Recently, a law firm that was moving their offices came to Tiger Leasing looking for an equipment lease for furniture and computer equipment. The law firm is a strong company and had a substantial line of credit in place with their local bank. Tiger was asked to quote a rate for the lease of office furniture and computer equipment, and the law firm told our team to "come up with the lowest rate because you are competing with our bank."
Thanks to our previous experience and knowledge of the field, we knew that the firm was probably commanding a rate of a point or two above prime. How could Tiger compete with a rate of 5% or possibly lower? Quite simply, we couldn't. We had to look outside of the box to come up with a creative solution. We presented what we could offer as a compliment to their bank line. Understanding the big picture, and having the experience to see what the law firm needed allowed us to come up with a plan.
The firm was going to incur heavy costs in the construction of their new space as well as in the acquisition of new equipment. With every conversation, the managing partner kept mentioning rate and Tiger Leasing kept focusing on the unforeseen costs that we've seen arise before in these situations, and the need for keeping their credit line available. Our work with similar clients in the past allowed us to recognize the issues the firm could run into in the future.
In the end, the managing partner decided that the low rate on his bank line was important but so was the need to keep some of his line available for future use. He used some available cash as well as part of his bank line to buy some of his equipment and engaged us to lease approximately 60% of his equipment budget. He realized that his "blended rate" - the average rate he was paying between his bank rate and my rate - was extremely competitive and he still had a comfortable cushion of bank borrowing available to him if he needed it in the future.
At Tiger Leasing, we have the experience to understand the big picture. Many people only look at the bottom line, or the initial price point, when in reality other factors need to be considered. Leasing allows companies like this law firm the ability to conserve their cash and working capital. Their resources are not all tied up in the equipment and construction purchases, so money will be available to them for unexpected setbacks, marketing, working capital, or other cash needs.
It is important to trust the people you do business with. Look for the industry leaders that will be able to look at your big picture and help you find the best solutions. When you're so focused on your company, it's good to have other professionals looking out for you as well. Research your options, understand your company's needs and limitations, and work with the companies that are leaders in their field.