Nicholas Fitch

Hey Omar, I have a finance background and work in the Entertainment Finance division of an equipment financing company. I also own my own Internet marketing and video production company I founded in 2006. Just wanted to chime in on a few points to help the community in terms of financing new gear. 1) Equipment Financing Vs Equipment Leases- An equipment lease is a common form of financing. Under an equipment lease, the Invoice from the vendor/seller is SOLD TO and SHIPPED TO the bank/leasing company. After the term of the lease is over (36, 48, 60-months), you have to exercise an end-option to actually purchase the equipment and own it free and clear. The end-option is set when you first sign the documents, and could be $1, $101, 10% of the equipment price, or FMV (fair market value). IMHO, financing gear under an EFA (equipment finance agreement) is much simpler, and takes away the end-option issue. The invoice from the seller is SOLD TO and SHIPPED TO you or your company from Day 1. This is especially helpful in the case of warranty's and upgrade programs like RED offers. Once the last payment is made on the agreement, the equipment is owned free and clear. The only collateral is the gear itself. A company that offers "equipment leasing" should also be able to document on an EFA. If they refuse, they are probably playing games and will be trying to get extra money out of you at the end of the lease term. There is LOTS of fine print on a lease and end-option, and many less than reputable lenders try to take advantage of the customer at the end to pocket extra money. 2) Term- Most lenders will require at least a 24-month term, with options to go up to 60-months. In order to save on interest/finance charges, go with the shortest term with payments you can easily cover. One plus of financing gear vs. buying is that is helps with cash flow. Don't go with a shorter term with higher monthly payments if finances will be tight. 3) Rate- Financing for "new" businesses is always going to be at a higher rate. If you have been in the industry at least 2-3 years, you are an established business and are able to get around the new business rates which can range from 14-25%. The high rate of new business defaults make these leases/loans more risky for the bank, and the rate is adjusted accordingly. However, this is still cheaper in the long run than putting the purchase on a credit card. Personal credit must be solid for new business financing. Established businesses and professionals can get rates starting in the 7% range (for larger deals with excellent business/personal credit) to low 10%'s for smaller deals with average credit. To give you an example, a $35,000 camera package would run $699 - $737/mo (60-months) depending on credit worthiness. This is assuming the deal is documented on an EFA with (1) payment in advance. If your use of the equipment, plus possible rental income will easily cover the monthly lease/loan payment... go for it. If not, I would recommend renting gear needed for jobs until you are ready to pull the trigger on a financed package. You can check out my company's video/film specific page here: https://www.financialwb.com/equipment-leasing/video-film/