|
| December 13, 2000 Headlines-- Attn
Mr. Rodi: I hope that many brokers take your advice and start becoming funders. However, while you may have no problem going to the bank and establishing a lease line, you make this sound to simple. It amazing that a funder will not approve a lessee who is "augmenting" their existing business with a slightly different service yet you expect "brokers" to become "funders". Isn't there a reason funders do not approve this type of business. Would you approve a Convenience Store (A rates) to open up a restaurant section? Both serve food. How about a Laundromat that wants a Drycleaning machine? Both clean clothes. Brokers and Funders are two very different professions. One of the problems in the funder market is that sales people think they can start a funding source. Personally, I think this was one of United's draw backs. They couldn't collect and/or avoid approval pitfalls. Their back room was lacking compared to their "front room". I felt that Granite (now FNF) and Finova (became Greentree then Conseco) had the same problem. When the market is good, good funders can't sell. If Funders knew how to sell, First Sierra would not have spent all their money buying brokers. If funders could sell, the high prices paid for brokers nationwide would not have occurred. While you may have good balance in these areas, brokers need to be very prepared when entering a funders arena. Funders employ a lot of third party due diligence when they approve deals. They have statistical models to look at, they have well trained credit staff (hopefully). Frankly, I would never want to compete at the 11-12% APR lessee market. You need to have buying power and excellent "back room" abilities. Anonymous We
thought Bob made some good points in his comments regarding the industry, but
as we have seen in the past, we have to try and blame (or attempt to)someone for
the current situation facing our industry. If you, or even your organization,
asked the broker and funding source community, what experience they had in the
credit industry, you would be alarmed of the background. Brokers in general have
no credit experience, and funding sources are using a computer scoring system
to make the deal "approved or declined". The broker is the sales arm of the funding
source (you see it every day). They have turned into marketing and sales people
that receive guidelines they follow from each funder. Some funder just ask for
an application and say they will do all the back office services for you "FREE".
How many times do we see a good credit turned down because of a! score. Use the
score as a tool to make a decision. Funders need to hire credit people, not score
keepers. They are hiring people that are friends, look good, or build ego's for
the owners. How many times do we see a deal for a company that needs $35,000.00
for computer equipment when they only have four people working at the company.
Does this deal make sense even though they have a strong Fair isaac score and
a medium 4 figure in the bank, and are listed with D & B? I could not think of
what to do with this much equipment for my operation or 11 people. Yet again,
we have an approval because it scored over 200. Funders need to take blame for their operation, and broker/discounters need to be reviewed more carefully. The industry will make it and there is still plenty of business out there. Let's do it right!!!!!!! Name withheld Bob--- I agree 100% with your opinion. " If you believe in the deal, buy it. Consider every deal as your own money. Would I invest in it ??" The industry's blood bath is just beginning. If the business climate does not improve soon, I expect to see unemployment at 5%, GDP at 2%, and the budget surpluses gone by 12/2001. As a funding source working with a select few originators, I have been looking at transactions much harder in the last 120 days. Inflation has crept in as higher energy and labor costs. I do not believe that productivity improvements have counterbalanced the cost-based inflation. Sooner or later, it will show up on FYE financials on small businesses and float to the top tier, larger name brand companies. (This is my trickle-up theory.) Best of luck to you. Keep writing. Paul Torres PTorres@BVCL.com BVCL AVP -- Credit T 650-294-6605 F 650-638-9889 www.BVCL.com Banks
feel pain of tech wreck By Matt Krantz USA TODAY LOS ANGELES -- Banks that've cashed in by lending money to or taking deposits from high-tech firms are getting caught in the crosshairs of a tech slowdown and whiffs of industrywide loan problems. Banks, such as Silicon Valley Bancshares and Imperial Bancorp, face new risks as start-ups burn cash rather than deposit it and the value of the banks' Internet investments sinks, analysts say. Meanwhile, evidence is building that some business loans industrywide are getting shaky as the economy cools. Shares of Silicon Valley Bancshares tumbled $9.75, or 22%, to $34.75 Tuesday after the bank warned that customers aren't depositing as much cash because of the slowdown in venture capital funding. It also warned that the returns it gets from its investments in Internet companies will be volatile. ''There's no way banks (catering to high-tech) are immune to the tech wreck,'' says Derek Derman, analyst at Wedbush Morgan. ''A lot of their gains are predicated on how well the market does, especially the initial public offering market.'' Betting on the tech boom has put some high-tech banks in tough spots: * Cash deposited into Silicon Valley Bancshares has dried up as tech companies have a harder time raising money from IPOs and venture capitalists, the Santa Clara, Calif.-based company warned late Monday. The shakeout hits Silicon Valley Bancshares hard, because it has profited by investing the cash it gets from tech start-ups and dot-coms after they raise money, says Rosalind Looby, analyst at Credit Suisse First Boston. The bank pockets the difference between the interest it pays to the start-ups on their deposits and the higher interest it collects conservatively investing the deposited cash in government bonds. ''The bank had seen huge growth in deposits,'' Looby says, pointing to 41% growth in deposits in the 12 months ended Sept. 30. ''Now these companies are burning through money, and deposit balances could start to go down,'' she says. Executives at Silicon Valley Bancshares declined comment. But there doesn't seem to be relief coming soon, as venture capital flows in California will also slow in the first half of 2001, according a forecast by the University of California at Los Angeles. * Imperial Bank stands to make far less from selling shares of high-tech companies that it gets in exchange for making loans, says Campbell Chaney, analyst with Sutro. The gains have shriveled along with the Nasdaq. Losing those large gains would be especially troubling for Imperial Bank, which is being bought by Comerica, because it has used them to boost net income. The gains are significant, as Imperial posted $15.8 million, equal to 68% of net income, from selling stock and other investments in the third quarter alone. Michael David, a managing director of Imperial's venture capital services unit, agrees that the tech downturn ''will have an effect.'' His unit brought in half of the bank's income through September, he says. Analysts also worry about Imperial's credit quality, as the bank's balance of troubled loans has grown each quarter this year, Derman says. Tuesday, shares of the Inglewood, Calif.-based bank fell $1, or 4%, to $24.38. Many banks dealing with tech firms eased lending standards and counted on investment gains too much amid the tech boom, says Steven Smith, chief financial officer of Palo Alto, Calif.-based Greater Bay Bancorp. Smith says Greater Bay planned for tech trouble by boosting reserves for loan losses all year and not including ''even a nickel'' from tech-stock gains in earnings. ''It's not income you can rely on,'' he says. Investors apparently still have their worries. Greater Bay shares lost $4, or 10%, to $34.44 GE Capital Fleet Services Joins LiveCapital Financing Network to Offer Real-Time Vehicle Leases to Small Business Customers SAN MATEO, Calif.--(BUSINESS WIRE)--Dec. 13, 2000--LiveCapital, the leading provider of real-time credit and financing solutions for companies serving the business market, announced today that GE Capital Fleet Service, one of the leading fleet management companies in the world, will offer financing through the LiveCapital Financing Network. LiveCapital clients will now be able to provide their small business customers with instant access to customized vehicle lease financing. "The ability to leverage technology to reach additional small business customers and provide them with customized leasing solutions is a core component of our long-term strategy," said Richard Neff, president of Small Fleet Services, a division of GE Capital Fleet Services. "LiveCapital has facilitated the approval of over $4.0 billion in business credit. This track record, combined with the company's cutting-edge technology, makes LiveCapital an ideal partner." Through the LiveCapital Financing Network, GE Capital Fleet Services will offer an Open-End TRAC (Terminal Rental Adjustment Clauses) lease. TRAC leases help businesses preserve working capital, decrease costs associated with their company vehicles, and increase profits. Benefits include competitive financing rates, low monthly payments, off-balance-sheet financing, and tax-deductible lease payments. In addition, TRAC leases carry no penalties for mileage and wear and tear. Most new cars, light trucks, medium trucks, and heavy trucks are eligible for TRAC leasing. "More and more small businesses are realizing the value of leasing vehicles for their companies," said Matt Seaburn, vice president of LiveCapital's Financing Network operations. "GE Capital Fleet Services strengthens our network of lending and leasing partners and gives our clients even more flexible financing solutions to offer their small business customers." The LiveCapital Financing Network includes more than 70 lenders and lessors who together offer financing products that cover the credit spectrum. These institutions offer lines of credit, leases, loans, trade credit and other credit products through the LiveCapital Finance Platform (LCFP). The LCFP facilitates all aspects of the credit process for all types of business credit, enabling application submission and processing, credit scoring, underwriting, approval, funding, and servicing. About LiveCapital LiveCapital is the leading provider of real-time credit and financing solutions for companies serving the business market. Equipment manufacturers, online marketplaces, and other companies active in B2B commerce use the LiveCapital Finance Platform (LCFP) to offer their customers instant access to loans, leases, and trade credit at the point of sale. The LCFP facilitates all aspects of the credit process for all types of business credit, enabling application submission and processing, credit scoring, underwriting, approval, funding, and servicing. To date, LiveCapital has enabled Staples, Microsoft, and others to offer instant online credit services to their business customers and has facilitated the approval of more than $4.0 billion in business financing. LiveCapital is privately held and headquartered in San Mateo, Calif. About GE Capital Fleet Services With headquarters in Eden Prairie, Minn., GE Capital Fleet Services is one of the largest fleet management companies in the world with more than 1.2 million commercial cars and trucks under lease and service management. It has operations in the United States, Canada, Mexico, Europe, Japan, Australia and New Zealand. GE Capital, with assets of more than US $345 billion, is a global diversified financial services company with 28 specialized businesses. A wholly-owned subsidiary of General Electric Company, GE Capital, based in Stamford, Conn., provides equipment management, mid-market and specialized financing, specialty insurance and a variety of consumer services, such as car leasing, home mortgages and credit cards, to businesses and individuals around the world. GE is a manufacturing, technology and services company with operations worldwide. CONTACT: GE Capital Fleet Services Rose Kasianiuk, 952/828-2163 rose.kasianiuk@fleet.gecapital.com
www.leasingnews.org |