theme of “Survive and Thrive,” the agenda featured sessions and speeches designed to help attendees wade through the current downturn and position themselves for greater success as conditions improve.

Our sessions consisted of three tracks: Portfolio Management, Credit and Funding. All three tracks were well organized and very informative. As Lacy Jumps-Malloy of LeaseTeam Inc. said, “The NEFA Summit was my official introduction into the world of equipment leasing. I learned a vast amount from the sessions presented. It’s nice to know all the organization members know the value of, and can appreciate specific knowledge sharing in this industry’s vulnerable time.”

The two keynote speakers also provided attendees with timely information. In fact, Joe Lane of the Equipment Leasing and Finance Foundation provided the first look at the Industry Future

Council report. It forecast the many unique opportunities and obstacles for the industry in an “unprecedented era,” discussed the signposts to track for indications of a turnaround, and how best to prepare for the future.

The other keynote speaker, Keith Hembre, Chief Economist, U.S. Bank, provided a very meaningful presentation regarding recent changes in the economy, and their effects on all businesses and consumers. Keith packaged his micro and macro economic knowledge in an easily understood fashion to provide insight into the current situation and more importantly, the future.

That future may still seem uncertain but at least the attendees at

Jack Harvey, Ted Reynolds, Chris Walker

Nick Nielsen, Denise Castagna, Ken Voitus, Mark Lacek

Marc Hamroff, Thomas Askounis, Victor Harris, John Rosenlund


2009 calendar of eventsMAy 2009

2009 neFA golf TournamentFriday, May 22, 2009Omni Interlocken Golf ClubBroomfield, CO

June 2009

First Annual neFA crab FeastThursday, June 11, 20095:00 p.m. – 8:00 p.m.Bo Brooks RestaurantBaltimore, MD

July 2009

Atlanta regional luncheonWednesday, July 8, 200912:00 p.m. – 2:00 p.m.Ansley Golf ClubAtlanta, Georgia

Angels Baseball nightThursday, July 23, 20097:05 p.m.Angel StadiumAnaheim, CA

SePTeMBer 2009

neFA Funding Symposium Fall 2009 September 24-27, 2009Monterey MarriottMonterey, California

ocToBer 2009

Atlanta regional luncheonWednesday, October 14, 200912:00 p.m. – 2:00 p.m.Ansley Golf ClubAtlanta, Georgia

noveMBer 2009

2009 Super regional conferenceMonday, November 9, 2009New Jersey

Please check www.nefassociation.org for more information and new events.

lA AngelS BASeBAll gAMe nigHT – leT’S PlAy BAll!July 23, 2009bY bArbArA griFFth, SoUthErN cALiForNiA LEASiNg

On July 23rd NEFA will be hosting its first Angels Game Night. Angels Game Night has been an annual tradition of Southern California’s leasing community for the past seven years. The first Angels Game Night was hosted by the UAEL Southern California Region in June of 2002. Angels Game Night is a core networking program offering attendees the perfect opportunity to mingle before, during, and after the baseball game.

This year’s game features the LA Angels versus the Minnesota Twins. It’s expected to be an exciting game! Angels Game Night is held at Angel Stadium in Anaheim, California - Home of the Angels Baseball Team since 1966.

Angels Game Night has historically been a well attended event. Lessors, Funding Sources, Brokers, and Industry Service Providers located regionally as well as from Northern California and out of state have been regulars at Angels Game Night! Angel Stadium is located just 12 miles from John Wayne Airport (Orange County, CA).

Orange County is centrally located between Los Angeles (45 minute drive), Inland Empire (45 minute drive) and San Diego (1 hour 30 minute drive). It’s easy to take advantage of the close proximity of Southern California’s Leasing Community by scheduling multiple business appointments before Game Night even begins. In one day, you could have the opportunity to shake 30 hands at Game Night plus several more during your morning and afternoon appointments!

Please join us at this year’s LA Angels Baseball Game Night. Let’s Play Ball!

Please visit www.nefassociation.org to register online and reserve a ticket.

event: lA Angels vs. Minnesota Twinswhen: Thursday, July 23, 2009Time: 7:05 PMwhere: Angel Stadium – Anaheim, cASeats: Field Box group Seats (Tickets are limited so reserve yours today!)

the Conference should feel more prepared to face it, thanks to the knowledge, insight and best practices gleaned from their time in Orlando.

Of course, any good conference has to offer more than just education. In addition to the attractions of Disney World, NEFA welcomed attendees with a poolside reception and capped off things with a “Final Four” party, where everyone could socialize and maybe even win their NCAA tournament pool!

To launch a conference at any time is challenging, more so in these current economic conditions. Fortunately, the Conference Committee consisted of many dedicated professionals who did so much to make it a success. That includes Chris Santy of Patriot Capital Corp., Dwight Galloway of Lease Specialty Finance, and John Rosenlund of Radiance Capital, who organized the educational tracks. Also playing important roles were Brent Hall of Pinnacle Business Finance, Skip Wehner of 5280 Financial, Reid Raykovich, Financial Pacific Leasing and NEFA’s Membership Directors, Alison Pryor and Joe Woodley. Additional thanks go to Kim King of NEFA, who coordinated sponsorship of the event.

Reid Raykovich provided a great summary of the conference. “I was a little nervous about the potential turnout due to the state of the economy, but it blew me away! The large turnout is a testimonial to the strength of our industry and of the NEFA organization as a whole.”

With this great start behind us, NEFA won’t rest on our laurels. Next up: the Funding Symposium, on September 24-27, in beautiful Monterey, California. We look forward to seeing you then, and hope to discuss the best ways to move forward in a better economic climate.


The National Equipment Finance Association (NEFA)’s first ever conference was held April 4-7, 2009 in Orlando, FL.

NEFA’s number one goal is to provide a professional forum for networking and the Summit conference delivered. The conference theme was, “Survive and Thrive”. The timing couldn’t be more fitting as our industry faces some of the most challenging times many have seen. I have heard nothing but positive feedback from this Summit. Discussions went beyond the traditional day to day challenges that funding sources and the broker/lessor community face.

BRING ON MONTEREY and NEFA’s 2009’s Fall Funding Symposium where we will “Innovate and be Great”. The momen-tum created from Orlando’s conference will be a springboard to help us all realize how important association is. Before the specif-ics of the Fall Funding Symposium, I want to challenge each of you with this thought: How are you going to play?

Monterey is exciting for Two reasons: 1) Industry professionals will come together to reflect back on what the last 6 months looked like in our industry from conversation that occurred in Orlando. More importantly, we will FOCUS on what new innovation and improvisation must occur to our business to achieve success as each of us define it…Increasing revenue, decreased expenses, efficiency within our business models, enhanced relationships, challenged yet committed employees, having fun in an industry with numerous opportunities, etc.

2) The beauty of the Monterey Peninsula and specifically Pebble Beach Golf Links is hard to beat. For those of you who play the best game on earth, golf, you’ll understand where I’m going with this. For those that

NEFA’S 2009 FALL FUNDiNg SYMPoSiUMSeptember 24-27, 2009

Bring on MonTerey… How Are you going To PlAy?bY chArLiE EhLErS

could care less how a little ball can both fascinate and frustrate an individual in the same swing, stay with me.

How are you going to Play?I want to use this golf analogy to help us understand how we will continue to play in the leasing industry. The setting is this: You are getting ready to tee it up on Hole #7 at Pebble Beach. It’s a picturesque, 106 yard Par 3, carved alongside the Pacific Ocean. What club do you have in mind; a sand wedge, maybe a pitching wedge…no more than a 9 iron for some, right? If the wind is at your back, take dead aim for the cup. If the wind is howling in your face, your club selection just changed to a 6 or a 5 iron, maybe an even longer club, to keep it low and out of the wind. For you golf purists, remember the shot Lee Trevino played? Innovation or improvisation at its finest. I hope you get my point…a 106 yard shot in perfect conditions requires a smooth swing with a short iron. It’s a comfort zone for most with 90%+ confidence you’ll land on the green. A 106 yard shot in windy, rainy, miserable conditions…when doubt, fear, and the unknown enter your mind and you’re far from your comfort zone, you’re hoping not to hit it into the ocean. How are you going to play the shot?

The equipment finance industry has some similarities to the above scenario, doesn’t it? 2006 and 2007 vs. latter part of 2008 and 2009 were quite different. Are you swinging with confidence right now or deciding what kind of shot you are going to play?

The Benefit of neFA’s Fall SymposiumThe Fall Symposium will create an atmosphere for funding sources, service providers and the broker/lessor community to come together again face to face to discuss the challenges and opportunities

that are staring us in the face. We will have a featured speaker, John Sweeney, who will discuss the concept of innovation in a very creative way. His book, “Innovation at the Speed of Laughter” will create much thought and discussion about how we need to constantly look at our business models and adapt in an ever changing environment.

Improvising when needed is always key…just like deciding what club to hit in the appropriate situation. We can’t compromise innovation with poor risk management however. The Federal Reserve Chairman, Ben Bernanke, had these comments from a recent article I read on the financial industry. He states, “As we have seen all too clearly during the past two years, innovation that is inappropriately implemented can be positively harmful. It would be unwise to try and stop financial innovation, but we must be more alert to its risks and the need to manage those risks properly.”

Knowing our industry will continue to be challenged by current economic conditions, the role that funding sources play for the broker/lessor will be even more vital knowing there are fewer funding sources in today’s environment. Managing risk will be key to long-term success for everyone. We as funding sources have to communicate a very clear message: We will continue to support business that is done the right way. Brokers/lessors should take whatever steps necessary to ensure they know their vendors and lessees even more. Provide complete and accurate answers to your funding sources when submitting the business you’ve originated. Ask your funding sources what they expect and deliver that to them. Funding sources should be doing their part to deliver back to you as that happens. The win-win approach has always been key but even more today.

Funding sources need to continue to add

tidbitsNational Equipment Finance Association



value to help brokers/lessors business grow. Adding value isn’t in how a funding source evaluates credit. Adding value is providing innovative marketing strategies, consultative sales strategies, and superior service levels which will create more business opportunities for a broker/lessor’s business.

“innovate and Be great”As we continue to “survive and thrive”, I challenge all of us to “innovate and be great”. This will make our entire industry better and keep all eyes looking ahead on what the next opportunity will bring to each of us. It will allow all of us to manage risk, yet be efficient and profitable. It will secure long lasting, mutual beneficial relationships, for all parties involved.

As you stay focused on creating success in the leasing industry, I look forward to seeing all of you September 24-27 in Monterey, CA for the NEFA Funding Symposium. I look forward to discussions about the challenges and opportunities we will continue to face. What happened in April 2009 vs. what IS happening in September 2009? I look forward to being a part of creating innovative solutions. We will be amongst one another for association that cares and supports each other. As different (shot) opportunities come your way, how are you going to play?

For more information about NEFA’s Fall Funding Symposium, contact NEFA at 404-760-2843 or www.nefassociation.org

Charlie Ehlers is with U.S. Bank Manifest Funding Services. He is the Fall 2009 NEFA Conference Chair.

deniSe cASTAgnAnassau Asset Management

“A kind heart is a fountain of gladness, making everything in its vicinity freshen into smiles”

Washington Irving

After college Denise joined her family business, Nassau Asset Management which was founded by her father in 1986. The company provides full service asset management to the equipment leasing and finance industry, including collections, asset recovery,

remarketing, plant liquidations and appraisals.

Denise had been active in all associations including the UAEL and the EAEL and served on the Board of the EAEL. In the spring of 2009 Denise served as the Chairperson of the first NEFA Summit in Orlando. We applaud Denise for her efforts in working closely with the new association, the management company and selecting a knowledgeable committee. She managed to present a first rate program and include networking opportunities.

The NEFA would like to take this opportunity to publicly thank Denise for the outstanding job she did on the first NEFA Summit. Her always pleasant “outlook” will hopefully encourage us through 2009. Thank you Denise for all your hard work, it was so greatly appreciated and your ever present smile makes us smile too.

Volunteer of the Month

BAlTiMore wASHingTon regionAl crABFeASTJune 11, 2009bY NANcY PiStorio, cLP, MADiSoN cAPitAL

NEFA will be hosting its first “official” crabfeast in June 2009. Over the last 8+ years, this well attended event had become an annual favorite of the Eastern Association of Equipment Lessors (EAEL), one of the two original associations which merged recently to form NEFA. Crabfeasts are a popular type of venue historic to the Baltimore Washington area.

“Picking” crabs, eating Maryland crab soup, corn on the cob, and massive onion rings, with plenty of beer to wash it all down is a memorable occasion not to be missed. (For those not partial to crabs, there are other entrée choices available.)

Generally, leasing professionals from both the Baltimore Washington area and as far away as California have participated. Attendance is usually between 70- 100 people. The event is held at one of Baltimore’s many popular crab houses on a Thursday evening. This year it will be held at Bo Brooks Crab House on Baltimore’s historic waterfront in Canton. Those attending this meeting may want to consider staying through the weekend to take advantage of Baltimore’s many downtown attractions. These include Baltimore’s Inner Harbor restaurants and shops, the Aquarium, paddle boat rides, tours of the historic USS Constellation, visits to Fort McHenry, Maryland Science Center, Little Italy, and more.

Please be sure to participate in the first annual NEFA Crabfeast and enjoy the fun and camaraderie with your industry colleagues! Register online today at: www.nefassociation.org

event: Baltimore washington regional crabfeastwhen: June 11, 2009registration: 4:30 – 5:00 PM, crabfeast 5:00 – 8:00 PMwhere: Bo Brooks restaurant, 2780 lighthouse Point, Baltimore, Md


Whether you listen to Warren Buffet, Ben Bernanke or President Barack Obama, they are all championing the

same message, and I agree with them. This economy will turn around. We may all differ on when the rebound will happen, anywhere from the fourth quarter of 2009 to the first quarter of 2011, but we all agree that it will. The big question though is this. Will you be ready when it comes? Will you be both operationally and fiscally “lean and mean” when the U.S. economy starts firing on all cylinders again? Now is the time when we all should be examining our operations and making sure that they are as efficient as they can be.

Efficiency gains in any organization can

come from both operational efficiencies and also financial efficiencies. All too often, we chide ourselves about the processes we use and how we need to become “more efficient”. But in today’s environment we can no longer sit idly by. We need to actively look for ways to improve our operations. Every single process must be examined with an independent and critical eye. I have had many opportunities to examine my client’s operations over the years and I have yet to come into a company and not see inefficiencies that could be easily addressed with a simple process change or by utilizing an available tool. And these same principals can be applied not only to the operations departments but also to the treasury departments as well. Are

you actively maximizing your rates and minimizing your cost of funds?

Three areas that can benefit the most in efficiency gains that I will discuss in detail are Originations, Portfolio and Asset Management and Funding Strategies. When each of these areas is looked at with an expectation that we can do better, you will and should be able to identify opportunities for efficiency gains. The key is to go into your review process with no preconceived notions. Nothing is sacred and everything is on the table. If you are to survive in this economy, you can’t rely on the old models, you must be adaptable to new situations and be ready to change course in an instant.

Are you reAdy For THe TurnAround?

Whether you listen to Warren Buffet, Ben Bernanke or President Barack Obama, they are all championing the same message. This economy will turn around. Now is the time when we all should be examining our operations and making sure that they are as efficient as they can be.

bY VAN wrENN

SEVicE line


AboUt thE AUthor

Van Wrenn is responsible for the management of the Client Services Group at LeaseTeam, Inc. Prior to assuming a management role at LeaseTeam he provided on-site installation, training, set-up and conversion of customer data. Before joining LeaseTeam in 2004, Van worked in the leasing industry for 18 years, most recently as a Vice President with US Bank. He is a Certified Lease Professional and has been a LeasePlus user for 17 years.

LeaseTeam, Inc. is a provider of software solutions to the equipment finance community since 1989. Van can be reached at [email protected].

In his book Art of the Deal, Donald Trump said that, “Money was never a big motivation for me, except as a way to keep score. The real excitement is playing the game.” If we want to win the originations game, we will need to ensure that our process is thoroughly reviewed from beginning to end. In order to do this we must first ask ourselves two key questions: 1. Do we know our market? and 2. Do we know our customer?

Too often I see companies that try to be everything to everyone. They don’t have a clear vision of their market or their customers. So prior to reviewing our processes we must know the channels and clients we want to target. The best way to accomplish this is to create a deal and customer profile. By doing so we can begin to look at our processes and determine if it meets our requirements to access and process transactions for our targeted profiles. Profiles can also help us to tailor and streamline our processing. We are not having to account for, or program to, every possible combination. If a deal does not fit our profile, it shouldn’t be processed.

Our second area of opportunity is within our portfolio and asset management systems. Now that we know the profile of the transactions we are to be processing, we can begin to review our systems and processes to ensure that they align with our goals. Every process must be reviewed. From booking to invoicing to cash application to contract adjustments and finally to contract termination we must ensure that we are optimizing our personnel, systems and processes. As we review our systems, we need to determine if they are configured optimally for the transactions we are asking them to process. We may need to adjust the configuration if it does not meet our requirements and contract profiles. Additionally, are we utilizing all of the tools, modules and capabilities that our software systems offer? Often times minimal investments in additional capabilities yield far greater returns than the original cost. Accompanying our review of our systems needs to be a review of our personnel as well. Do they have sufficient training in our systems to adequately utilize them to their fullest extent? Keeping our employees adequately trained and current on software updates and releases is essential to optimizing their skills. Finally, are our reporting systems sufficient to generate the information needed to accurately and effectively monitor our portfolios? Identifying our reporting needs up front is critical to ensuring that our systems are configured properly.

The third area that we will review is our Funding Strategy. While some may not see this as an area in which we can gain efficiencies, it is certainly one that is routinely overlooked and can benefit from a thorough review. Do we have the systems and reporting structures in place to enable our treasury departments to efficiently seek and obtain competitive funding? As we review all of our processes we cannot ignore this important part of


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Member: UAEL, NAELB, AZELA

For more information please call or emailJim Padden, CLP or Bill Griffith, Credit Manager at:

email: [email protected]: [email protected]

www.padcofinancial.com

Financial Services, Inc.

30 newSline | MAY/JUNE 200930 newSline | MAY/JUNE 2009


Every economic downturn is unique in itself but, sadly similar in the emotional and psychological impact it has on the players. My experience well into four

decades of rolling cycles brings the initial stomach jerking feeling of here we go again combined with the awe of not knowing how bad this one can get. I have never lived through the time of people jumping off buildings like the great depression of 1939 but seeing the prime interest rate go over 20% in 1980 certainly redirected everyone’s career opportunities. That was when sales and credit folks all became collectors. Survival instinct was the common thread.

Business leasing and finance has always run akin to other financial markets. Current government control has been as much a part of every problem as the ultimate outcome. Housing has as many yo-yo actions as our industry has seen, due to the availability of demand and funding, and remains a good yard stick for when it all starts down and when the end is in sight. The crazy stock market has had the same twists as housing and the severe impact on pocketbooks is a double whammy to those of us in the finance trade.

We are generalizing here and it needs to be said that there are always segments that avoid recession. Housing and buildings along coastal waters and closely held businesses with deep pockets may not feel the same pain as the rest of us but for the most part globalization has made us all party to the downward dance.

This begs the question of how much sensitized fear comes from too much bombarded information via the news people and our digitalized world. And is

this breeding greater uncertainty than in the past? The stock market took a dramatic plunge in the mid 70’s and, unless you were a big player, no one saw the cross-over to leasing until much later.

With Carter in the early 90’s and a go-nowhere economy, communication had matured. And in the early 90’s when the US burped again we all had more modern cell phones and advanced computers. Today we have so much more information clogging our thoughts and truly know very little more than we ever did about solutions. But what we can bet on is that the strong heart of America will prevail. No one has ever won betting the “no show line” against this country bouncing back. Maybe history does repeat itself and in economic terms this is a good thing. We can only dissect what we know, maintaining as best we can, and project to taking advantage of tomorrow. n

Every economic downturn is unique in itself but, sadly similar in the emotional and psychological impact it has on the players. My experience well into four decades of rolling cycles brings the initial stomach jerking feeling of here we go again combined with the awe of not knowing how bad this one can get.

bY JoE wooDLEY

2009 version of “cycles of uncertainty”

AboUt thE AUthor

Joe Woodley, CLP, is a Membership Director for National Equipment Finance Association (NEFA). He has been in the equipment leasing industry since 1972. Joe was formerly with St. Paul Leasing, Colonial Pacific Leasing, Westover Financial, and Executive Director of UAEL. He was involved in the inception

of the CLP program and Past President of WAEL in 1987. He resides in La Quinta, California.


It’s time to face the future. All businesses from time to time need to redefine themselves, their markets and their future opportunities. As

an industry, we have traveled through a period of change and challenges for the past year; and must now redefine and communicate our new capabilities to the market.

Whenever businesses redefine themselves the first stage of marketing is to reeducate the market in reference to new capabilities and capacities. Therefore, we all need to take a step back and put on our teaching/marketing hats. The world and our past customers need to be made aware of who we are and how we can best service their needs in the future. It’s is often most difficult to communicate our new capabilities when many (both internally and externally) have seen us in the same mold for so long, especially if we have

been successful in the past conveying ourselves as a major player in a particular niche which we are now redefining. Redefinition can be small and subtle to us, but the challenge to broadcast these changes becomes a major undertaking in the market.

Many years ago, I participated in a redefinition process which the entire management team thought was going to be a quick and easy transition. The lessor was a small ticket vendor oriented organization with an average ticket size under $10,000.00. Because of changes in the market and its ability to fund larger transactions, the lessor wanted to increase its transaction size and add direct end user business to its mix. The lessor was not going to decrease its desire to fund smaller vendor generated transactions - the redefinition was only the addition of new capabilities. The sales team quickly

hit the market with new marketing materials and a new message of expansion and new improved capabilities. The transition was slow and at times painful. Many existing vendors continued to give their larger transactions to other lessors, some didn’t have larger transactions and resented the continuous driving request for larger transactions. Vendors with only larger transactions continued to see the lessor as not a player in their market. Several years later there were still many in the marketplace who continued to see the organization as an under $10,000 funder when in reality the average size transaction was closer to $50,000. There were even internal sales representatives who continued to have portfolios with an average transaction size under $10,000. The lesson learned is that strong, old perceptions are often hard to alter.

Many lease originators are faced with new

eMBArKing on new oPPorTuniTieS

It’s time to face the future. All businesses from time to time need to redefine themselves, their markets and their future opportunities. As an industry, we have traveled through

a period of change and challenges for the past year; and must now redefine and communicate our new capabilities to the market.

bY Scott whEELEr

brokEr line

opportunities involving the redefining of industries they will serve, product availability (less or lower thresholds on application only transactions), credit parameters and other factors. Therefore, a real comprehensive marketing plan needs to be developed and more importantly, executed upon in order to re-educate both past and new clients. My suggestion is that the market plan be aggressive consistent, methodical, and persistent over time. Marketing changes do not usually happen quickly. New and improved capabilities need to be well presented in a confident manner over time. The best means of communication is always in person, although when an organization is going through a redefinition period, personal calls should be supported by repetitive written communications in the form of letters, emails, faxes, newsletters and others. Often times the written word can reinforce success and drive a message home especially when there are many alterations to your past capabilities.

Strong, effective marketing plans are not created on the fly. I strongly suggest that the time be spent to examine the new landscape, examine new capabilities, and to spend ample quality time constructing a marketing strategy which will best allow you and your organization to maximize its opportunities in the future. Extra effort and time now will increase your profits more quickly in the near term. Make sure that your message is concise and well understood by your staff before you take it to market. We are facing exciting new opportunities and the individuals and organizations who are first to market with an aggressive, well understood message will be the first to realize the rewards of success. n


AboUt thE AUthor

Scott A. Wheeler, CLP has been in the commercial equipment industry since 1982. With over twenty-six years of leasing experience and an Executive Masters in

Business Administration, Scott is an accomplished senior leasing executive with leadership qualities in marketing and operations. Scott is currently the president of Wheeler Business Consulting LLC; providing extensive experience to organizations looking to reach a higher level of profitability and corporate development. Scott was active with EAEL since 1989 and is a current board member of NEFA.


Sales representatives and lessors, have three basic means to increase revenues. They can develop new clients, increase margins on current business or they can sell more services and products to existing clients. Most successful

businesses know that the most efficient and effective means to increase revenues is to better service the needs of existing clients especially in more challenging economic times.

The relationship is already established

The value add you can provide means there is a greater likelihood of generating additional sales

The cost of marketing and calling on existing is less than marketing and calling on new prospects.

At Ameritrade it’s called “share of wallet”. It means how much of their investable assets can we get? The goal clearly is to make sure that if a client is investing, they should be investing through Ameritrade accounts only. This should be your goal as well. There is a strong correlation between existing clients, loyalty, and revenue. You will need to show them you are listening to their problems and solving them through a product offering that benefits them. This is especially true if they are already a leasing client maybe even through a couple of different sources.

By being proactive with your inside sales team and development of your existing business, you can build you business from the inside out. The key is education on your end user clients, education on your funder, staying focused on what you do best, and adding value to your client base year after year.

bY tiM MAthiSoN

Building Business From the inside out


Many lessors and brokers are searching for products that will differentiate themselves. For the past couple of years, some brokers and lessors could actually be all things to all people. One problem with this is there is a tendency to get spread too thin. Another problem comes with the change in the market. The question to ask your self is; “Is my product bringing value to the table?” If it brings value, it’s easier to add products. On the other hand, some companies spent the past couple of years picking all the low lying fruit. They forgot their focus and their purpose. Picking the low lying fruit is not building a relationship and it ads no value other than just getting a deal done.

You should be digging into your existing clients and profiling their needs. Does the company you wrote a lease with 2 years ago really understand the value you provide outside of that one lease? Have you missed opportunities since then? Maybe you have an existing business sales department. Usually, those calls are with your least experienced reps, and go something like: “We did a lease with you X months ago and I’m calling to see if you have any needs in the next 6 months”. Maybe you get a chance, but most likely, your rep is going to schedule a call in 6 months with the same question. The point is; do these companies, your clients, really know what you do and what you are capable of doing? Do they understand your products?

So, how do you get your “share of wallet” without spreading yourself too thin and losing your core purpose and focus? Obviously, you need to take a look at your customer base to understand what they may all have in common. You really need to add a new niche.

This may seem obvious, but be careful not to get caught up in a reactive mode. The reactive mode happens when a prospect/client calls and asks you to finance something out of your sweet spot. You may spend time and money researching funding sources on a product you have never been trained on, and you may never finance that product through that source again. Be proactive. Maybe you have a vendor program that sold on the same vertical. In this case, you can take your top customers and visit with them to see what needs they all have in common and where you can add value. The next step is to find a funding source you can partner with to help deliver that product. Research your clients and research your niche funders.

There are a lot of healthy niche funders looking to establish close relationships. Most of them have limited exposure to the leasing community because they aren’t set up to work with everybody.

Once your end user research is done, your funding relationship is in place, and you have been educated on your new niche product, you are in position to cross sell a niche product. Now you are adding value to your existing marketing base. You have a reason to call, and better yet, a reason for them to listen.

You will find that this proactive process is more efficient than being reactive because you are adding value and controlling the sales of your existing client base. Think of the possibilities and efficiencies of understanding the niche and offering the product based on education and research. The opposite of this is the reactive mode of doing a deal when it comes along and wasting time on a deal by deal basis.

You may educate and assign or hire a rep for your cross selling, but be sure you are building on your core product that is already working. With your new product offering you will have more depth and resources so you can avoid wasteful and costly mistakes because you were proactive with the product.

By being proactive with your inside sales team and development of your existing business, you can build you business from the inside out. The key is education on your end user clients, education on your funder, staying focused on what you do best, and adding value to your client base year after year. n

AboUt thE AUthor

Tim Mathison is the VP of Broker Relations for P&L Capital. He joined P&L Capital in 2001 as an account manager. Since then, he has had roles as sales manager of all 3 of P&L’s companies, P&L Technology, P&L Capital, and 2nd-byte. P&L Capital specializes in the Technology Rotation Lease and is now offering the TRL as a product to the broker/lessor market.

AdverTiSer indeX

Allegiant Partners ........................................................ 37

American Bank Leasing ............................................ 17

Boston Financial & Equity ....................................... 11

Collateral Specialists,Inc. ......................................... 12

CT Lien ...............................................................................4

Dolsen Leasing Company ......................................... 33

ECS Financial Services .............................................. 23

Financial Pacific Leasing ......................................... 22

International Decision Systems ..........Back Cover

Kropschot Financial Services ................................. 22

LEAF Financial .............................................................. 33

LEAN ................................................Inside Front Cover

Lease Team .................................... Inside Back Cover

Leasing Solutions ......................................................... 29

LFC Capital .........................................................................9

Merchant Cash & Capital ......................................... 17

Padco Lease Corp ........................................................ 29

Premier Lease & Loan ..............................................15

Quiktrak, Inc. ................................................................. 18

US Bank Manifest Funding ..................................... 14

Continued from page 38

MEMbErLiNE

invest $100,000 and he agreed. I was lucky – I really did not know what I was doing from an operational standpoint.

As they say, the rest is “history”. Allegiant continues to survive despite the poor economy. I continue to enjoy life. I enjoy being outside a great deal. I was a competitive skier growing up, and I continue to ski with my family and friends. In the summer I wakeboard almost every evening with my three kids – Ben (12), Eric (10) and Annie (5). I have also become an avid surfer – I try to get out 2 to 4 days a week in the fall and winter when surfing is good in San Francisco. Luckily, my family is active as well and we like to do a lot of outdoor activities as a family. I started playing guitar a few years ago, so I enjoy playing with friends (including Chris Walker from Great America when we get breaks from NEFA board meetings). I spend time supporting The Wilderness Society supporting the preservation of America’s wild places by helping raise money and serving on the President’s Counsel. n




ArE YoU rEADY For thE tUrNArAoUND?

LEgALLiNE

the overall equation. A method to accomplish this is to closely partner with your sources of funding. Draw on their expertise, knowledge and systems to create a seamless funding process. Not only will this process enable you to identify operational efficiencies but will also lead to financial efficiencies (i.e. lower rates) in your funding strategies.

In closing, don’t try to re-invent the wheel. Partner with your service providers and peers to implement a best practices approach to your systems and processes. Draw on their expertise to guide your efforts. They will readily assist you in defining your target profiles and then ensuring that their systems are aligned with your goals. Also remember that this is not a one-time event, but an on-going effort to maintain your operational and financial efficiency. All of your processes, systems and personnel should be reviewed annually to make sure you are maximizing your returns. And finally, create a “Why?” culture. Foster your employees desire to continually ask “Why?” You never want them to answer, “Because we have always done it that way.” Healthy organizations are constantly questioning their policies and procedures. Don’t let your organization become married to the status quo. There is always a better and more efficient way. Are you ready? n

conSider your oPTionS wiTH reSPecT To THe eQuiPMenT.

The UCC-1’s entitle you to foreclose your security interest and reclaim your interest in the washers and dryers. Therefore, you need to make the business decision as to whether you can recoup some of your losses by reclaiming and selling the equipment. Is there a market for the two-year-old washers and dryers? What about the year-old, top of the line washers? How much will it cost to transport and store this equipment? If you include a cause of action seeking to retake your equipment, provide your lawyer with copies of the UCC-1’s to save him or her from having to search for them a secured transaction registry. Your attorney will need to verify that your lien is, in fact, a priority lien. As for the delivery van, be sure that all title documents are in order.

PrAcTicAl conSiderATionS. Even though your conversations with Larry may not have gone anywhere, consider whether any of the information learned during your discussions might be relevant to your pre-suit considerations and analysis. Did Larry state that he had or was about to file for bankruptcy? Did he mention other creditors who have already filed suit or obtained a judgment? Are you aware of any other assets which could be attached if a judgment is obtained? Did Larry indicate that he might be willing to return the equipment without having to litigate over it? Any information learned during these discussions should be shared with your attorney.

Hopefully this article has outlined some relevant considerations which will assist you in preparing for suit efficiently and in a manner so as to assist your attorney in focusing only on the most relevant pre-suit steps. After all, finding ways to operate more efficiently will always be a means to “survive and thrive.” n

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I began in the equipment finance business in 1988 as an intern for a Japanese leasing company called IBJ Leasing. I had studied some Japanese

and was getting a Master’s degree in International Relations and Pacific Studies. An internship in Tokyo was arranged for me through an Orange County, CA developer.

At the time, the Japanese banks often had affiliates who engaged in real estate finance and large ticket lease finance. I was involved in loans to developers like Donald Trump and other high flying real estate moguls, many of whom became insolvent around 1990 due to overly leveraged real estate projects started near the peak of the economic cycle of the time. Primarily, however, I was involved with Japanese leveraged loans financing aircraft all over the world. It was a fun time to be in Japan – at the height of their great economic “bubble”.

Not long after getting to Japan, I noticed a Canadian girl. A whole group of us – about 50 – were going on an overnight bus ride to ski at a resort in the northern part of Japan. I was sitting next to a friend who quickly fell asleep. In fact, everyone was asleep except for the girl I thought was cute (her name is Margot) and me. I nudged my buddy and told him to move, and Margot came and sat next to me on the bus. We ended up talking the entire night, and by the end of the bus ride

we both knew we were meant to be with one another. The deal was sealed on the ski hill. I was looking up the mountain waiting for her to come down, and finally looked down as it turns out she was already down the hill. Margot wrote her parents the Monday after the weekend she had met the man she was going to marry. We have been married now nearly 19 years.

I continued working in Japan until 1992, both for IBJ and later for an affiliate of IBJ called D’Accord Financial Services. At first I worked with a more experienced person in Japan. The cost of having a senior person in Japan was high, and soon I was running the Asian office on my own, reporting to the headquarters in San Francisco. It was a thrilling time for me, being 25 in a foreign land running an operation without local help. I was successful and our office was profitable, but after nearly four years in Asia I was ready to return home. Tokyo was a huge, congested city and I was used to spending a great deal of time outdoors. I was ready to get back to the Bay Area.

I ended up working for a few different large ticket leasing companies after returning to San Francisco. I covered Canada for BankAmerica Leasing, and was a Managing Director at CIBC, a Canadian Bank, covering Canada and also assisting with other cross-border transactions in Asia and Europe. During my first 10 years in the leasing business, I was fortunate to be involved in Japanese Leases, Canadian Leases, US leveraged and single-investor leases, “synthethic” leases, German leases, LILO structures in the US and Canada and other structured financings.

By 1998 I was burned out with interna-tional travel. We had a newborn baby and I was spending 3 weeks out of 4 on the road. I was ready for a lifestyle change. I was listening to an interview of the Spice Girls on TV – one of them said “You just got to figure out what you want in life and go for it.” I was ready to figure it out. I quit that day from the road.

I knew I wanted a change, but I wanted

MEMbEr line

loves leasing, loves life!

cEo, ALLEgiANt PArtNErS iNc.

Chris Enbom

to stay in equipment finance. I liked the people and felt I at least had a grasp of the subject matter. I wanted to start a company that did not require me to find new fee revenue every few months as my previous jobs had required, but instead was looking for a recurring revenue stream. There were several obstacles to overcome: a) I did not have millions of dollars and b) I did not understand small ticket leasing or credit.

Luckily I had quit my previous job suddenly and in the middle of several projects that needed my expertise, so I was able to collect fee income for a few years while I figured out a business plan. I looked at a number of different business models in the leasing arena and settled on the B credit market as a niche market with the potential to build wealth over time. It did not require large leverage and if done correctly would provide nice dividends as the cash flow can be quite good. I raised equity capital from friends and family and started Allegiant in 1999. The most fortunate event that happened was being introduced to Ben Carlile who at the time was running Trinity Capital’s collections and credit department. Trinity (now the vendor, credit and collections arm of Bank of the West’s equipment finance department) was privately owned at the time and Ben was ready for a new challenge. I told him he could make $30,000 per year and he would need to


National Equipment Finance Association · 2018-04-04 · AnnuAl Funding Source iSSue newsline...

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