When discussing business debt workouts with small business owners, we frequently find that they overlook their equipment leases when we discuss their debt. For some reason, small business owners tend to believe a lease can’t be worked out and they are often surprised when I tell them that the exact opposite is true. The workout, however, requires a cash payoff, as the lessor is usually willing to negotiate a short sale but not a short finance arrangement. We have done this with medical equipment for many doctors (including chiropractors, dentists, optometrists, general practitioners), as well as printers, restaurant equipment and any other imaginable business asset.
Leasing is simply a slightly different form of financing. It is true that when you lease, you do not hold title to the item until the end of the lease when you often have an option to purchase the equipment for an agreed upon amount. However, this does not change the reality that the equipment is worth decidedly less than the lease payments indicate, and the lessor does not want the equipment back for reasons similar to those of the banks that will engage in a workout. The cost of liquidating the collateral and the resulting revenues are usually much less than the amount owed, thus there is a basis for a workout. It is usually a tougher workout, sometimes not quite as reduced as with a bank, but it’s still a terrific deal for the lessee.
If you are laden with leased equipment and choking on the payments, call us. We can negotiate a workout that will reduce your monthly overhead significantly as well as add value to your bottom line. Do your debt workouts, even with leases.
Call us. Norm will arrange a no-obligation teleconference for us to discuss your options: 413-584-2581.
