February '20

For the Business of Apparel Decorating

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5 8 P R I N T W E A R F E B R U A R Y 2 0 2 0 helpful, and a large down payment is always a great way to offset credit risks." Lastly, stay proactive. Instead of trying to tackle things once they've already gone south or getting over- whelmed with late payment fees and diminishing a credit score, Bourdon tells business owners to retain business and personal credit files. "By keeping track of your credit, you can make sure you fix errors ahead of time and avoid surprises when it's time to ap- ply," he adds. These are some simple tips and tricks, but they'll make a world of dif- ference in whether a decorated apparel business's finance or lease application is approved. WHAT IF… So, what if a business doesn't get the stamp of approval? A denied applica- tion can be a defeating and unsettling feeling for businesses. As a financial manager, Jung says lenders are there to help secure approval no matter the credit stance or time in operation. But, if it does come down to a denial, he suggests the customer ask the lend- er about any other possible options they have. For those looking to straighten things out and try again immediately, Kroll suggests a down payment and/or a cosigner to get immediate approval. If customers are looking for long-term credit improvement, she recommends customers first look at their credit re- ports and double-check for any errors. If there are some, businesses need to connect with the credit bureaus to clear them up. If credit scores are low due to high debt, paying down balances is the best option before applying for financing again. Additionally, making payments on time every month is imperative over time. Making these long-term adjust- ments will help, but it's important to know that it will also take some time for credit to build back up again. Kroll suggests customers with little, limited, or no credit get a credit card and use it for as little as one purchase per month. Paying the purchase off in full each month will increase credit scores, but again, you won't see chang- es overnight. The key is for businesses to be proac- tive with payments and their credit re- port going forward, so they're in a solid spot to apply for assistance for the first time, or again in the future. PW 5 8 P R I N T W E A R F E B R U A R Y 2 0 2 0 A PROS & CONS LIST FINANCE EXPERTS FROM ASCENTIUM CAPITAL, CIT, AND GENEVA CAPITAL WEIGH THE GOOD AND THE BAD OF FINANCING AND LEASING. FINANCING PROS: • No term buyout • The customer legally owns the equipment (with a UCC-1 Lien) • Can report as an asset and liability • Ability to preserve cash on hand • The customer can write off entire equipment cost in the year of purchase (if income offsets it) CONS: • Monthly payments can be 10–15% higher • The customer is liable for any injury, damage to property, etc. LEASING PROS: • Lower payment due to end-of-term balloon payment (typically 10% of original equipment cost) • The customer is not liable for any legal issues • More flexibility at the end of the term (walk away, upgrade, or purchase) • Payments are completely tax-deductible CONS: • End of term buyout • The lessor is the owner of the equipment

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