Step 1
Step 1 is to determine what companies will be your best prospects. To determine this you would first examine the companies credit. Considering the size transaction you wish to develop, the minimum net worth requirements will probably be $1 million. Larger companies will be better prospects; probably your best prospects will have a net worth of over $2 million. Futher, your prospects must be earning in the area of 10 percent after taxes on their net worth to be considered credit worthy. Their earnings record must be reasonably satisfactory for at least the prior three years, and there must be no major problems evident on the horizon.
Your best prospects obviously would be companies that use large amounts of equipment and replace it on a continuing basis. A look through would indicate that or industry classifications are more apt touse your services. Mining companies, some retailers, manufacturers, transportation companies, and utilities tend to use major amounts of equipment. Conversely, furniture stores, financial institutions, architecturam firm, engineering firm, most wholesalers, and companies of this type generally use little equipment other than that needed for data processing or office procedures.
Companies’ balance sheets also influence their equipment financing. Those with little or no debt are generally not good prospects for equipment leasing or financing, since they have unused borrowing capacity at the banks where they maintain accounts. Companies with major amounts of debt in their capital structure generally find new financing sources worth examining.
You also wuld investigate the companies prospects and longterm growth outlook. Companies which are expanding often find their capital requirements are increasing too rapidly to develop sufficient equity. Thus they are excellent prospects for equipment leasing and financing. In contrast, companies whose sales and balance sheets are relatively static usually require little or no outside financing.
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