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When the time is right, it’s right… And right now it is sooo right. The medical industry is expanding at an exponential rate with a multitude of contributing factors from the aging baby boomers to the rapid advancements in treatments and procedures. New technologies are being developed on a daily basis, not only as a means of keeping up with the higher demands of medical assistance but to also compensate for our ever growing need for a better quality of life, a definition of which can be left in the eye of the beholder. This rapid growth is leading way for many new providers to jump into the market and existing providers to expand their business with either new locations or by adding new treatments, all of which takes capital.

So where does this capital come from and how do you join in?

Well that’s an easy question to answer when you’re an established doctor with a long running and profitable practice looking to expand. But what if you’re a start-up? What if your practice has experienced some hard times and your borrowing history isn’t as pristine as most banks would prefer? Or what if your org chart doesn’t happen to have a physician sitting at the top?

Start-Up Financing

For new providers just getting started, the question of where to get capital can be the toughest one of all. Medical Equipment can come with a hefty price tag, especially when it’s the latest and greatest, and traditional lenders don’t seem very keen on the idea of lending out $200k to a company that’s just getting on its feet. Another solution would be to solicit a private investor to bring in as a partner. However, unless you have an expansive rolodex, 6 months to a year to iron out the terms and agreements and are willing to give up some of the equity in your business, this may not be the best option either.

Perhaps the best answer, and sometimes the most overlooked, is to simply walk before you run. Everyone wants to get to Point B as quickly as possible, but sometimes getting to point B requires leaving point A with the resources needed to get you there successfully.

At SLS Financial, our goal is to match you with the financial product and the amount of capital that is right for your company. History has provided many examples of start-ups that manage to obtain a loan for top-of-the-line equipment only to find that demand isn’t what they thought it was or that their cash flow can’t survive the inevitable off-peak seasons that occur with most non-primary medical verticals.

So maybe our method means you start out with the equipment that has all of the bells but none of the whistles or perhaps even last year’s model. This is still a great stepping stone to build your practice to what you want it to be and to do it safely by making sure you stay cash flow positive during the incubation period.

Or what about starting with used equipment? We also know the value of buying used or refurbished equipment for new clinics and are more than willing to work with any refurbisher or used equipment dealer with a good track record.

And remember, taking our approach doesn’t mean you don’t get the equipment you want, in fact, this may actually lead to getting the equipment you want in less time.  Opening your doors with equipment requiring a lower capital investment means you get valuable time to build up credit with SLS to qualify for a higher end system a few months down the road. Many dealers and manufacturers also have trade-in programs and will happily exchange your old equipment for credit towards a newer model. And the most important part being that you never put a strain on your finances trying to do too much too early.

Blemished Borrowing History

If you’ve struggled through hard times and your borrowing history has some bumps and bruises, don’t let that deter you from growing your practice or clinic. At SLS we care about your story. We want to know why all signs are looking positive and why our capital investment in your company makes sense. Our 30+ year history is filled with seized opportunities to help companies like yours get back on their feet. We know that lending isn’t a distant relationship, it’s a true partnership and that’s why we invest in your story more than your credit report.

Non-Practitioner Owner Financing

At SLS we also understand that not all businesses should be structured the same. We admire a physician that is willing to take on the burdens of acting as the manager of daily operations as well as the care provider. However, we also understand when a physician has decided to step out of the way and let a non-physician manager step in to operate the business so that they can focus on what they do best, which is help people.

We also understand that many entrepreneurial minded people can be passionate about and successful in the medical field without being a physician themselves. It’s hard to imagine that these such people are getting denied the ability to expand their clinics simply because they employ physicians rather than being one themselves, but it happens every day.

In neither of above mentioned scenarios does SLS feel it would be appropriate to discriminate against the providers in underwriting and deny them a loan if all other pieces fit. Some of the fastest growing medical providers in the US are doing so with a management company running the show and that’s simply because, sometimes it works.

 

With the rapid growth in your industry, there may never be a better time to start building the relationships you need to grow your practice. When the time is right for you, give me a call.

 

John Brock

National Account Manager

SLS Financial Services

816-587-7301

jbrock@slsfinancial.com

 

I have almost a decade’s worth of experience in medical financing and want to use my expertise to provide you with the best finance product and service available. My goal is to meet your company’s specific needs and ensure a long and profitable success through a sound lending partnership.

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While there are a number of benefits to the Tax Cuts and Jobs Act of 2017 for companies, there is a universal theme of “encouraging reinvestment” that seems to be at play. Because of this, there are a few strong incentives to put more revenue producing equipment or projects to work for a lower net investment.

Here are a few of the BIGGER incentives:

• 100% deductions for equipment purchases now reach up to $1,000,000 (from $510,000 in 2017) and begin phasing out at $2,500,000 (up nearly $500,000 from 2017)
• Extension of Section 179 Depreciation benefits to the purchase of used equipment
• Reduction in top line corporate tax rate from 35% to 21% (For C Corporations)

While the top-line tax break is beneficial, all businesses should approach reinvestment with proper analysis. If you determine that growth is your best application of these tax benefits, it is important to strike the right balance with the reinvestment.

With the cost of debt still near historic lows companies can marry the additional cash and depreciation incentives with lower costs of capital to “get more for their money”. While the additional cash position may cover expansion of one product line, responsibly leveraging creative financing might offer additional capacity for expansion. The after-tax cost of revenue-producing assets should of course continue to be a worth while calculation and in some cases now more than ever. This is another area where we may be of assistance.

Whatever a company’s growth plans, acting now may be advisable. With interest rates on the rise for the foreseeable future, making the most of the tax benefits and low interest rates is best acted upon sooner rather than later.

For decades we have helped businesses of all sizes take advantage of opportunities with an uncomplicated approach to financing.

How can we help you grow in 2018 and beyond?

Contact Doug:

Doug Fuller

dfuller@slsfinancial.com

816.423.8021

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We’re a little over a month into 2018. The month of resolution making is over. How have you held up? Staying strong so far? Good. Past the point of making goals, you have to take the steps to achieve them. Our goal last year was to create and expand a blog that would help our customers, partners, and businesses achieve success and learn a few things along the way, as well as let our online visitors get to know us a little better.

We laid out the Top Ten Reasons to use Equipment Financing, and how to Understand the Financing Process. We got a chance to share our gratitude toward our community for an award nomination, and show our gratitude toward our team for a job well done in 2017. We Broke Down the Credit Mystery using The 5 C’s of Credit, and shared knowledge from one of our favorite reads on how to be Great by Choice. Finally, we gave some insights on commercial lending for the various industries we serve.

We hope we were able to be of assistance last year, and we’re looking forward to continuing our mission in 2018. Commercial Lenders Help Drive the Economy, and we’re happy to play our part. So whether you are Planning for Rising Interest Rates, or looking to Use Section 179 for More/Better Revenue-Producing Equipment this year, keep checking back here throughout 2018 for more ideas and insights from your partners-in-business, here at SLS Financial Services.

In the meantime, feel free to reach out with any questions you may have today. Talk to you soon!

Brian Soetaert

bsoetaert@slsfinancial.com

816.587.7375

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When you think about the financiers that power the American economy, you might go to the names that grab the headlines. Fancy investment banks or global commercial banks might race to the top of your mind, and to some degree that’s true. But if 80% of all employment comes from smaller businesses, who is helping them? Who is making the capital available, so that the small business owners’ dreams can be realized, or the big new contract can power the growth of a company from small and stable, to stable and flourishing? The answers might surprise you.

41% of all small business loans are for equipment and technology. Equipment is a critical ingredient for business success because it drives efficiency, productivity, and in many business models—revenue. Businesses can’t take on a new contract without the equipment to gear up manufacturing. Construction companies can’t move dirt in two different jobs with the same equipment.

Most businesses realize that investing cash reserves for depreciating equipment is a less than desirable outcome… and these are just some examples of why more than 40% of loan requests are for equipment.

Equipment Lending Entities are estimated to fund $1.2 trillion globally, up from $490 million only 15 years ago. There are a multitude of reasons why businesses increasingly count on these “specialist” lenders, but a few of the more important reasons are:

  • Financial Benefits: Tax depreciation benefits, preservation of cash, aligning needs to challenging budgets, and a more affordable way to scale their business are just some of the benefits these lenders can bring. Because they understand the equipment that is in use, they can create more flexible financial solutions that maximize cash flows while minimizing cash investment up front. This benefit is an absolute staple of financial management success for smaller businesses.
  • Ease & Speed: Smaller businesses can fund equipment needs in days, rather than waiting for weeks just for an approval. With simpler application processes and faster decision making, smaller businesses can move faster in the marketplace by ramping up to grow business quicker and more affordably.
  • Equipment Knowledge: Increasingly, smaller businesses understand that managing the replacement cycle of their commercial equipment can be a challenge. Understanding how long they might use an asset, how they dispose of the asset at end of life and how to manage the finances during that “useful life” to achieve not just their financial goals, but their operating objectives are handled far easier when working with a lender that understands and specializes in equipment.

Commercial Equipment Lenders help power our economy, and it might be time to think about how one of these specialist lenders can power your economy.

We’ve offered uncomplicated financing to smaller businesses and commercial equipment dealers for more than 30 years. While part of a trillion-dollar powerhouse industry, our success is built one business lending need at a time–person to person, and year after year. Perhaps we can assist you. If so, contact us anytime!

We’re Thankful for our Team! (Holiday Event)

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It may be about a week after Thanksgiving, but we can still assuredly say: WE’RE THANKFUL FOR OUR TEAM!! Our reps from all over the country have been doing great work this year helping businesses find uncomplicated solutions for their commercial lending needs, so we invited everyone down to Kansas City for a couple days of food and fun right before the holiday weekend.

On Tuesday, we went out to Top Golf for an SLS “Par-Tee”. Turns out we have a couple of team members with solid swings:

It was nice to find some time to catch-up as well:

We hope everyone else had a safe and relaxing holiday! We’re looking forward to ending the year strong, and finding even more reasons to be thankful to be working with a great team, and creating even greater relationships with people like you!

Let us know if we can help you end the year in a big way! Talk to you soon.

Doug Fuller

816.423.8021

dfuller@slsfinancial.com

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Finding today’s “win-win.”

Times have undoubtedly changed. Lenders are under exponentially larger regulatory pressure in how they lend money. The days of the lender making a decision with his or her signature while you sat in their office are long over. Lending has become impersonal, distant, judgmental and seemingly…as the survey respondents identified…adversarial. But it doesn’t have to be that way. Here are a few items to seek in a lender to develop a “win-win” relationship in today’s market.

  1. Do they listen? The marketing machines of large national lenders will make you believe that simple and fast are the only measures of financing success. While important, these factors alone do little to address your company’s unique lending needs. Solutions built only on these pillars are more about fitting you into a “credit-score” modeling box than solving your problems. A lender should listen. You can’t have a real advisor with you for the long haul if they won’t take the time to listen.
  2. Multiple options and new ideas? A real advisor should have years of experience and be able to build solutions to meet your needs. If that lender only has one real lending solution to offer in the market, that severely limits their ability to meet your needs in a rapidly changing business climate. More options also lead to new ideas and better ways of borrowing for your company in a wide variety of business situations.
  3. Seek consistently competitive solutions but beware of “cheap.” Interest rates matter, but it is only one piece of a more complicated puzzle. Too many lenders leverage their knowledge of this puzzle to manipulate the importance of interest rate when other factors like term, cash down, and end-of-life options have far more impact on payment and your cash flows. A lender that cares about your long-term success will work to remove the mystery of this puzzle and not use interest rate as “bait”. Lenders that lead with rate are trying to “do deals” and that attitude rarely leads to a relationship of mutually aligned interests.
  4. Do they care? Lending is not a numbers business…it’s a people business and you can’t get to the numbers if you don’t invest in the people first. Your lender should care about your business, your employees, and your family. Your business is more than an income source or line item on an application. A “win-win” lending relationship should show real investment on the part of the lender in actually building a relationship with you. They should call and check in with you, not because they are selling something, but because they care. They should want to learn about where you are headed, not because of the need to answer a credit question, but because they want to see you win. And they should want to finance your company for today AND the road ahead.

Times have changed for sure. But finding a “win-win” business lending relationship is not a thing of the past. We’re SLS Financial Services and we’ve been helping our customers win for more than 30 years. In fact, the newest approach in lending might just be a little bit of old school thinking. We’d love to show you how it works – Give us a call!

Doug Fuller

dfuller@slsfinancial.com

816.423.8021

 

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Equipment Leasing and Financing for Startup Construction Industry Enterprises

America, the Beautiful – the Land of Opportunity.

 

Opportunity often requires capital, and this is most often the case for NEW IN BUSINESS Construction Professionals.

The new/newer in business companies carry a higher risk for many lenders ~ so what options do you have out there to buy the equipment you need to hit the ground running?

 

Options:

  • Find an investor – this can be challenging and not everyone ‘knows someone’ who would just hand over tens of thousands of dollars. Also, should you find an investor, chances are they will own part of your company, and require part of your profits for a very long time.
  • Work with a local bank – local banks usually offer the cheapest source of funding, however many aren’t familiar with commercial equipment. Those that might have some experience with them, tend to be conservative on how much they’ll lend and the terms they’ll lend it to you at – higher down payments, shortened length of borrowing term, etc.
  • Non-bank commercial lenders – sometimes can be a bit more expensive, but a good non-bank commercial lender should take time to learn about your history and your game plan at making the business work. They should also have an understanding of commercial assets allowing for more flexible terms and down payment options.
  • SBA Loans – usually these are government backed type loans underwritten through national banks. These can be very appealing for the right company, if you’ve got some time to work through the process.

 

What’s usually needed to get credit?

 

Underwriting Criteria:

Most all lenders will need the following information when underwriting the needs and risk for a new company in any industry ~ including the construction industry:

 

  • Their Credit Application
  • Equipment proposal
  • Business Plan

Also, it’s not uncommon, depending on credit history and amount requested, to provide a simple personal financing statement and a couple years worth of tax returns.

 

Terms:

Typical Leasing and Financing Terms will range from 12 – 36 months; sometimes up to 60 depending the asset(s) being financed.

 

Who to call:

Your own Bank, the Equipment Seller, or another commercial lender like SLS Financial. www.slsfinancial.com

Noteworthy: SLS is listed by others as a BEST lender for start-ups: https://www.smarterfinanceusa.com/blog/best-equipment-leasing-companies

 

Our best Construction Equipment Financing and Leasing Expert at SLS is:

Doug Fuller

dfuller@slsfinancial.com

816.423.8021

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Breaking down the credit mystery: Capital

Would you invest in something that the owners of the investment themselves aren’t invested in? Probably not. As we continue to unpack the core components of credit decisions (called the five “C’s” of credit) in a series of short articles that remove the mystery and arm you with the information to succeed with financing, it is important to understand the impact of equity.

Capital

Understanding leverage.

Debt is a powerful weapon to facilitate business growth. But weapons can dangerous too. The amount of debt-related assets you have or the value of ownership you have in the business (equity) is the “leverage” you carry. You may be familiar with “Debt-to-Income” ratios used by mortgage lenders. Or you may recall the recommended 33% or less recommended balances on credit cards to maximize personal credit scores. These are both measures of personal leverage. Carrying large amounts of business debt related to your assets, or leverage offers your company less flexibility to manage financially should business conditions worsen. This increases risk to your lender, and negatively impacts financing needs.

Down payments and Equity.

The down payment you make on your house is “equity,” or the portion you own independent of debtors liens. The same principle exists with business assets. If every asset you own is leveraged to 100% or more, you haven’t invested much of your own money in your company. While in certain areas like equipment financing, this is a more preferred tactic because of the assets depreciating nature, taking an overall approach to leveraging debt with little or no ownership investment can leave lenders asking questions. Again, would you be eager to invest thousands, hundreds of thousands or even millions in an investment where ownership seemed hesitant to invest their own money? Little equity in the company and heave leverage can lead to credit obstacles.

Equipment.

Commercial equipment depreciates. Therefore putting huge capital into an equipment finance transaction generally doesn’t make sense. Would you invest $50,000 into an asset you know is going to be worth $20,000 in 4 years? Of course not. But business owners sometimes miss that point with commercial equipment. In some cases, 100% financing may be available, and in other situations, an affordable down payment may be required. In those situations, the lender may need you to help offset the risk of other credit matters by taking some “equity” in the transaction. A small down payment can help you improve the finance offering and in some cases where credit challenges are present, be the difference between putting revenue producing equipment to work or passing on an opportunity.

 

Here are more articles in the “5 C’s of Credit” series:

 

At SLS, we’ve helped small businesses succeed with uncomplicated finance programs for more than 30 years. While our finance programs are competitive and flexible, what sets us apart is our people. We may have Wall Street caliber financial resources… but we’re Main Street kind of people. And maybe that’s why so many small businesses and dealers trust us time and time again.

If you want to know how to establish or grow a finance program for your company…let’s talk.

Doug Fuller

816.423.8021

dfuller@slsfinancial.com

 

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Great by Choice (pt. 3)

You can find the last two posts in the Great by Choice series here:

Fanatic Discipline (20 Mile March)

Empirical Creativity (Fire Bullets, Then Cannonballs)

One of the first books our employees are given on their first day at SLS is “Great by Choice” by Jim Collins and Morten T. Hansen, which looks at why some companies thrive in uncertainty and chaos, and why others don’t. What draws us to this particular book is its focus on quantifiable data to lead you to the conclusions of what made these companies excel in their industries. There are three main points that we will cover in three blog posts, so that we can hopefully give you some insights that will help you become GREAT BY CHOICE. And to that end … let us know when we can assist. We’re more than a commercial lender. We’re your partner in business. Call us at 816.423.8021

For some backstory, the research for this book began in 2002, and continued for nine years. The subjects of the study were seven companies that are referred to as “10xers”, or companies that beat their industry index by at least 10 times, but that is just the baseline. Some companies went above and beyond that benchmark, like Southwest Airlines who performed 63.4 times better than the market as a whole, and 550.4 times better than its own industry! These companies include:

 

As mentioned previously, there are three main points that cover the three main characteristics these 10xers have including Fanatic Discipline, Empirical Creativity, and Productive Paranoia. Today we will be taking a look at Productive Paranoia.

Productive Paranoia

The true key to becoming a great, lasting company, is survival. It’s almost in the definition of being a “lasting” company. This idea is pretty inherent in any business… we haven’t met any in our 31 years that were actively trying to go under… so why are there still companies that close their doors for the final time each year? What are they missing? Well, they might just be lacking some Productive Paranoia.

We’ll be looking today at the three points that are covered in this section of “Great by Choice”:

  • Productive Paranoia 1: Build cash reserves and buffers to prepare for unexpected events and bad luck before they happen.
  • Productive Paranoia 2: Bound risk, and manage time-based risk
  • Productive Paranoia 3: Zoom out, then zoom in, remaining hypervigilant to sense changing conditions, and respond effectively.

Productive Paranoia #1: Build Cash Reserves

“By the late 1990s, Intel’s cash position had soared to more than $10 billion, reaching 40 percent of annual revenues (whereas [in comparison to Intel,] AMD’s cash-to-revenue ratio hovered at less than 25 percent).”

We know what you’re thinking – this sounds irrational! Intel knew that 95% of the time, it would be irrational to have such a high level of cash. But they weren’t looking at 95% of the time. They were looking at the 5% of the time where not having enough cash would be devastating during an industry or economic crisis. They were preparing to survive. They weren’t alone. “80% of the time, the 10X cases carried a higher cash-to-assets ratio and a higher cash-to-liabilities ratio than their comparisons.”

If you’re looking for 10X success, you need to prepare for the worst outcomes, or what this book dubs “Black Swan” events. These are low-probability, highly disruptive events that are impossible to predict… to a degree. As the text states “the probability of any particular Black Swan event might be less than 1 percent, but the probability that some Black Swan event will happen is close to 100 percent.” It never hurts to prepare… especially in the best of times.

Productive Paranoia #2: Bound Risk

One might think that companies that have reached 10X success are more likely to take bigger risks to reach their position, but according to the research in “Great by Choice” this was not the case. In looking at ~57 decisions made by 10X Companies, and their Comparison Companies, 56% were low risk and 44% were medium to high risk for 10Xers, as opposed to 22% falling in the low risk category and 78% for medium to high risk decisions. That tells quite a story.

Of course, not all risk is unavoidable, and some higher risk decisions come to the table. In cases where higher risk decisions are unavoidable, such as time-based risk decisions, 10Xers took control and made sure they analyzed the time table available and took a mindset of “go slow when you can, fast when you must.” They avoided reactionary decisions, and came to deliberate, fact-driven conclusions, and made sure they executed with the intensity needed for each respectively situation.

Overall, they were always looking to reduce risk so they could avoid these higher pressure, time-sensitive decisions. When times were good they continued to shoot bullets, not cannonballs to analyze their current business conditions, and where to move to next (remember part 2 of this series?) Sometimes a little productive paranoia can go a long way.

Productive Paranoia #3: Zoom Out, then Zoom In

We’re going to keep this one pretty simple. To be a 10X leader, you have to have a dual lens capability. You have to be hyper-focused on the task at hand, without losing track of the macro. This ability, in practice, looks like this:

 

Zoom Out

Sense a change in conditions

Assess the time frame: How much time before the risk profile changes?

Assess with rigor: Do the new conditions call for disrupting plans? If so, how?

Then

Zoom In

Focus on supreme execution of plans and objectives

 

Don’t zoom in so much that you can’t see your surroundings. Don’t zoom out so much that you can’t your own two feet. With a healthy balance, you may be able to be the next 10X success!

With the three topics we’ve covered over the last couple of months, hopefully we’ve helped you make the next step to become Great by Choice. Thanks for reading along each step of the way! Feel free to take a look at the rest of the posts on our blog for more helpful posts like these.

You can find our last two posts in the Great by Choice series here:

Fanatic Discipline (20 Mile March)

Empirical Creativity (Fire Bullets, Then Cannonballs)

These ideas have been major philosophies of our business, and we hope it has given you productive ideas for yours. We’ve worked with a lot of companies over the years who are on the journey to become Great by Choice. We’ve helped businesses finance equipment to free up their monthly cash flow to pursue their business bullets, and continue to be a part of companies’ 20 Mile Marches. Maybe the ideas in this series were valuable enough, and if that’s true, thanks for stopping by, but if we can help assist you, feel free to give us a call! We’re more than your commercial lender, we’re your partner in business.

Brian Soetaert

bsoetaert@slsfinancial.com

816.587.7375

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We love doing our part to help businesses succeed – we’ve been doing it for 31 years now. We’re not in it for the accolades or the recognition, but it does put a smile on our faces to receive something like this in the mail:

“Congratulations! Security Leasing has been nominated as a candidate for Thinking Bigger Business Media’s 17th Annual 25 Under 25 Awards… The companies selected for the award will demonstrate consistent growth, community involvement, as well as an ability to overcome challenges and obstacles.”

Thanks for thinking of us! We’ll continue to “Think Bigger” and play a role in helping our community succeed.

Now, back to business 😊

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