Section 179 Decoded

Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income.


The purpose behind Section 179 - to motivate the American economy (and your business) to move in a positive direction. For most businesses (adding total equipment, software, and vehicles totaling less than $139,000 in 2012), the entire cost can be written-off on the 2012 tax return.

The total amount written off ($139,000 in 2012), and limits to the total amount of the equipment purchased ($560,000 in 2012). The deduction begins to phase out dollar-for-dollar after $560,000 is spent.

All businesses that purchase, finance, and/or lease less than $560,000 in new or used business equipment during tax year 2012 should qualify for the Section 179 Deduction. If a business is unprofitable in 2012, and has no taxable income to use the deduction, that business can elect to use 50% Bonus Depreciation and carry-forward to a year when the business is profitable.

The most important difference is both new and used equipment qualify for the Section 179 Deduction. Bonus Depreciation covers new equipment only. 

The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179.

2012 Deduction Limit = $139,000 For new and used equipment, as well as off-the-shelf software.

2012 Limit on equipment purchases = $560,000 This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced.

Bonus Depreciation = 50% This is taken after the $560k limit in capital equipment purchases is reached.   Bonus Depreciation is available for new equipment only. Bonus Depreciation can also be taken by businesses that will have net operating losses in 2012.

Contact us for a bid on your capital purchase before year end.   Don’t miss out on Section 179 deductions and Bonus Depreciation 801 816 0800

Our Customers say it best

“Working with Mazuma Capital allowed us to ride the tailwind of our newly signed service contracts with the right equipment in place.  The flexibility Mazuma offered us was refreshing and it was a great fit for our needs,” said the CEO of the Services Company. “The team at Mazuma did not feel like your typical lender/banker, their business is relationship based on every level.  The dynamic throughout Mazuma’s staff was one of professionalism with an added level of personalized service. Working with a top notch lender that provided exactly what we needed was a great experience.”

Kevin, CEO Ground Reclamation Services

“As our company searches for more opportunities for lease financing, I received a call from Mazuma Capital Corp. As I laid out to Mazuma and other companies what we were looking for in the way of lease financing, Mazuma came through with the best over all cost of funds as well as meeting our needs and time schedules. I have enjoyed working with Mazuma Capital Corp, because of their willingness to be flexible and the way they keep me updated on all that happens through the process. Everyone there is so easy to work with and I will continue to work with them on an ongoing basis. My experience was well within what I hoped for from a lease financing company.”

–Tom, VP of Finance & CFO

NEWS RELEASE East Coast Coal Fired Power Provider Partners with Mazuma Capital in Funding a Fly-Ash Conditioning System

DRAPER, UTAH July 2012–Mazuma Capital, a leading national direct lender, today announced it has funded $1.3M for a large East coast power provider.

The power provider sought a knowledgeable funding source with the ability to provide a solution to a complicated transaction. In order to comply with state environmental standards the company needed to condition their waste into coal fly-ash before depositing waste in state landfills.

The company was set up as a multi-layered organization with disparate corporate entities having varying degrees of ownership.  Due to this structure and the difficulties it posed, the incumbent bank for the power provider passed on providing financing for this equipment, in spite of the fact that the company has excellent credit. The additional challenge was financing almost 50% of “soft costs”, to include labor and installation along with a blanket UCC filing that would not subordinate.

After navigating the review of several of the company’s opaque organizational charts, the risk factors, and equipment, Mazuma agreed to fund this transaction

“This power producer had a very unique set of complications that we were able to work through. Our team was innovative and methodical in our approach to the deal, which ultimately provided the terms in the manner the company needed. It is transactions of this nature that really spotlight the unique funding abilities Mazuma has within the industry”, said Jared Belnap, CEO and President at Mazuma Capital.

About Mazuma: Mazuma Capital is committed to our client’s success. Our unique capabilities and innovative product offerings provide solutions accelerating financial growth. Servicing both rising companies and established businesses, Mazuma continues to secure its position as the middle-market industry leader. We build long-term relationships by delivering on our commitments. Mazuma co-authored the Utah Best Practices Alliance. Mazuma Capital subscribes to the ELFA Code of Fair Business Practices and NAELB code of ethics.

Media Contact:

Julie Fuchs

801-816-0800 Ext. X291jfuchs@mazumacapital.com

Emerging Leader- Jared Belnap

http://www.worldleasingnews.com/articles/jared-belnap-president-mazuma-capital/

Jared Belnap, President, Mazuma Capital

By Abigail Sutton, Editor

During his tenure in the leasing industry Jared Belnap has personally closed over $150 million in lease transactions and has garnered extensive experience in credit, syndication, sales, legal, documentation, and executive management. Belnap helped create Mazuma. First, as a co-founder and private investor, then, serving as vice president of sales/corporate secretary through December 2007 and in his current position, as president since January 2008. His performance and experience have been invaluable in the formation and implementation of Mazuma’s infrastructure, website development, marketing, documentation, sales and sales management, formation of key strategic relationships and other important functions within Mazuma’s framework. Belnap is an introspective leader who achieves success through calculated risk, for this and more we chose him as February’s Emerging Leader.

Teri Gerson, President & CEO of Executive Solutions for Leasing and Finance, Inc. had this to say about Belnap’s skill and leadership, “Jared Belnap has impressed me with his commitment to analyzing before pulling the trigger.  This saves tremendous back pedaling, both with market entrees, employee hires, and sales force structure. He is thoughtful, honest, and fair in all of his dealings, and always takes a broad view without sacrificing practicality and reality relative to his company.”

Mazuma Capital Partners: Lease Accounting Standards Talks Still Underway

Mazuma Capital Partners: Lease Accounting Standards Talks Still Underway:

Hitting an impasse over how to account for short-term, rental-like leases, the Financial Accounting Standards Board and the International Accounting Standards Board will regroup next week to discuss their findings after additional research on an eleventh-hour proposal.


FASB and IASB are in the home stretch of redeliberating a new accounting standard for how to account for all leases to bring them on the balance sheet and banish the bright-line distinction between operating leases and capital leases. The boards have long wrestled, however, with how to develop a straightforward method to account for leases like today's operating leases, which tend to represent short-term arrangements for limited access to a given asset bearing little resemblance to the purchase of the asset. They are trying to put the finishing touches on a revised proposal so that it can be issued for a fresh round of comments and wrapped up by 2013.

Mazuma Capital (Equipment Lease & Financing/Direct Lending) - Draper, UT...

Most Recent Funding at Mazuma Capital

Mazuma Capital Funds $12.5m Transaction For Thermal Coal Producer

DRAPER, UTAH, February 17, 2012 – Mazuma Capital, a leading national direct lender, today announced that it has funded over $12.5 million dollars for a U.S. high quality thermal coal producer.

The coal producer sought several funding sources that had expertise in funding newer companies. They had many challenges present in the transaction from the type of equipment, to the documentation aspect.  There were also several factors that affected the credit due to recent mergers.  Due to these challenges the financing was denied through several well-known banks and vendors. Mazuma Capital was ultimately the right financing source to help structure and fund the transaction.

A favorable structure was an important objective in order to provide cash flow, the appropriate tax, and accounting factors to meet the financial goals of the company. The structure also needed to provide the ability to expense the payments over time.  Mazuma Capital was able to secure an approval in a timely fashion while meeting the needs of the company; from the terms to the unique structure.

“This is a newer company that is still in the midst of a huge growth phase.  Therefore, this transaction produced several challenges in finding a suitable financing structure to meet the goals of the company.  The lack of history, recent buyouts, and mergers made this a more difficult credit.  Our team worked hard to develop a perfect balance with the right structure, and suitable terms for the company,” said Jared Belnap, President and CEO of Mazuma Capital.

About Mazuma: Mazuma Capital is committed to our client’s success. Our unique capabilities and innovative product offerings provide solutions accelerating financial growth. Servicing both rising companies and established businesses, Mazuma continues to secure its position as the middle-market industry leader. We build long-term relationships by delivering on our commitments. Mazuma co-authored the Utah Best Practices Alliance. Mazuma Capital subscribes to the ELFA Code of Fair Business Practices and NAELB code of ethics.

Media Contact:

Julie Fuchs

801-816-0800 Ext. X291

jfuchs@mazumacapital.com

U.S. Companies Keeping Business At Home

U.S. companies, facing slowing markets and rising costs around the world, are taking a new look at their home market.

With growth slowing in China and a slump gripping much of Europe, companies are adding capacity in the U.S., replacing aging equipment and even moving overseas production back from low-cost labor markets, a sign that corporate America could be poised to take a bigger role in the economic recovery.

Union Pacific expects to buy twice as many locomotives this year, spending upward of $400 million.

The pace of earnings growth at companies slowed in the fourth quarter, and there are signs that profitability is falling. That is prompting companies ranging from beverage maker Coca-Cola Co. to industrial supplier Emerson Electric Co. to disclose cost cuts. But after keeping a tight lid on costs for the past few years, many other companies are expanding capacity to meet rising demand.

United Rentals Inc., the world's largest equipment rental company, plans to increase its capital spending by about a third, to $1 billion, this year as more construction and industrial companies opt to rent rather than own equipment like elevated forklifts and backhoe loaders. Cummins Inc., which makes engines for trucks and heavy equipment, is boosting its capital spending to more than double the rate of two years ago.

"It is an environment that feels like it is building momentum," William Plummer, United Rentals' chief financial officer, said in an interview. "We are coming out of the depths of the recession and are starting to build momentum on the upside."

U.S. businesses increased their investments in December. According to the Commerce Department, new orders for nondefense capital goods excluding aircraft, a proxy for how much companies spend on equipment, climbed 2.9% from November. That ended two months of declines, suggesting businesses are becoming more confident. Compared with a year earlier, companies shipped 9% more.

There are signs that hiring may be picking up as companies expand facilities. Job growth in January was its highest level since April, with unemployment falling for the fifth consecutive month.

Source:  WSJ.com

Companies to lose equipment-finance tax breaks in 2012

Two generous tax breaks small-business owners received during the recession are going to shrink dramatically in 2012. That makes year-end tax planning more important than usual.

The changes affect the deductions for purchases of equipment. One is called the Section 179 deduction, named for a provision of the Internal Revenue Code. The other is called bonus depreciation. Congress approved the breaks to make it easier for small businesses to expand and hire workers. Although the economy is still slow, the breaks are being scaled back.

Ed Smith, a tax partner at the accounting and consulting firm BDO in Boston, says he's talking with clients about whether it makes sense to buy equipment before the changes take effect.

"Understand that we're not going to have this deduction in the next couple of years," he said.

The Section 179 deduction allows a small business to deduct upfront rather than depreciate the cost of equipment, such as computers, vehicles, machines in manufacturing, office furniture and sheds.

The deduction for 2011 is $500,000. In 2012, it will drop to $125,000. And in 2013, it's expected to fall to $25,000 — the amount it was back in 2002.

Bonus depreciation allows small businesses to take a deduction for equipment expenses beyond the amount allowed under Section 179. For 2011, the bonus depreciation is 100 percent. The maximum that can be deducted under the two deductions combined is $2 million. In 2012, bonus depreciation drops to 50 percent.

Under normal depreciation rules, the cost of equipment is deducted over a number of years according to a formula set by the IRS. So the Section 179 and bonus depreciation provisions have given small businesses accelerated tax savings.

You can learn more about the deductions in IRS Publication 946, "How to Depreciate Property." It goes into detail about the deductions and the regulations that govern how they can be taken. For example, the Section 179 deduction can't be used for your new heating and air conditioning unit. But that equipment can be depreciated.

It's also a good idea to discuss your plans with an accountant or tax attorney.

Changes in the tax law shouldn't be the biggest reason for buying equipment. Deductions aren't worth it if you're wasting your money on something your business doesn't need. But if you've been debating whether to buy tablet computers for your employees or install manufacturing equipment in 2011 or in 2012, it might make sense to move the purchase into this year. If you can get a better price than you would next year, that's another reason to buy now.

A big caveat: The equipment has to be up and running by Dec. 31. You can't order a new server or drill press this year, have it delivered in January and still take the deduction. You have to be able to use it — which means it needs to be installed — by the end of the year. However, it's OK if you don't pay for the equipment until next year, or if you're going to take several years to pay it off.

Something else to think about is whether you want to take advantage of these deductions now. You're not required to use Section 179 and bonus depreciation. In fact, you need to elect to take a Section 179 deduction when you file IRS Form 4562, "Depreciation and Amortization."

Depending on what your profits look like this year, and what they're likely to be in the coming years, you might prefer to use regular depreciation. So you might want to postpone your purchase until next year.

Smith says the money owners will save on their taxes from Section 179 and bonus depreciation can help them pay for the equipment they've bought. But using these deductions will eliminate any tax savings you would have had from depreciating equipment over time. Smith points out that when equipment is depreciated under regular rules, the tax savings from that can be used to cover principal payments if the equipment was financed. And the interest on financing is deductible.

Again, it's a good idea to consult a tax professional to decide which approach makes the most sense for your business. Source http://www.modbee.com/2011/10/26/v-print/1919770/tax-breaks-on-business-equipment.html

Equipment Leasing Slowly Rising

U.S. business borrowing for equipment up in Sept.

Oct 24 (Reuters) - U.S. companies borrowed more to buy or lease capital equipment in September and did a better job of keeping up to date on their existing debts, boosting a key measure of business activity, a lender group said on Monday.

The Equipment Leasing and Finance Association said U.S. businesses originated $7.1 billion in new loans, leases and lines of credit last month, up from $5.7 billion in August.

Companies use that money to invest in everything from tool-and-die machines and delivery trucks to office furniture and computer software.

"It's a replacement environment," ELFA President William Sutton said in a phone interview. "People aren't in a growth or expansion mode."

Demand for finance was up in the agriculture, healthcare and information technology sectors, Sutton said. The construction and trucking sectors remained weak.

The group, which represents the lenders who finance half the capital investment in the United States each year, said 2.3 percent of borrowers were 30 days or more behind in paying their debts, down from 2.5 percent in August and the lowest reading since late 2006, before the recession.

ELFA's confidence index rose to 50.7 in October, up from 47.6 in September. The diffusion index centers around 50, with any reading above that point positive and one below negative.

Source: Reuters

http://www.reuters.com/article/2011/10/24/usa-economy-elfa-idUSN1E79N0JS20111024

Companies Spend on Equipment, Not Workers

Companies that are looking for a good deal aren’t seeing one in new workers.


 Workers are getting more expensive while equipment is getting cheaper, and the combination is encouraging companies to spend on machines rather than people.

“I want to have as few people touching our products as possible,” said Dan Mishek, managing director ofVista Technologies in Vadnais Heights, Minn. “Everything should be as automated as it can be. We just can’t afford to compete with countries like China on labor costs, especially when workers are getting even more expensive.”

Vista, which makes plastic products for equipment manufacturers, spent $450,000 on new technology last year. During the same period, it hired just two new workers, whose combined annual salary and benefits are $160,000.

Two years into the recovery, hiring is still painfully slow. The economy is producing as much as it was before the downturn, but with seven million fewer jobs. Since the recovery began, businesses’ spending on employees has grown 2 percent as equipment and software spending has swelled 26 percent, according to the Commerce Department. A capital rebound that sharp and a labor rebound that slow have been recorded only once before — after the 1982 recession.

With equipment prices dropping, and tax incentives to subsidize capital investments, these trends seem likely to continue.

“Firms are just responding to incentives,” said Dean Maki, chief United States economist at Barclays Capital. “And capital has gotten much cheaper relative to labor.”

Indeed, equipment and software prices have dipped 2.4 percent since the recovery began, thanks largely to foreign manufacturing. Labor costs, on the other hand, have risen 6.7 percent, according to the Labor Department. The rising compensation costs are driven in large part by costlier health care benefits, so those lucky workers who do have jobs do not exactly feel richer.

Corporate profits, meanwhile, are at record highs, and companies are hoarding cash. Many of the companies that are considering hiring say they are scared off by the uncertain future costs of health care and other benefits. But with the blessings of their accountants, these same companies are snatching up cheap, tax-subsidized tractors, computers and other goods.

“We had an opportunity to buy equipment at a very discounted rate,” Mr. Mishek explains of his decision to make bigger investments in equipment than in workers. “Now that the economy has turned around a little bit, it made sense to upgrade.”

Hiring has some hidden costs, as well as the expenses of salary and benefits, Mr. Mishek added.

“I dread the process we have to go through when we want to bring somebody on,” he said. “When we have a job posting these days, we get a flurry of résumés from people who aren’t qualified at all: people with misspellings on their résumés, who have never been in the industry and want a career move from real estate or something. It’s a huge distraction to sort through all those.”

Culling the résumés takes three days. Then he must make time to interview applicants, and spend $150 for each drug test.

Once a worker is hired, that person must complete a federally mandated safety program, which Vista pays an outside contractor a flat fee of $7,000 annually to handle. Finally, Vista’s best employees spend several months training the new hire, reducing their own productivity.

“You don’t have to train machines,” Mr. Mishek observes.

Usually economists cheer on capital spending, and have supported Congress’s tax breaks for capital investment, like bonus depreciation, which lets companies expense the full cost of purchases immediately instead of waiting several years. That is because capital and labor can be complementary: a business that buys a new truck often hires a new driver, too.

But with the rising costs of hiring, companies like Vista are finding ways to use capital to replace workers whose jobs are relatively routine.

“If you’re doing something that can be written down in a programmatic, algorithmic manner, you’re going to be substituted for quickly,” said Claudia Goldin, an economist at Harvard.

To add insult to injury, much of the equipment used to replace American workers is made by workers abroad, meaning that capital spending is going overseas. Of the four pieces of equipment Vista bought last year, one was made domestically. The others came from Israel, Switzerland and Germany. (“I try to avoid buying Chinese at the workplace and at home,” Mr. Mishek said.)

Of course the shift to more automated production predates the Great Recession. And in the long run, better technology lowers prices, raises living standards and helps workers move into higher-paying jobs. This was the case with the mechanization of farming, which a century ago employed 41 percent of the American work force.

“We don’t have 11 million unemployed farmers today because over time farmers and their children transitioned into different sectors,” says William C. Dunkelberg, chief economist at the National Federation of Independent Business. “We don’t usually have this kind of shock, though, that displaces a lot of workers at once.”

Better technologies may eventually offer better job opportunities, but only if people can upgrade their skills quickly enough to qualify. That is hard to do in the short run, especially when so many displaced workers need to be retrained at once.

“People don’t seem to come in with the right skill sets to work in modern manufacturing,” Mr. Mishek said, complaining that job applicants were often deficient in computer, mathematics, science and accounting skills. “It seems as if technology has evolved faster than people.”

Some economists support policies that might shift the balance away from capital spending. Andrew Sum, an economist at Northeastern University, advocates tax incentives for hiring that mirror those for capital investment. Congress passed a hiring tax credit along these lines last year, but it was not well publicized, and some said it waspoorly devised. The proposal is reportedly floating around Washington once again.

Made in America: Manufacturing Jobs Are Coming Home

The tale of American manufacturing has long been one of woeful decline. Just about a year ago, China replaced the U.S. as the world’s No. 1 maker of things, and that seemed a sure sign that the glory days had faded for good. But all of a sudden the talk is of a “manufacturing renaissance,” to quote a new study by the Boston Consulting Group.
The BCG study, “The Return of U.S. Manufacturing,” makes an interesting case. China’s wages are rising by 15 to 20 percent a year, while its productivity will improve at half that rate. The yuan is gaining in value, too, and Chinese-made products are destined to become more expensive. There is a shortage of skilled workers even in major manufacturing centers such as Shanghai and Tianjin.
In the U.S., wage increases have been minimal for years and will remain at 3 percent or so annually. U.S. productivity will remain higher than China’s by a wide margin, and government incentives are also a factor in attracting U.S. manufacturers back home. “Reinvesting in the U.S. will accelerate,” the study says, “as it becomes one of the cheapest locations for manufacturing in the developed world.”
The math that went into this study is impressive, and it works like this: Right now, labor costs in China are slightly less than half those of the U.S. when the difference in productivity is factored in. In five years’ time, labor costs on the mainland will be 70 percent of the U.S. figure. Counting costs such as inventory and shipping, the study says, the Chinese cost advantage will drop to single digits or disappear entirely.
It’s a convergence theory of a kind, and one forecasted result is that outsourcing jobs to China will turn out to have a beginning, middle, and end. “China will no longer be the default low-cost location for supplying the U.S. market,” the BCG study asserts. “The economics are becoming marginal for many products.”
Some interesting figures support the study’s argument. U.S. manufacturing grew at an estimated annual rate of 9.1 percent in the first quarter of this year, compared with a disappointing 1.8 percent for the economy as a whole. There are also some curious cases of prodigal industrial companies already returning home:

• Caterpillar, which has a major presence in China, is building its next plant to make excavating equipment in Texas, tripling its capacity for such equipment in the U.S.
• Ford is repatriating 2,000 jobs from China after reaching an agreement with the United Auto Workers that it says it can live with.
• NCR has already brought its production of automated teller machines back from China to shrink the time from production to market, to stitch divisions closer together and lower operating costs.
• The toy maker Wham-o (and this is my favorite) is repatriating half of its production of Hula Hoops and Frisbees, most from China, some from Mexico.

“It’s very early days, but this trend’s beginning,” says Hal Sirkin, a senior partner at Boston Consulting. “It’s all based on simple economics: wage rates, relative exchange rates, and productivity levels. Over four or five years, manufacturers will be indifferent to producing in China or the U.S. If it’s for the Chinese market, make it in China; if they’re producing for U.S. consumption, make it in the U.S.” 
A couple of myths seem about to explode. One was that manufacturing is finished in the U.S., another that we live in a post-industrial economy. The first is patently untrue—though manufacturing as a share of GDP has been declining for half a century, and steeply for the past decade. As to the second, there is no such thing, in my view, as a post-industrial economy. No one survives without making things.
President Obama is entirely on the right track in declaring a revival of industrial production as one of his economic priorities. But the Boston Consulting study starts to look more than a touch rosy (and too statistics-driven) when you consider a few of the harder facts:

• Recent growth in manufacturing is due partly to a come-from-behind context. True, the U.S. has added 250,000 manufacturing jobs since the start of 2010. Also true: It lost almost 6 million jobs in the past decade, including a third of all employment in manufacturing. 
• Growth in industrial production is concentrated in a few sectors such as oil and computers. “The Case for a National Manufacturing Strategy,” a new study by the Information Technology and Innovation Foundation, a Washington public-policy group, indicates that 15 of 19 sectors, accounting for almost 80 percent of U.S. industrial output—apparel, metals fabrication, machinery, printing, and so on—declined over the past decade.
• The U.S. strategy, such as it has one, is fundamentally different from those of Europe and Japan. Their manufacturing sectors are stable or better because they have automated drastically (Japan) or gone into high-end production (much of Europe). The U.S., by contrast, has lagged in capital investment and appears set to compete primarily by way of low wages and often costly packages of tax breaks and other incentives.

The question is obvious: Do Americans want to make their country a low-cost production platform? Ford is coming (fractionally) home because it can pay auto workers $14 an hour—about 10 bucks less than it paid them when it eliminated those jobs. Henry Ford famously thought his workers should be able to afford the products they made; he believed in a vital middle class. So other questions are obvious, too: What will a manufacturing renaissance, if it arrives, do for this country’s middle-income wage-earners? What will a decade or so of intense outsourcing have cost them in net terms when the jobs come home?
Related Links:
Manufacturing Is Expected to Return to America as China’s Rising Labor Costs Erase Most Savings from Offshoring (Boston Consulting Group)
The Case for a National Manufacturing Strategy (Information Technology and Innovation Foundation)
U.S. Manufacturing Rebound Is a Myth (The Market Oracle)
China Poised to Eclipse U.S. Manufacturing (Open Salon)

Mazuma Capital Funds Multimillion Dollar Transaction for Environmentally Conscience Ground Clearing and Reclamation Services Provider

DRAPER, UT, MAY 25, 2011–Mazuma Capital, an elite national direct lender, announces it has funded a $2.5 million dollar transaction for a privately owned services company. The company is a prominent national player in the ground clearing and reclamation services industry.  Well known for administering environmentally friendly solutions in order to maintain a miniscule ecological footprint.
With major growth and expansions over the past 18 months the company sought funding for new equipment.  The equipment was engineered with superior fuel efficiency in mind; as well as being able to withstand extreme stress and tough terrain while performing its functions. The equipment was vital as it was needed to accommodate the large amount of growth and expanding service contracts in the oil and gas sector, while still providing a level of environmental responsibility. 
The company had obtained new contracts throughout the country to work with utility providers in need of reclamation and mulching services.  The challenge was finding a structure to meet the needs of the company's growth and financial requirements, while not requiring personal guarantees. Mazuma Capital Corp provided a lease structure to procure the ground clearing and mulching equipment for the company.
Mazuma Capital’s experienced underwriters brought their ability to think outside the box, using innovation and their proven track record in securing funding for growing companies to the table. Mazuma was able to structure the lease to meet the company's needs while ensuring it would foster the current growth and help to facilitate new growth.
“Working with Mazuma Capital allowed us to ride the tailwind of our newly signed service contracts with the right equipment in place.  The flexibility Mazuma offered us was refreshing and it was a great fit for our needs,” said the CEO of the Services Company. “The team at Mazuma did not feel like your typical lender/banker, their business is relationship based on every level.  The dynamic throughout Mazuma’s staff was one of professionalism with an added level of personalized service. Working with a top notch lender that provided exactly what we needed was a great experience.”
About Mazuma: Mazuma Capital is committed to our client’s success. Our unique capabilities and innovative product offerings provide solutions accelerating financial growth. Servicing both rising companies and established businesses, Mazuma continues to secure its position as the middle-market industry leader. We build long-term relationships by delivering on our commitments. Mazuma co-authored the Utah Best Practices Alliance and subscribes to the ELFA Code of Fair Business Practices.

# # #

Media Contact: Julie Fuchs, 801-816-0800 Ext. X291, jfuchs@mazumacapital.com, http://mazumacapital.com

Revolvers Return, with Some Twists- Good news for credit-seekers as banks relax, a little.

If anything bodes well for the economy, this does: companies are opening up new revolving lines of credit and refinancing older instruments at reduced rates.

In 2010, lenders doubled their issuance of syndicated, revolving lines of credit, a staple of corporate finance, according to data from Thomson Reuters Loan Pricing Corp., with borrowings accelerating the second half of the year, to $381 billion.

During the financial crisis, banks cut their exposure to revolvers, downsizing instruments or flatly refusing to renew them. Now, individual banks are slowly raising the amount of untapped commercial-credit commitments they're willing to keep on their books, according to federal call reports.

As in the larger corporate-loan market, new issues are predominantly refinancings of debt set to mature in the next 12 months. In late February, for example, Avista Corp. replaced existing debt set to mature last April with a new $400 million facility that expires in 2015. Near the same time, FelCor Lodging Trust, an owner of 82 upscale hotels, closed on a $225 million instrument secured by 11 of its properties.

FelCor had terminated a line of credit in 2009 because covenants were getting tight, says Steve Schafer, FelCor's vice president of strategic planning. But once earnings rebounded, FelCor pursued a new revolver with a three-year maturity, a lower interest rate, and an option for a one-year extension to 2015.

"It's always good to push out maturities," says Schafer. "The lower interest rate [LIBOR plus 4.5%] improves our earnings, and a new [line] will help us manage liquidity better — we've been carrying excess cash because we didn't have a line of credit."

"With not as many strong credits, banks are eager to lend, and they are kind of bending some of the standards," says Richard M. Pollak, a practice group leader in lending and structured finance at Troutman Sanders LLP.

Companies with steady earnings can lengthen terms to five and, at the outside, seven years. "It's fairly typical of what we see entering a growth cycle," says Walter Owens, head of U.S. commercial banking at TD Bank. "But we're a bit surprised by some of the deals going out [five and seven years]. We've let some of these deals go because we didn't think the company deserved that type of facility."

Borrowers like being locked in. "They don't have to worry about waking up one morning and discovering that their lender is not so enamored of their business anymore," Pollak says.

So, could banks be under pricing risk again? While easing up on some loan conditions, banks are more disciplined at valuing the receivables, inventory, and real estate that secure lines of credit, says TD Bank's Owens. "Since loss and default rates were not as high as most banks anticipated, in the last six months banks have been more aggressive. But, from a historical perspective, they're still fairly conservative."

And companies are having to put up a lot of assets. For example, Delta Air Lines's new revolver is secured by accounts receivable, airport slots, ground-service equipment, spare parts, engines, and flight simulators, among other property. "Out of an abundance of caution, banks are taking a lot more collateral," says Pollak. So, while banks and institutional investors may be going long, they're definitely hedging their bets.

http://cfo.com/

New Government Regulations Driving Healthcare's Demand for Equipment Financing

Have you ever stood in a doctor’s office and stared at the seemingly endless rows of color-coded file folders lining every spare inch of the office? It is a scene we are all familiar with because the healthcare profession still maintains vital medical records the old fashioned way – handwritten notes, stuffed in manila folders, and stored on shelves or in file cabinets.
The federal government is seeking to change this system by promoting wide-spread usage of electronic health records (EHR) and providing financial incentives so physicians, hospitals, clinics and other medical services facilities are able to implement EHR systems. New government regulations will automate and streamline the physician’s workflow to improve patient safety and the quality of patient care. This industry-wide transformation is driving demand for new equipment and system upgrades.
Despite leading the world in IT development for sectors such as banking, communications and transportation, the United States has lagged behind other industrialized nations in the race to adopt EHRs and modernize its healthcare system. Some of the world’s leading users of this technology include the Netherlands, where 98% of primary-care providers use EHR systems, New Zealand and Australia, with 92% and 89% use respectively, according to a 2009 Commonwealth Fund survey.
Recently, however, US adoption rates of EHRs have improved. At the 2011 Annual Conference for HIMSS, Health and Human Services Secretary Kathleen Sebelius highlighted increases in the use of EHRs by US patient care providers in what she called “a revolution in healthcare.” Secretary Sebelius cited 2008 figures that showed only 10% of hospitals, and just fewer than 20% of doctors, use basic EHRs. Over the last two years, according to Ms. Sebelius, the percent of doctors using electronic records has increased to almost 30, and four out of five hospitals say they are planning to apply for government incentive payments by 2015 that will require them to meet meaningful use standards in EHRs.
Paper-based medical records lead to inevitable inefficiencies, and possible life-threatening errors. The aim of the federal regulations is to reduce data entry errors, speed the sharing of patient information, and minimize the time spent on preparing charts in advance of appointments. In order for electronic medical records to be truly effective, all healthcare providers who have a meaningful impact on patient care – from generalists to specialists – must meet the “meaningful use” standards.
Overview of the “HITECH” Act
The American Recovery and Reinvestment Act of 2009 included $19 billion in funding for the Health Information Technology for Economic and Clinical Health (HITECH) Act, aimed at advancing the adoption of electronic health records. The HITECH Act provides incentive payments for healthcare providers who implement EHR systems and meet “meaningful use” requirements. Penalties for those who fail to comply with these requirements will begin in 2015. The tight timeframe for achieving meaningful use and receiving the financial benefits will drive significant demand.
The objective of the HITECH Act was to encourage the use of EHRs in a meaningful manner while improving the quality of care through the efficiencies the electronic exchange of healthcare information creates. The financial incentives provided under the HITECH Act come in the form of Medicare and Medicaid reimbursements.
Achieving Meaningful Use
To receive the financial incentives and avoid penalties, medical providers must demonstrate that they are using the equipment and software in a meaningful way. Simply purchasing new software and hardware will not qualify a provider for incentive payments. Healthcare providers must demonstrate their usage of the equipment in a meaningful way, as defined by the Centers for Medicare and Medicaid Services (CMS), thereby reducing the redundancy and cost of patient care.
Meaningful use will be implemented in three stages, with stage one covering 2011 and 2012. For full details on the HITECH Act and the meaningful use requirements please visit the CMS website at www.cms.gov or the Office of the National Coordinator for Healthcare Information Technology’s website at www.healthit.hhs.gov.
Once approved, healthcare providers will be eligible for $40,000 to $65,000 in incentive payments. Federally qualified health centers, rural health clinics, children’s hospitals and other healthcare facilities are also eligible for funding through CMS.
The incentive payments for providers will be phased out over time, and Medicare/Medicaid payments will be reduced for those who fail to adopt certified electronic health records. Those not meeting the meaningful use requirements will see the incentives turn to penalties if meaningful use is not met by 2015.
Factors Driving Investment
Compliance with the new regulations means medical providers will need to invest in new IT hardware, software, and services. Purchasing the necessary equipment could cost tens of thousands of dollars for a small practice and carry a significantly higher price tag for larger practices and healthcare facilities. This required investment comes at a time when the healthcare industry, like most US industries, faces significant budgetary constraints.
During the recession, healthcare providers deferred investments in equipment upgrades to protect their own financial well-being. To cope with the recessionary environment, medical providers have been forced to improve quality, reduce costs, and increase transparency. In these tight budgetary times, medical providers cannot afford noncompliance. The built-up demand created by those deferrals, accompanied with the government initiatives, will drive new equipment purchases and installations.
Providers are looking to preserve their cash reserves and credit facilities to deliver services, fund operations, and undertake projects that are not easily financed. Installing the technology early will help healthcare providers to demonstrate “meaningful use” in order to qualify for the federal stimulus incentives provided by the HITECH Act. Therefore, it is increasingly important for them to team-up with a knowledgeable financing partner to acquire and deploy the necessary hardware, software, and services to evolve their businesses to comply with the new regulations and satisfy the meaningful use requirements.
Healthcare Providers Have Multiple Financing Options
By acquiring the necessary equipment through a lease, healthcare providers get access to the cutting edge technology needed to deliver best-in-class patient care without bearing the full up-front cost of ownership. Term financing enables the lessee to match a long-term capital acquisition with a long-term finance solution.
Medical professionals need to partner with healthcare equipment manufacturers, software providers, and IT professionals to satisfy the meaningful use requirements. The acquisition and implementation of these systems present a significant growth opportunity for finance providers who understand the industry and regulatory framework, and who can provide financing solutions within the industry’s budgetary restraints.
In summary, as the healthcare industry continues to upgrade technology and equipment to comply with federal regulations, there is a growing demand for equipment financing solutions tailored to the healthcare industry. The good news is that healthcare providers are looking for knowledgeable financing partners that can work with them to provide best-in-class healthcare and qualify for federal stimulus incentives to offset the cost of deployment.

Source: World Leasing News/Leasing Finance Blogs

More Accounting News From ELFA

ELFA Issues Joint Letter on Accounting for Lessors to IASB, FASB

ELFA and the global leasing industry have issued a Joint Letter on Accounting for Lessors to Leslie Seidman, acting chairman of the Financial Accounting Standards Board, and David Tweedie, chairman of the International Accounting Standards Board.
The letter is signed by the Equipment Leasing and Finance Association (ELFA), Leaseurope (the European leasing and automotive rental federation), the Japanese Leasing Association (JLA), the China Leasing Business Association (CLBA), the Canadian Finance and Leasing Association (CFLA), the Australian Equipment Lessors Association (AELA), the Australian Fleet Lessors Association (AFLA) and the Truck Renting and Leasing Association (TRALA).
The joint letter explains that the global leasing industry has followed the Boards’ recent re-deliberations on the Leases project with great interest. In light of recent Board discussions, the industry wishes to reiterate its common views on lessor accounting before the Boards progress further in their re-deliberations on this topic.
The letter outlines the industry’s position on accounting for lessors as follows:
1. The de-recognition model, with accretion of residual assets, must be the general approach for lessor accounting. This will allow for manufacturing/sales profit recognition for manufacturer/dealer lessors, which we believe to be an entirely appropriate outcome.
2. The performance obligation model lacks conceptual grounding and fails to depict the economics of leases. It must be abandoned.
3. New guidance for lessors must be issued simultaneously with new guidance for lessees and be given full and proper consideration in order to achieve a high quality final standard.
Read the Global Leasing Industry Joint Letter on Accounting for Lessors.
For more information, visit the ELFA Lease Accounting page.

Equipment Leasing Industry Find Companies Are Purchasing Equipment Again

(Reuters) - A key measure of U.S. business activity rose sharply in February from a year ago, as companies borrowed more to invest in their operations, but the reading was down slightly from the prior month and credit quality eased, a lender group told Reuters on Tuesday.

The Equipment Leasing and Finance Association (ELFA) said U.S. businesses originated $4.1 billion in loans, leases and lines of credit in February to invest in everything from computer hardware to office furniture and machinery.

That was slightly below January's $4.2 billion total and well below December's $9 billion figure, but up 28 percent from a year ago, when the U.S. economy was beginning its gradual recovery.

February marked the 10th consecutive month of year-over-year gains, and the third straight month such gains were above 20 percent.

"It's a nice, steady trendline up," said ELFA President and CEO William Sutton. "Everything we are seeing throughout the economy (points to) steady, albeit slow, growth."

http://www.reuters.com/article/2011/03/22/us-usa-economy-elfa-idUSTRE72L4Y120110322

Let Mazuma Capital Corp act as the lessor for your bank. Together we will deliver financing solutions to fit your client’s needs.

Strategic Partner Programs For Banks
In the current economy more and more middle market clients are being turned down when looking for equipment lease financing. New credit regulations present challenges that many banks are unable to overcome.   Mazuma Capital Corp is the solution for these challenges.

Mazuma Capital Corp Capital invites you to take part in our exclusive Strategic Partner Program.
By forging a strategic partnership we will integrate our services as an extension of your current offerings. Mazuma Capital Corp will carry the risk that you currently cannot, greatly benefiting you and your clients while maximizing innovative solutions.
This will allow you to enter the leasing arena (or offer additional services if you already offer leasing) with ease and expertise.  You can offer customized leasing products to your clients and prospective clients with instant credibility.  Mazuma Capital Corp is a leader in best practices when it comes to lease structuring, documentation, syndication and sales.
For loan applications requesting loan amounts or other terms that are outside your traditional parameters, Mazuma Capital Corp offers innovative flexible solutions that meet the budgetary needs and goals of your clients, making you a turnkey service provider.

Allow our team of experts to work with you to create a comprehensive approach to extend additional financing solutions to your clients. Together we can deliver leasing solutions that fit your client’s needs.

Mazuma Capital Corp Role:  We will manage the entire leasing and financing process.  We will assist your commercial bankers in meeting the capital equipment financing needs of clients seamlessly.
Bank Role: You will promote capital equipment financing to your clients and prospective clients and manage the overall banking relationship.

Strategic Partner Program Options:
White Label Solution:Mazuma Capital Corp works as private provider of services under partner. How it works- You submit application on behalf of your client and are main point of contact throughout the financing process with Mazuma Capital Corp.
Under your name or under Mazuma Capital Corp products and services will be provided. Either way Mazuma Capital Corp protects the relationships you have fostered with your clients.
Key Features:  Financing programs are offered under your brand.  All client materials are provided under this brand.  This may include, but is not limited to:  Marketing and Collateral Materials, Communications and Documents.
Turnkey Service Provider:Mazuma Capital Corp works directly with customer as an extension of services provided through partner.  How it works- Your customer submits an application; you are then contacted via emailed informing you that your customer submitted an application. Depending on your desired level of involvement we CC you and/or your designated contact on all email correspondence with your customer, so you are up-to-date at all times.
Vendor Programs:Whether you currently offer leasing products or not Mazuma Capital Corp can tailor additional solutions.  Mazuma Capital can work with you to provide vendor (manufacturers, dealers, distributors and resellers) financing programs.  We will work with you to support your commercial bankers’ efforts, enhance existing relationships and cross-sell additional banking products.
This will help you offer products that serve the needs of existing and/or prospective vendor customers.   The services will be an extension of your bank solidifying your relationships, generate new loans, develop new banking relationships and add to the bottom line.
Alternative Financing Solutions:  Mazuma Capital Corp works with you to incorporate you as a funding source for transactions that fit your banks lending criteria.
Mazuma Capital Corp works with you to determine your parameters for funding Mazuma Capital Corp transactions. Mazuma Capital submits credit application for transactions that meet your banks criteria and work with your bank to seemlessly meet the goals of our clients.
Key Features: Mazuma Capital Corp helps build your loan portfolio’s. Your bank becomes a key funding partner with Mazuma Capital Corp.

For more information please contact us at partners@mazumacapital.com
For the latest industry news and trends follow our Mazuma Capital Partner Blog

Cash Hoards are Shrinking at S&P 500 for the First Time since '09 as Obama Continues to Woo CEOs

According to Bloomberg Corporate America is putting its cash hoard back to work.
In the first decline since mid-2009, Standard & Poor’s 500 companies reduced cash and short-term investments to $2.4 trillion from a record $2.46 trillion, according to data Bloomberg compiled from their most recent quarterly reports. Capital spending increased $22.3 billion, the biggest quarter- to-quarter jump since the end of 2004, to $142.8 billion, the highest level in two years.
Budgets are rising for new plants, distribution centers and stores from S&P bellwethers Cisco Systems Inc., General Electric Co. and Coca-Cola Co. While some of the money is being spent abroad, company officials say they are opening the purse strings at home now too. A rebound in economic demand, President Barack Obama’s efforts this year to court business leaders, and Republican gains in Congress have helped build confidence to invest and start adding jobs, executives and investors said.
U.S. companies’ accumulated record cash last year after they slashed spending shut factories and fired workers in 2008 and 2009 to cope with the worst recession since the 1930s.
The dearth of investment took a toll on jobs, with the unemployment rate averaging 9.6 percent in 2010. An increase in spending this year may help lower the rate to 9.2 percent, the average estimate of 87 economists in a Bloomberg poll.

Political Climate

Companies held their cash partly on concern that health- care mandates and increased financial regulation would add costs to their bottom line.  Business confidence has improved and is contributing to some increased risk appetite. The economy last year grew 2.9 percent after shrinking 2.6 percent in 2009.

Profit, Not Presidents

Obama backed a compromise to extend tax breaks that were set to expire in December and a measure to accelerate equipment depreciation. He has countered executives’ criticism with a call to lower corporate taxes, freeze federal spending and review “outdated and unnecessary” regulations. In return, at a Feb. 7 speech to the U.S. Chamber of Commerce, he asked companies to invest and create more jobs at home.

 ‘Good for the Economy’

The Bloomberg data examined the most recent quarterly figures reported by S&P 500 companies, regardless of the specific calendar period. About 75 percent have reported so far in the current cycle, and final totals may change. The S&P 500 increased 12.8 percent in 2010, compared with 11 percent for the Dow Jones Industrial Average.

http://www.bloomberg.com/news/print/2011-02-16/cash-hoards-shrink-at-s-p-500-for-first-time-since-09-as-obama-woos-ceos.html