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Leasing options can help you to reserve your working capital, manage your credit, and still invest in the equipment your small business needs to pursue its growth targets. Tracking industry trends for 2015 can help you make the right leasing decisions for your company. In addition, you’ll want to learn more about planned changes to accounting rules that will alter the way equipment lease expenditures are reported. These 2015 industry trends and changes in accounting rules can help you assess your company’s equipment leasing options

1.   Introduction

As a small business owner, you can’t afford to have cash management concerns distract you from your company’s core areas of focus. At the same time, you need to conserve your working capital and make the most strategic use of your lines of credit as you pursue new opportunities in areas such as marketing, R&D, and expansion. And to complicate matters further, you need to invest in equipment to keep your company competitive and positioned for growth. Depending on your needs and objectives, leasing may make sense for your company when the time comes to acquire new equipment.

According to the Equipment Leasing and Financing Association (ELFA), that time may be now. The organization predicts that 2015 will see record spending of “nearly $1.5 trillion in capital goods or fixed business investment (including software).” That figure accounts for spending by U.S. businesses, nonprofits, and government agencies. On the business side, the hike in spending is seen as a sign of economic confidence and expectations of expansion, as companies in some industries see capacity utilization rates “reach or surpass levels historically known to spur business investment.”

2.   Taking stock of the industry trends

ELFA predicts a “healthy growth rate of 6 percent” in equipment and software investment this year. It adds that “aircraft, trucks, and other industrial equipment are projected to be among the higher growth types, while agriculture, computers, and software are expected to see slower growth.”

With the Federal Reserve expected to raise short-term interest rates in 2015, the organization predicts that businesses will “seek to lock in equipment financing at lower rates.” In fact, it has forecast a trend toward the use of financing for 62 percent of businesses’ $922 billion in expenditures on plant, equipment, and software this year.

Technological advances are supporting the move toward increased financing. “Equipment finance providers are streamlining their business processes and improving customer self-service capabilities using digital technologies,” ELFA finds. “To meet customer demand and address evolving technology equipment requirements, equipment finance companies will tailor innovative financial offerings.”

3.   Taking reporting rule changes into account

In addition to tracking these 2015 trends, ELFA has its eye on an upcoming change in accounting rules that will have an impact on the way businesses account for equipment leases. Lease consultant Bill Bosco of Leasing 101, a member of the ELFA accounting committee, was sponsored by the organization as a working member of the Financial Accounting Standards Board (FASB) task force to change the accounting rules. He explains that the Lease Accounting Project was initiated by FASB, which establishes accounting rules in the U.S., at the direction of the Securities and Exchange Commission.

“The project’s major objective is to record operating leases as an asset and a liability on the balance sheet of any company that has to report audited financial statements,” Bosco says. “So it’s going to apply to small- and medium-sized enterprises that have to put out audited financial statements for their banks. The objective is to show readers of financial statements what the liability was for operating leases as well as what the value of the right to use the asset is that arises from those operating leases.”

The project began in 2006, and to understand its evolution, it’s helpful to have some background on where accounting rules and practices stood at that starting point. “Operating leases are currently off balance sheet, and what that means is that neither an asset nor a liability appears on the books, but a company reports rent expense,” Bosco explains. “They accrue the average rent, and they pay the actual rent for any equipment that they’re leasing or any office space or retail store space.”

Under that practice, financial statements record only rent expense, and companies footnote future rent obligations, he adds. “That’s so people like lenders can understand what your company is obligated for that might not be on the balance sheet when they’re making a decision as to

whether or not to lend you money.” The SEC decided that it was better practice to include that information on the balance sheet, and that decision led to FASB’s creation of the Lease Accounting Project.

4.   Scaling the changes to small business capacity

The details of the initial proposed change sparked concern among small business owners and leasing industry professionals. “People were worried about the complexity of this,” Bosco says.

“A small business doesn’t have a big accounting staff.” But the project has evolved through many iterations and much public comment since its inception, and based on industry input and public comment, FASB opted for a rule that puts the present value of rents on the balance sheet as an asset and a liability but does not call the liability debt.

“That’s an important point. They made it easier to comply because of the way they decided to handle the P&L and the balance sheet,” Bosco says. “The P&L is going to stay exactly the same. A small- or medium-sized company, or any company for that matter, would for operating leases approve the average rent expense if it’s an uneven rent lease, and pay the actual rent expense, same as you do today—so you don’t have to change your rent payment process or your rent cost accounting process.”

Another area of concern was that the new rule would have a negative impact on small companies’ credit ratings, but that fear is unfounded, Bosco says. “Your credit is not going to change at all, because lenders and credit rating agencies always look at operating leases in the footnotes. Just because FASB says you’ve got a new asset and liability doesn’t change your ability to pay your debts, so your credit rating isn’t going to change.”

5.   Getting a handle on it all—and preparing for compliance

What does the impending change mean, in practical terms, to you as a small business owner? When the new rules go into effect, you’ll “put the present value of the lease on the books each month with the new present value and reverse the old present value,” he says. “You can actually do it on an Excel spreadsheet. All you’ve got to do is put at the head of the column a present value calculation using your incremental borrowing rate, which is the rate that you’d pay on a loan of the same term as the lease. Put that at the top of the column, do a PV calculation, and make an entry debiting right-of-use asset and crediting other lease liability. It’s that simple.”

In its latest iteration, which is supposed to be signed toward the end of this year, the rule “will give users of financial statements better information, but it will not penalize companies that are leasing equipment as the original project would have,” Bosco says. He notes that the FASB made a great effort to simplify the accounting changes prompted by the new rule and to make compliance less costly.

It’s also important to remember that the new rule will not go into effect for companies until 2018, so you’ll have time to prepare for the change. But by educating yourself about the new rules now, you’ll be better equipped to understand the full impact of your equipment leasing decisions. And that, in turn, will help you to devise your most productive and profitable strategy for investing in your company’s long-term growth and success.

6.   Resources

The ELFA maintains the Equipment Finance Advantage website, which offers a variety of resources for small business owners:  

If you’re new to equipment leasing, these ten questions help you evaluate your options and assess the financing terms you’re offered.

This chart provides a point-by-point comparison of leases versus loans.

Refer to this online glossary when you need assistance understanding terminology used in the lease agreements you’re offered.

This Digital Toolkit not only reviews the basics of equipment leasing, but also explains how it can work as part of your asset management strategy.

Wondering which trends the equipment leasing industry is tracking this year and how these developments might affect your small business? This article provides an overview of what to watch.

Time Value Software created this equipment lease rate calculator to help evaluate your leasing costs.

Bank of America, N.A. engages with Inc. to provide informational materials for your discussion or review purposes only. Inc. is a registered trademark, used pursuant to license. The third parties within articles are used under license from Inc.. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

Vacation-Thumb.pngFive Steps To Prepare


By Donna R. Childs, Prisere LLC

Taking regular vacations is important to your well being, allowing you the opportunity to rest and return to work fully refreshed. But for many small business owners, being away from the office can be more stressful than being at the office.


These five steps will help you prepare for time away from the business (PDF).

Robb-Hilson3.pngBy Robb Hilson


We recently released the spring 2015 Bank of America Small Business Owner Report, a semiannual study that uncovers the concerns, aspirations and perspectives of small business owners around the country.


We’re happy to say that confidence in the economy remains steady compared with one year ago. In addition, two-thirds (66 percent) of small business owners are optimistic about the growth of their businesses over the next five years. Sixty-four percent of small business owners, however, note that their businesses are still recovering from the “Great Recession” of 2008. Most have yet to reach a full recovery.


One of the notable findings of the survey is the tendency of small business owners to be self-sacrificing, putting the needs of employees above their own. Sacrifices include accumulating personal debt or delaying their own compensation, versus laying off employees or delaying employee compensation.


Employee appreciation programs are widespread and offered by nearly all (94 percent) of small business owners. Popular forms of expressing appreciation include team outings, spot bonuses, office recognition and extra time off. Small business owners also favor customer appreciation programs, feeling that repeat business stems from strong customer relationships. This sentiment is strongest among Baby Boomer owners.


Bank of America appreciates the tremendous contributions that small business owners make to the U.S. economy, which is why we’ve planned several special events throughout our “Small Business Month” of May. We’re hoping not only to honor small business owners but also to provide useful insights and expertise through special product offers and local events. In San Francisco, we’re proud to celebrate small business owners by being a presenting sponsor of San Francisco Small Business Week, taking place May 16-22.


We’ll also be hosting a Google Hangout on May 20 to discuss some of the themes that have emerged from our spring 2015 Small Business Owner Report. Panelists for the Hangout include Jill Calabrese Bain, Managing Director and Small Business Banking National Sales Executive, Preferred & Small Business Banking for Bank of America; Rieva Lesonsky, CEO of GrowBiz Media &; and Nikhil Arora, co-founder of Back to the Roots. USA TODAY columnist and small business expert Steve Strauss will moderate. We hope you’ll tune in by checking out the Bank of America Google+ page Wednesday, May 20, at 8pm ET.

SustainableEntrepreneurship.jpgA new generation of leaders is learning how to apply business practices to the pursuit of social and environmental missions, according to a new book entitled, Understanding Social Entrepreneurship: The Relentless Pursuit of Mission in an Ever Changing World by New York University professors Jill Kickul and Thomas Lyons. Business writer Cathie Ericson recently caught up with co-author Lyons to discuss how business and social entrepreneurship skills complement each other, and why social and environmental sustainability can drive economic growth.

Click here to download the PDF.

Sustainability.jpgAccording to the 2013 Small Business Sustainability Report, 79 percent of the business owners surveyed reported that "offering green products and services gave their business a competitive advantage," and that sales actually spiked during the recent economic downturn. Whether your business runs a broad-based sustainability operation or is integrating green practices on a smaller scale, customers seem to be supporting those efforts with their wallets. Business owners are finding new and innovative ways to be both profitable and environmentally responsible, as these three entrepreneurs are proving.

Click here to download the PDF.

Entrepreneur_Obstacles_body.jpgby Erin O’Donnell.

Entrepreneurs have a reputation for being brash and bold innovators. And yet a successful company is built on more than a great idea. We asked a small business coach and a longtime business owner to identify some of the most common roadblocks to success, and share tips for clearing the obstacles.

Undefined goals

If you don’t know where you’re going, how will you know when you get there? That’s what business coach Jennifer Martin of San Francisco-based Zest Business Consulting asks her clients.

Martin says every small business owner must start with clearly defined, written goals. But some entrepreneurs skip this step in their eagerness to get to market. “They don’t actually take time to create a vision,” Martin says. Her solution: Create a two-year outline of everything you want to achieve, from a client base to market share to revenue.

Too many to-dos

With goals in place, it’s time to begin work in earnest. But Martin says many small business owners pile up the action items without prioritizing their to-do lists. They risk becoming overwhelmed because it seems like everything is a priority that has to be accomplished now.

That’s almost never the case, Martin says. “What they really need to be doing is focusing on the action that will get them traction,” she says. Make your own determination about where to put your resources. Devoting hours a week to promoting your business on social media, she says, may not bring you the same return as developing referral partners among other businesses who serve your ideal client or customer.

Entrepreneur_Obstacles_PQ.jpgRushing the process

One of the most important skills small business owners can cultivate is learning how to run their company at the right pace, says Karen Fichthorn, a founder of Fichthorn Brand Development in Sanibel, Florida. Try breaking a large task into smaller ones, especially if you’re still working another job while you get your business off the ground. “Achieve just one thing per day,” Fichthorn says. For example, if your list item is “Establish a trademark,” start by researching attorneys one day, then making an appointment the next. In a year, you’ll have achieved about 200 tasks on the one-a-day plan.

Fear of failure

On the contrary, an entrepreneur must be willing to make mistakes and learn from them. Martin says many business owners were fantastic employees, but they struggle with setting their own structure and being generous with themselves when something goes wrong. Instead of fixating on what went wrong, the experts say small business owners need to rally in order to find the lesson in the misstep or failure and keep moving forward.


Bank of America, N.A. engages with Touchpoint Media LLC to provide informational materials for your discussion or review purposes only. Touchpoint Media LLC is a registered trademark, used pursuant to license. The third parties within articles are used under license from Touchpoint Media LLC. Consult your competent financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.



Thumbnail.gifThe 2015 storm season officially begins on June 1, with news stories on hurricanes, fires and droughts likely to follow over the coming months. But in April, experts at Colorado State University released their forecast, giving us a preview of what is ahead. They expect the experience of 2015 to be well below average with only seven named storms, three of which will become hurricanes and one to reach major hurricane strength with wind speeds of at least 111 miles per hour. This news may not impact your small business risk management strategy. But it should drive your communications strategy to motivate vigilance.


Click here to read the full article (PDF).

Spring-SBOR-Thumb.gifDespite challenges, small business owners are still optimistic about the future, embracing self-sacrifice while prioritizing employees and customer relationships.

Seven years after the Great Recession began, two-thirds (64%) of small business owners report their businesses are still in the process of recovering, according to Bank of America’s spring 2015 Small Business Owner Report. The report, based on a semiannual survey of 1,000 small business owners across the country, says that only one in five (21%) small businesses state they have completely recovered from the recession.


However, despite these lingering impacts from the Great Recession, small business owners are still confident about the future growth of their businesses.


“Small business owners are optimistic about the future and are working extremely hard to achieve success,” said Robb Hilson, Small Business executive. “As they have focused on recovery, many business owners have embraced a mindset of self-sacrifice. They are prioritizing their employees and customers above all else and it is often at the expense of their own personal or financial well-being.”


The report also found that small business owners have been working long hours, forgoing raises and delaying their own compensation as they focus on investing in employees, and attracting and rewarding repeat customers.


Investing in employees

When it comes to their employees, small business owners overwhelmingly find the need to reward them and show their appreciation in a variety of ways. Almost all small business owners (94%) surveyed say their companies have employee appreciation programs.

Celebrate-Article-Vert-sm.gifIn addition to appreciation programs, small business owners are investing in helping their employees perform better and grow in their careers. “Small business owners are seeking more support through lending than they did a year ago. Citing difficulty in locating qualified candidates, small business owners’ number one priority for using loan capital is training and developing existing staff,” Robb said.

Strengthening customer relationships

Establishing relationships with customers is a primary driver of repeat business, and small business owners are showing their appreciation to their customers in a variety of ways. More than half (57%) of the survey respondents feel they receive repeat business because of the relationships they have developed with their customer base. This sentiment is even stronger among Baby Boomer owners (71%) compared with 47% of Millennials and 53% of Gen Xers.


Click here to download the full Bank of America Small Business Owner Report in PDF format.

SP_Veteran_Resources_body.jpgby MeLinda Schnyder.


Taxpayers fund between $600 billion and $800 billion to recruit, train, equip, and deploy the U.S. military, according to Sean McIntosh, executive director of The Bunker Kansas City, part of a national program that offers education, mentorship, and access to funding for veteran entrepreneurs. “Our highly-trained, stress-tested, and experienced military veterans are a by-product of that investment,” he says. “They should be re-purposed as job creators.”


If you’re one of the nearly 250,000 service members transitioning to civilian life this year and are considering working for yourself, there are many resources available locally, regionally, and nationally. The U.S. Small Business Administration website is an excellent resource for all entrepreneurs, but here are seven programs specifically aimed at veterans:


1. Veterans Business Outreach Centers

The SBA’s Veterans Business Outreach Program has 16 organizations participating in this cooperative agreement to provide development services such as business training; counseling and mentoring; and referrals for eligible veterans owning or considering starting a small business. Check the website for VBOC locations and areas of coverage.


2. America’s Small Business Development Centers

In its 35th year, the Small Business Development Center program includes 63 state and regional SBDC networks at nearly 1,000 locations. The centers provide free one-on-one consulting to small businesses, from business plan development to manufacturing assistance to financial packaging and lending assistance. The program is a public-private partnership in cooperation with the SBA.



3. Veteran Fast Launch Initiative

For more than 45 years, SCORE (Service Corps of Retired Executives) has offered mentoring and training to entrepreneurs through its network of 13,000 volunteers. The SCORE Foundation partnered with major corporations to create Veteran Fast Launch Initiative, combining the counseling and education with free software and services to help accelerate the start-up process for veterans and their families.


4. The Bunker

The Bunker targets existing veteran-owned tech startups and aspiring entrepreneurs, helping to launch and accelerate their businesses. There are seven chapters nationwide—all run by veterans—that accept applicants for a six-month training pipeline, bringing together companies, mentors, and aspiring entrepreneurs. Find affiliate locations on the website.


5. American Dream University

This non-profit offers a free online course to help veterans decide if starting a business is for them. Advanced programming includes free events on bases across the world featuring tools and speakers who are entrepreneurs, leaders, and trailblazers and have volunteered their time to help veterans transition.


6. Patriot Boot Camp

Patriot Boot Camp’s intensive three-day events offer training in entrepreneurial and business skills, as well as mentoring from successful entrepreneurs and military and business leaders. Vets and their spouses can attend at no cost in locations across the country.


7. Operation Boots to Business

Boots to Business is an entrepreneurial education and training program offered by the SBA as part of the Department of Defense’s Transition Assistance Program. The curriculum includes steps for evaluating business concepts, the foundational knowledge required to develop a business plan, and information on SBA resources available to help access start-up capital and additional technical assistance.


Bank of America, N.A. engages with Touchpoint Media LLC to provide informational materials for your discussion or review purposes only. Touchpoint Media LLC is a registered trademark, used pursuant to license. The third parties within articles are used under license from Touchpoint Media LLC. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.

Thank-You-Thumb.gifYou work around the clock and life can move pretty fast. Which is why we just want to stop and say how much we appreciate all you’ve done for the economy.

Click here to view the infographic.

Note:  We're celebrating small business all month long.  As a small thank you, we’ve compiled our newest and most popular content for you here.

Military.jpgIf you are one of the nearly 250,000 service members transitioning to civilian life this year, veteran business owners want you to know that your skills could transfer to being your own boss. According to the National Veteran-Owned Business Association (NaVOBA), more than 3 million men and women who have served in the U.S. Armed Forces have started their own small businesses after their military service. NaVOBA calls them vetrepreneurs.


NaVOBA analysis shows veterans are twice as likely to own a business as non-veterans. More data—this from the Institute for Veterans and Military Families at Syracuse University—shows that the success rate of veteran-owned business startups is almost twice that of other business startups.

Click here to download the pdf.

Then-Now-Thumb.gifLife moves pretty fast. And a lot has changed recently, especially in terms of technology and business. Let’s take a trip down memory lane and see how things have evolved.


Click here to view the infographic.



Note: We're celebrating small business all month long.  As a small thank you, we’ve compiled our newest and most popular content for you here.

SP_Ways_To_Become_More_Sustainable_body.jpgby Robert Lerose.


Small businesses that adopt green policies and procedures can often come out ahead in two essential ways. First, they reduce their environmental impact and conserve precious natural resources. Second, they can boost their bottom line and enhance their standing among customers. Surveys of small business owners that offer green products and services show an uptick in sales and higher customer loyalty.


Although making your business greener can seem overwhelming, experts say to start small and then tackle bigger changes. Simply Green Solutions, an Ellenton, Florida-based project management services firm that helps businesses go green, offers these suggestions:


1. Use recycling bins

Put out containers for recyclable items—such as glass, paper, and aluminum—in a convenient location in your company. Post instructions on how to use them and reminders throughout the building.


2. Use eco-friendly cleaners

Harsh detergents can add potentially harmful chemicals to the water supply, as well as irritate skin, eyes, and lungs. Choose natural, non-toxic cleansers that are easy on the environment and on people. (You'll be amazed at what you can do with ordinary household items like vinegar and lemons.)



3. Turn off the power

Save electricity and cut your energy bill by shutting down your computers at the end of the day, as well as non-essential lighting, machinery, and equipment. To make the task more efficient, take an inventory of your operation, put together a checklist of everything that can be switched off, and give someone on your team the responsibility for executing it.    


4. Find new life for your old equipment

The amount of e-waste—such as computers, cell phones, and monitors—is staggering. Landfills are overflowing with castoffs that can also unleash toxic elements into the environment. When you upgrade to new models, take your old equipment and donate it to a non-profit. They'll appreciate the offer and you might be eligible for a tax write-off. In instances where equipment can't be reused, give it to a reputable recycler that follows proper protocols.


5. Decorate your office with plants

We may take them for granted sometimes, but plants are one of the best ways to help your business operate efficiently and cleanly. Plants scrub the air, minimizing amounts of dust and other particulate matter. They also help to regulate indoor heat and humidity levels, and release oxygen for a healthier working situation.


Taking simple steps like these can have a measurable impact on the environment and your wallet—that’s truly going green.


Bank of America, N.A. engages with Touchpoint Media LLC to provide informational materials for your discussion or review purposes only. Touchpoint Media LLC is a registered trademark, used pursuant to license. The third parties within articles are used under license from Touchpoint Media LLC. Consult your financial, legal and accounting advisors, as neither Bank of America, its affiliates, nor their employees provide legal, accounting and tax advice.


Small-Biz-Thumbnail.gifThe number of small businesses in the U.S. continues to grow, with more than a third started and owned by women. These small companies cut across all industries and sectors, and in fact, have been major job creators over the last decade.


These are just a few of the highlights from our snapshot of the status of small business today. Read on to find out the top five small business growth industries, the most entrepreneur-friendly states, and other interesting small business demographics.


Click here to view the infographic.   You can also download a PDF version for printing by clicking here.

Note: We're celebrating small business all month long.  As a small thank you, we’ve compiled our newest and most popular content for you here.

Millennials-Thumb.jpgWith the economy mostly healed from the recent recession, more millennials are choosing to forge their own path in the business world. According to the Global Entrepreneurship Monitor, a joint venture between Babson College and London Business School, 18 percent of Americans age 25 to 34 launched or ran a small business in 2014, compared to 15 percent in 2013.


The traits that define the typical millennial—idealistic, confident, environmentally conscious, self-absorbed, creative—coincidentally lend themselves to entrepreneurship. Add a little tech savvy and the exuberance of youth, and you have the demographic potential to redefine the small business community and the economy overall.


Click here to read the full article (PDF).

Note: We're celebrating small business all month long.  As a small thank you, we’ve compiled our newest and most popular content for you here.

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