So I will take option 4 from a previous post since Travis made the point. "Up to 60 months with $1 buyout is the same as a 5 year bank loan." I want to run debt free as soon a possible. That being the case I don't lease and have not leased to keep debt down. I do have a start-up loan that is being paid on a little slower than I would like, but we have paid off 1/2 of it in < 5 years and based on our payments, we are cash flow positive. Granted, my WISP is a lot smaller than many that post here and our growth rate is small, but some of that is managing growth to stay cash-flow positive. I have seen several companies die because they became cash rich, but still could not cover the debt.
Travis Johnson wrote: > The banks can sell a car with little effort. They already have > relationships with dealers and auctions. And often, if the consumer's > credit is questionable, the dealer will guarantee to take the car back > if the loan defaults. > > Who is going to buy a $10,000 radio that has been repo'd? Even for > $5k, I wouldn't touch it. I'd buy a new radio with warranty, that I > know is good and hasn't been fried or broken. > > The banks will never loan on the equipment alone. There is no security > there... but again, why do you need a bank loan for equipment when you > can just lease it and get the same results? Up to 60 months with $1 > buyout is the same as a 5 year bank loan. What's the difference? > > Travis > Microserv > > Tom DeReggi wrote: >> Maybe when talking about CPE. >> >> But what about when one is talking about a $10,000 Part101 radio? >> >> Just like a car, all that the lender should need is to "hold the title" of >> the radio until paid off, and get a down payment of $2000 to cover the cost >> of tower climber/repo man, and a signed letter of authorization from lanlord >> stating the location of the tower gear is installed on and they acknowledge >> that the gear is not abandoned equipment. (So it does not automatically >> become property of landlord in 4 months, and teh landlord knows the >> equipment owner has first rights to the gear). >> >> Think about it... Wouldn't repo costs be reduced when the repo man knows >> exactly where to find the radio? A car can easilly be relocated and >> hard-to-find, when the owner skips town. >> Plus the home likely has an owner with a shot gun or a big dog, which the >> tower/MTU likely does not. The MTU building might even have a security >> guard to escort teh lender safely to the roof :-) >> >> >> Tom DeReggi >> RapidDSL & Wireless, Inc >> IntAirNet- Fixed Wireless Broadband >> >> >> ----- Original Message ----- >> From: "jp" <[email protected]> >> To: "WISPA General List" <[email protected]> >> Sent: Friday, May 22, 2009 11:13 AM >> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability >> >> >> >>> In a worse case scenario, a car is probably considerably easier to repo >>> than the antenna on my roof and radio in my attic. And the car would be >>> worth a magnitude more money. The installed infrastructure is worthless >>> if it costs a huge amount to get to it. >>> >>> On Thu, May 21, 2009 at 07:27:09PM -0400, Tom DeReggi wrote: >>> >>>> I've never found a lender willing to lend against using the in-place used >>>> equipment as colladeral. >>>> It is the biggest double standard. >>>> I find it highly ironic that they'll use a car for colladeral that looses >>>> 50% of its value the day it leaves the lot, and has a rate of failure and >>>> risk of damage higher than just about any product on the market, and it >>>> has >>>> a huge cash burn (gas :-). but yet lendors won't put equivellent value on >>>> wireless gear, that holds its value, Ebay boasting easilly 50% after 3-4 >>>> years of use, even after fully depreciated. >>>> I'll never understand the lending market. >>>> >>>> Tom DeReggi >>>> RapidDSL & Wireless, Inc >>>> IntAirNet- Fixed Wireless Broadband >>>> >>>> >>>> ----- Original Message ----- >>>> From: <[email protected]> >>>> To: "WISPA General List" <[email protected]> >>>> Sent: Thursday, May 21, 2009 1:55 PM >>>> Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital >>>> Availability >>>> >>>> >>>> >>>>> Answers in-line. >>>>> >>>>> >>>>> ++++++++++++++++++++++++++++++++ >>>>> <insert witty tagline here> >>>>> >>>>> ----- Original Message ----- >>>>> From: "Charles Wu" <[email protected]> >>>>> To: "WISPA General List" <[email protected]> >>>>> Sent: Thursday, May 21, 2009 8:49 AM >>>>> Subject: [WISPA] Quesiton on Funding / Financing / Capital Availability >>>>> >>>>> >>>>> >>>>>> With all the hype being generated by the stimulus bill, we have been >>>>>> approached by a multitude of third party financial organizations that >>>>>> have >>>>>> a renewed interest in potentially financing rural broadband...now, >>>>>> specifically, for WISPs, in the past, equipment leasing has been a >>>>>> very >>>>>> popular option for financing, but in looking at our numbers over the >>>>>> past >>>>>> year, I've noticed a marked decline in the amount of leasing that we >>>>>> do - >>>>>> that said, I have the following questions for the listserv about >>>>>> financing >>>>>> >>>>>> Assuming that WISPs are still need to buy equipment... >>>>>> >>>>>> 1. Are you able to just purchase equipment out of cash-flow >>>>>> organically >>>>>> generated from operations >>>>>> >>>>> Other than originally starting with our own personal seed money, that's >>>>> what >>>>> we've done. >>>>> >>>>> >>>>>> 2. Have you gone to more traditional forms of money (e.g., bank / SBA >>>>>> / >>>>>> RUS loans)? >>>>>> >>>>> I could not qualify for any of them. >>>>> >>>>> >>>>>> 3. Are you doing more vendor leasing programs (e.g., Motorola 3% >>>>>> financing >>>>>> deal) >>>>>> >>>>> Never sought any. >>>>> >>>>> >>>>>> 4. Have you not been able to borrow money due to the credit crunch >>>>>> (e.g., >>>>>> not deploying as aggressively) >>>>>> >>>>> My corporation hasn't ever been able to obtain hard money credit. In >>>>> fact, the "credit crunch" start last Fall raised my "30+ day past due" >>>>> amount from a piddly $1200 to at one time to almost $13,000 in just >>>>> four >>>>> months. That almost put us under, and we're still barely scraping by >>>>> until >>>>> our seasonally variable cash flow revives come August, with still >>>>> several >>>>> thousand on the books that's very slowly getting chipped away at. >>>>> >>>>> >>>>>> 5. Are you holding off on deployments because of the economy >>>>>> >>>>> No, we're holding off due to lack of cash flow. We have plenty of >>>>> people >>>>> waiting for us to build infrastructure out to them. >>>>> >>>>> >>>>>> 6. Have you gone to Agility...<cough> Louie the loanshark =) >>>>>> >>>>> After much discussion, being some of the first people Agility >>>>> contacted, >>>>> we >>>>> have not done any business with them. In my estimation, they wanted >>>>> control over our business and day to day decisions, which we concluded >>>>> was >>>>> both unwarranted and unwise. >>>>> >>>>> >>>>>> Or any other thoughts / comments on this topic? >>>>>> >>>>>> >>>>> WISP equipment is not really a "commodity" in that there is almost no >>>>> market >>>>> for it outside of the "maker-vendor" relationship. Other than Ebay, >>>>> and a >>>>> couple of people who attempt to do it piecemeal, there is no "market" >>>>> which >>>>> stabilizes the value of used equipment, making them a commodity you can >>>>> borrow against. >>>>> >>>>> Perhaps it would be more useful, if vendors had the ability to get >>>>> capital >>>>> and create stable working and short term credit relationships with >>>>> their >>>>> buyers, kind of like the used car market. >>>>> >>>>> >>>>> >>>>> >>>>>> -Charles >>>>>> >>>>>> >>>>>> -------------------------------------------------------------------------------- >>>>>> WISPA Wants You! 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