Financing Your Commercial Tent Purchase

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When it comes to making a big purchase for your rental business, conventional logic typically dictates that you use profits from the previous year to fund the purchase.  However, based on the old adage “Cash is King” – is this really the best approach?

Let’s take a look at two scenarios and how they affect your cash on hand:

Scenario #1 – Buy 40×80 tent top outright ($4,800 cash payment)

  • $4,800 comes out of your bank account on day one and you are -$4,800 from a cash perspective.
  • By month 5 you have rented your tent 5 times at $1,000 a pop and paid your tent off…but are just now starting to be cash flow positive.
  • Here is simple table showing how the first 12 months look from a cash flow perspective:

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As you can see, there are several months of negative cash as your our cash outlay for the purchase don’t line up with the cash inflows from rental revenues.

Scenario #2 – Buy the 40×80 tent top utilizing financing at 12% over 48 months

  • Your payment is roughly $126 per month
  • If you rent the tent once per month for $1,000 a pop (as above), you will be cash flow positive from day 1.
  • Here is simple table showing how the first 12 months look from a cash flow perspective:

Financing

Because your payments more closely match with the rentals of the tent, your cash flow is significantly better.  In fact, here is a graph showing the difference in cash between Scenario #2 (Financing) and Scenario #1 (Outright purchase).

Benefits of Financing

The cash on hand from financing is higher all the way through Month 38 (just over 3 years).  Of course, the interest that comes along with financing comes into play and the outright purchase will provide you with a final ending cash position.  However, there is no penalty for paying the loan off after 12 months.  So while you can get the low payment schedule of a 48 (or even 60 month term), since you have the tent paid off in the first year (gotta love how quick those NEW Tents pay off!), you could pay off the loan after 12 months and cut your interest charges significantly.

Obviously, if you have a big cash influx from a profitable year, and can comfortably pay for a tent up front, you should do so.  But if you find that cash is tight or are looking for ways to grow your business, financing may be an options.  Here are more details about financing through Advantage+ (our preferred vendor):

  • No penalty for early payments after 12 months.
  • Competitive rates – anywhere from 10-15% depending on your credit score and company financials.  Much better than most credit cards.  Not as good as a bank loan rate – but much less hoops to jump through and typically easier to obtain financing.
  • A one page application and an answer in just days.
  • You own the equipment outright at the end of the term (no buyouts, like other financing companies have)
  • No additional collateral is typically needed to secure the loan – as the equipment is used to secure the loan

For more information, please contact your NEW Sales Rep or contact Advantage+ directly through their website at www.advantageplusfinancing.com.

**The above calculations assume the following:

  • A 40×80 can be rented for $1,000 and is rented once per month (or 12 times per year)
  • Financing is at 12% over 48 months