Equipment Vendors Intro to National Machine Tool Financial Corp.

In today’s economy a lot of businesses can’t afford to make a major capital investment on equipment they might need.  This is where it’s in the best interest of the manufacturers and distributors to help their customersacquire equipment through financing.  The potential customer mightnot have $100,00 equipment investment in the budget, but they could have $1,500 per month in the budget.

• A referral program. The manufacturer mayhave business cards of three or four leasing companies. If the customer wantsto finance the purchase, the salesperson gives these cards to the customer, andit is up to the customer to try to make the arrangements.

• A third-party vendor program. Here, theleasing company may have some reps specifically focused on the manufacturer’sproducts. They also assist the manufacturer’s sales reps in closing deals.There is no balance-sheet risk to the manufacturer.

• A “private-label” program. Thisis similar to a third-party vendor program; however, the leasing documents mayhave the manufacturer’s name on them. In addition, the manufacturer doesn’tassume any balance-sheet risk.

• A joint venture. Here, the leasing company andmanufacturer form an equity joint venture with the sole purpose of providingfinancing services. Both companies can share in the profit, and they are bothcommitted because both have equity invested. A potential downside for themanufacturer is that it may have some balance sheet risk depending on how thejoint venture is structured.

• A virtual joint venture. If a manufacturerwants to do a joint venture, but doesn’t want to take the risk on its balancesheet, the leasing company can set up the books and treat it as if it is a trueequity joint venture. “It is a nice way to get the benefits of a jointventure, but without the time and cost associated with setting up a legalentity,”  at the end of the year, the books are reconciled, and thetwo companies share in the profits or losses.

• A captive financing program. This is formanufacturers that want to “jump in with both feet.” Here, themanufacturer owns and runs the entire leasing business. “Manufacturersthat offer this include Caterpillar, John Deere, Mask , Doosan, Haas, andothers.. The benefits are profits. “IBM, for example, makes more than onebillion dollars net after tax profit per year,” he states. “Ofcourse, if you don’t run it well, you stand to lose a lot of money on creditlosses.”

If you would like to know more about our programs call Bob Lang at 800-669-7527 ext. 1210 or Chris Chiappetta at 800-669-7527 ext 1208