Rates are rising: What does that mean for equipment loans?

As rates continue to increase some companies are rethinking how they finance equipment. In the past when rates were low some business choose short-term, variable-rates. Now a fixed rate is best when thinking about a capital equipment purchase.

Even with interest rate hikes, business outlook optimistic

U.S. businesses took on $7.1 billion in new loans, leases and lines of credit to fund equipment in February.

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Automation is Changing the Economy

Automation leads to significant economies of scale – important in industries which require high capital investment. Automation enables firms to reduce their number of workers, and help navigate more complex controls.

Advantages-and-disadvantages-of-automation

automation can unlock new opportunites

Unlock New Opportunities with Automation


Barbara Griffith, President & Founder, SCL Equipment FinanceSCL provides a Honest & Easy approach to equipment financing

Barbara Griffith
President & Founder
714-573-9804 ext.101

SCL Equipment Finance Celebrates our 30th Year in Business

Just a few years back 1992 our company was a startup. The mission of the company is to provide equipment financing to businesses throw-out the US. Fast forward 30 years we are blessed to have succeeded in building strong relationships with our clients, and helping businesses grow to become financially stronger.

What Happens When The Fed Raises Interest rates

Capital Preservation is Important – Equipment Financing is a Fixed Rate – So You Can Budget Your Capital Expense

interest rates

What Happens When The Fed Raises Interest rates

The Federal Reserve’s mission is to keep the U.S. economy humming—not too hot, not too cold, but just right. When the economy booms and “runs hot,” distortions like inflation and asset bubbles can get out of hand, threatening economic stability. That’s when the Fed steps in and raises interest rates, which helps cool down the economy and keep growth on track. As the interest rates increase companies will continue to finance their equipment.
 
Warren Buffet

Warren Buffet: How to be Frugal

I really enjoy hearing from one of the richest men in the world and how he lives despite of his $78 Billion net worth he has simple taste.
 

SBA Loans & Working Capital

As a reminder if you are thinking of a SBA loan or a working capital loan please give us a call we can help you with this process.
 

What is going on with the Supply Chain?

The Supply Chain 2022

Assuming something truly crazy doesn’t happen (like another February 2021 polar vortex), Q2 of 2022, we should see an ease in the supply chain.

The Shortage at Grocery Stores

Since the onset of the COVID-19 pandemic, grocery store sales (adjusted for inflation) have averaged ~12% above their 2018 levels, which is a very sharp increase.

Inventories haven’t kept up with sales. This can be seen in the ratio of inventories to sales for food and beverage stores (grocery stores are the largest subset of these stores, unfortunately data on monthly retail inventories is not reported by the Census Bureau). Since the onset of the pandemic, the ratio of inventories to sales has fallen from ~0.79 to ~0.73, which represents a 7.6% decline (which is very substantial over a short period). This means grocery stores are turning their inventories substantially faster than before.

fresh produce in grocery store

Retail Inventory/ Sales Ratios

Since March 2021 we have seen a sharp drop in the employment by grocery stores. Right now, despite inflation-adjusted sales being up ~12% from 2018 levels, employment is up only 2%. This makes it far harder to keep the shelves stocked.

While production of food was a more serious cause of shortages in 2020, the most recent data for production of food does raise some concerns due to the strong downward trend in the seasonally adjusted data since the middle of the summer.

Supply Chain graphic

Industrial Production – Major Appliances – 2022

Regarding large appliances, the biggest issue is strong demand. Industrial production last month was ~11.8% above September 2019 levels, but demand has outstripped this output.

Equipment Financing – Allows Your Business to Conserve Working Capital

Did you purchase equipment 2021? Section 179 write off.

All businesses that purchase, finance, and/or lease new or used business equipment during tax year 2021 should qualify for the Section 179 Deduction …

Section 179 End of Year Equipment Tax Deduction

The Section 179 deduction limit for 2021 is $1,050,000. This means your company can deduct the full cost of qualifying equipment (new or used), up to $1,050,000, from your 2021 taxable income.

Why Finance Your Equipment

Equipment financing will help conserve working capital and allow your company to invest in capital equipment, replace outside cost and reduce employee size.

cash flow

A Big Business Starts Small