for DBEs

Managing Your Finances

Wes Hinton

Marketing Development Consultant

Caterpillar Financial Services Corp

February 15th 2011

for DBEs Topics Financing Sources Financing Options Be Educated

for DBEsFinancing SourcesTraditional Banks – offer several options for financing including working capital loans, leasing, credit cards, etc. at competitive interest rate levels. Lending is typically not specific to limited industries.

Independent Finance Companies – Finance any type of equipment without regard for the manufacturer. Reps typically have industry familiarity.

Captive Finance Companies – Typically owned by the equipment suppliers and provide low rates. Based on their familiarity with the equipment and industry, risk tolerance level is typically higher than non-related lenders.

for DBEs Financing Options Purchase Lease Rent

for DBEs Purchase Ownership Machine accrues equity Trade-in value Tax benefits: Depreciation

for DBEsIf you decide to

buy… Installment Sales Contracts

– Similar to auto loans– You own machine now– Build equity quickly– You take depreciation

for DBEs Leasing Typically no down payment Replace aging equipment with

minimal capital outlay Helps with planning Easier to standardize Tax considerations

for DBEs If Leasing…

Tax or Operating lease – Long Term Rental

– Off balance sheet financing, which can help manage financial ratios

– Payments typically expensed like a rental

– Option to purchase at end of lease

for DBEs If Leasing… Other Options

– Finance Lease: Equity building lease

– Flex leases: Predetermined “walk-away” options throughout the lease

for DBEs

Presented by Patrick A. Parsons, IPMA-CP, SPHR

Good for jobs outside usual scope No maintenance costs Good way to test equipment

Renting

for DBEs Be Educated Fees: Documentation, Origination,

Prepayment Conditions: Lien Practice, Return

Requirements, Grace Period Loan Flexibility: Loan

Modifications, Skip Payments

Read your documents and ask questions!

The views expressed herein are the personal views of the author and are not intended to reflect and do not necessarily reflect the views of Caterpillar Inc.