A MESSAGE FROM THE PRESIDENT OF BDM FINANCIAL SERVICES, INC.

BDM Financial Services, Inc. just completed its 15th year in business.  In the equipment finance world the number one most important stage for the lessee / debtor is the proposal stage. The lessee / debtor is unfortunately not doing enough due diligence to find out the actual all in rate.  I have seen over and over CFO’s, Controllers, decision makers miss end of term notices which result in lease extensions (rate increases substantially).  Additionally, the proposal stage is like a broken record for me.  The lessor/debtor believes most of the time, the stream rate is their all in rate.  This is extremely frustrating, as they are being hasty with their due diligence, and not finding out their all in rate.  This is a very simple process, a lessee / debtor needs to hold the proposal maker accountable in writing prior to signing off and sending in $$$: 

1. Request an amortization schedule (T-Value) on the Finance companies letterhead signed off by an officer. 
    

2. Demand in writing the approximate interim rent, (one week vs three months will have a major impact on your all in rate).
    

3. If you are being proposed a $1.00 Buy-out on your lease, ask the proposal maker to provide you with another proposal as a loan, as there should be no difference in rate (a loan may be a safer decision). 
    

4. Make the proposal maker put in writing that if you are required to have a notice, them or their assignee or designee must give you 30 to 60 days notice, not 180 day notice and make them put in writing that the finance company will notify you annually of your exact notice date in writing.
    

5. FMV?  I am shocked to see lessees who have no idea that their lease is an FMV. Again, ask for an Amortization schedule (T-Value) to define your all in rate including an FMV (if applicable).
    

6. Evergreen Clauses:  If ever there was an aspect of equipment leasing which juxtaposed the legal with the unethical, the "evergreen clause" would be that area. An evergreen clause, or evergreen lease as the word implies, signifies a contract that goes on forever. In actuality, it can end, but only after the lessee sends, within a specified time period, a letter stating his intent to return or purchase the underlying equipment. In practice, the procedure is deliberately made cumbersome by the Lessor. Hence, the lessee unwittingly pays in excess of the total price to which the parties agreed. Most lease and finance agreements have a $1.00 buy -out. This should nullify any chance of being "ever greened". Buy-outs of Fair Market Value not to exceed 10% fixed and a contract without any end position will have evergreen verbiage. These range from monthly automatic renewals going month to month or some automatically renew for 12 months. As a result the customer doesn't recall 5 years prior what they signed. They keep getting invoices for the same payment amount and their A/P keeps sending the payments in. Months later they sometimes catch it, but it's too late. They still have to give the leasing company 90 days notice. So now they have to pay 3 more payments then buy the equipment for the designated amount. Sound fair?
   
    

7. INTERIM RENT:

The equipment is delivered on the 5th of March. The lease/finance contract defines the "delivery date" the "acceptance date" and the "commencement date".  All of which is very confusing. It states the lease payment will be due on the date specified by the Lessor in the month following the commencement day.  So they bill for the "interim period" which is from March 5 to March 30, 25 days. Sounds nice and friendly- you only have to pay for a partial month. However, the lease doesn't actually start until April 1st. At the end of the lease term they bill you again for the month of March. They get almost a full extra payment, just for asking. All of this is perfectly legal as it is "stated" in your contract.

Even during these economic downturns along with seeing many of our competitors fall to the wayside BDM has continued to grow and prosper in a highly competitive, rapidly changing business climate. Our achievements are unprecedented and were made possible through the TRUST, Passion, and Commitment to our clients, as well as lending institutions, strategic partners, and vendors. Thank you for all that you have contributed to us over the past 15 years and we look forward to giving you the TRUST in knowing when you move forward with BDM, you will have learned more about the lease /loan process than ever before.  Much success to everyone, and most of all stay happy and healthy.

Sincerely,

Brian F. Maurer
President
BDM Financial Services, Inc.