Fire Truck Leasing Newsletter - Volume 3

Published by Commercial & Municipal Capital
- - specializing in tax-exempt loans for fire trucks and fire stations.

Included in this issue:
Tribute to our Heros.
The wisdom of having formal financial statements.
Does it really make sense to borrow from your local bank?
Interest rates are extremely low - now is the time to finance.
Visit our Web Site.
Winners of Drawings for GPS Systems - Baltimore and New Orleans

GOD BLESS AMERICA

UNITED WE STAND

We at Leasing 2 want the family members, loved ones and brother fire fighters of the gallant and heroic fire fighters that were lost in the World Trade Center to know that they have our prayers and heart felt sympathy. The same goes for all those that have lost their friends and loved ones on that dreadful day.

There are many volunteer fire departments that do not have formal financial statements. For that matter, there are a surprising number of fire districts that also fall into that category. I guess that is OK as long as these departments can function independently from the outside world but there are a couple of things that need to be considered here.

Tax-exempt leasing is becoming more and more popular with fire departments of all types. Usually the amount financed is sizable - usually $150,000, $250,000, or even more.

Lenders do not lend that much money to anybody (including fire departments) that cannot give them a clear picture of what their financial situation is and formal financial statements is about the only way that can be done. To a lender, well prepared financial statements can indicate not only how capable the department is to pay back the loan but how well the department manages its business activity. Actually, the absence of good financial statements is an early warning that a department's money is not well managed.

These statements do not have to be long and complex. A simple Income and Expense Statement showing your major categories of receipts and disbursements and a simple Balance Sheet showing your assets (what you own) and liabilities (what you owe) is adequate. Also, a Budget showing what you anticipate your receipts and disbursements will be for the coming year will show that you have a plan and goals on how you will manage your money for the upcoming year.

A local accountant can show you how to set up your various income and expense accounts and asset and liability accounts. There are various accounting systems that run on PC's that are available and I am sure that you have someone in your department that would be happy to run it for you.

I suggest that you run your financial reports at the end of every month and that those reports show your total receipts and expenses by account for that month, and for the year-to-date. A third column showing the budgeted amount for each account is also very useful.

And remember, the most important reason to have good financial statements is to help you manage your department's money. It goes without saying that your board should closely review your financial statements each month.

And, by the way, your financial statements will help you get a tax-exempt loan when you need one!

It is always good to see a local bank that wants to support their local fire department by providing loans at favorable interest rates and those banks are to be congratulated.

However, Leasing 2's interest rates are lower than the local banks more often than not. The trouble is that, too often, the local banks still expect the fire department to favor them with the loan and often exert a certain amount of social and political pressure on the department for the business.

An example of this is a recent situation where Leasing 2's annual payment was $720 less than the local bank's annual payment on a 10 year loan. After some local pressure the department decided to give their loan business to the local bank explaining to me that the $720 difference was not enough "to justify not keeping their business in the community".

Only after I explained to the department that the difference was not simply $720 but 10 years times $720 or $7,200 did they change their mind.

It is also worth mentioning that federal regulations for tax-exempt loans for volunteer fire departments call for a very unique set of steps and documents that many local banks do not know about. If the bank's loan files are audited by a federal agency and it is found that your loan has not been properly documented it could cause you undue problems, expenses and time spent to rectify the situation.

Interest rates are lower right now than they have been in the last 10 years. If you are considering financing any capital purchases in the next year or two it would make good business sense to arrange the financing now to take advantage of these low rates. Keep in mind that it usually takes a month or so to make purchase and finance decisions and fire trucks and fire stations usually take close to a year to complete. Also, we can lock today's low rates in for you but your first lease payment can be scheduled for up to a year after completion of the truck or station.

Also, if you are currently paying on a sizable fire truck or fire station loan the chances are good that we can save you thousands of dollars every year by refinancing those loans.

Please call Whitey Meyers at 800-287-5155 if you feel you might be interested in considering this and have some questions or would like to receive a preliminary quote on a lease.

Our web site is the only site on the internet that is exclusively devoted to fire department financing. There are many informative and interesting topics offered. Check it out!

http://www.firetruckleasing.com

Attendees who visited our booths at two recent conferences in Baltimore, MD and New Orleans, LA had the opportunity to register for a drawing to win a Garmin GPS Personal System Navigator. CONGRATULATIONS TO THESE WINNERS:

Baltimore:
Deputy Chief Charles Pritt
Locust Creek Fire Department
Bunpass, Virginia

New Orleans:
District Chief George Harlow
Klein Volunteer Fire Department
Klein, Texas

Since Leasing 2 will have a booth at every national and regional conference and several state conferences through 2002 you still have a chance to win one of these GPS Systems by registering at our booth at any of those conferences.