Lease as a modern instrument of business financing

Lease as a modern instrument of business financing

It`s not a secret that the modern world needs efficient business methods. Entrepreneurs often have a problem how to get money for purchasing necessary equipment or for upgrading the existing. One of the most efficient and flexible resources is leasing. What it is and how it works was told and, importantly, shown by using specific examples in Odessa during the press tour to the leasing company “TEKOM-Lease”, which was arranged by the Association “Union of Lessors of Ukraine” with the support of the USAID Project “Transformation of the Financing Sector”. The fact of no small importance is that TEKOM-Lease has shown the best rates for 9 months in the current year in increasing the volumes of financing of a new business: in comparison with the same period of the last year, the increase is as much as 250 %! This growth is related to new projects as explained in the company. But first things thirst!

TEKOM-Lease is a universal company specialised in three main aspects: leasing in the field of the marine sector  – financing of various infrastructure facilities in the territory of seaports; agricultural leasing – financing of agricultural machinery, from rigs to carriages (wagons) transporting grains; leasing of transport and equipment. Herewith, lease is considered as rent, not as an investment global mechanism allowing to satisfy the customer requirements. TEKOM-Lease is a groundbreaker in the infrastructure leasing. Here they construct on a turnkey basis. “From the client`s viewpoint, it is very easy as he gets a ready facility with the first standard payments,” the General Director of TEKOM-Lease, Pavlo Mukhin, said. Hearing the word “lease”, ordinary guys usually have the main association – car leasing, when it is the simplest object though, as noted in the company. Now, the service on leasing of cars, mechanisms, agricultural machinery and equipment is more than just wanted. But the most perspective aspect, as Pavlo Mukhin thinks, is real property leasing that makes it possible for young people to have their personal dwellings. This type of leases allows moving to the apartment already and making payments with the minimum initial payment of, for example, 10-15 % depending on the cost. “A good developer is chosen, the entire halls are purchased. Due to a big scope, there is a possibility to set a good price, even at 1 % per annum. The leasing company wins with the resale already. At this, sure, it is better to work with a built house,” Pavlo Mukhin told.

TEKOM-Lease provides its clients with great benefits in the leasing of agricultural machinery and equipment. Here a good price may be set for the service, with a discount for the latter, for the insurance and the object itself as well. A positive moment is that the leasing company deals with all the administration matters at the same time. Pavlo Mukhin made an emphasis on the principal distinctions of leasing from loans by using a specific example of the elevator when the client did not have anything to pledge. The leasing company purchases the equipment and becomes its owner. If a client goes to a bank, not many people are ready to provide the financing of future facilities while having nothing now. It is likely that the financial institution will not grant a credit, loan. An elevator is constructed during a year, so there is no pledge. Besides, the leasing company undertakes risks of the elevator construction. The second example is the purchase of a car, machinery: “When a client comes to a bank, the bank appraises his financial status and estimates its risks when it provides the financing, for instance, 60 to 40. In the leasing company, you can get the financing with a smaller balance for a longer term as the company is always an owner of an object to be purchased,” Pavlo Mukhin pointed out. Leasing companies are more flexible, their activity is not governed by the National Bank, so there are no such limitations as at banks. The company estimates risks on its own, makes a decision on financing the object, when banks have to follow the procedure.  An undeniable advantage is that the leasing property may not be distrained by third parties. When, for some reasons, the client`s property is attached, the property on lease may not be attached. Furthermore, the client has all the ownership rights, except the right of disposal. It is interesting that TEKOM-Lease is just about a single company participating in tenders on public services. The company won two of them. “Though the work with such tenders is aches and pains on the part of the verifying bodies. But for us I see a perspective in taking part in Odessa municipal programs, for example, in the public transport procurement,” Pavlo Mukhin noted.

According to the customer structure, medium business with the proceeds of up to 1 billion UAH, prevails at TEKOM-Lease, what is 75 %. 10-15 % is large corporations, and 5 % is small ones.

The best proof of the efficiency of leasing as an instrument of financing is a personal communication with leaseholders. So, during the visit of the Odessa Port facilities, the unique appliances and equipment for grain loading were presented, in particular, the mobile loading transporter NEUERO. Thanks to it, grain is gathered from the grain storage tubes and loaded to a ship or back. Concerning the capacity, the speed of loading is 800 tons per hour. To the question “Why did you chose leasing not credit?”, the leaseholder, CTO of Olympic Coupe International, Maksym Panchev, gave an answer: “It is handy. Optimal conditions and service are provided.” The Odessa Port has already got a grain handling complex. It has been operating since 2015. The second one will be installed till the end of this year. We should point it out that the port elevator is not just a place for storing grains, but a powerful logistic complex. At this, not less important is to select a right location. In Odessa, we have available three elements: port, railway, pier. Another facility: the complex “Novotech-Terminal” had been constructed for 9 months at the Odessa Port. “At this moment, we can see the construction of the second line of four. After completed, 8 silos will be operated, the height of one is 29 m,” Vitalii Zinchenko, CTO of Novotech-Terminal told us. The technical performance of the loader line is 1000 t/h. “They are our first clients in the equipment leasing. We started our work with the leasing of specialised machinery and equipment so to operate in the port territories, and are very glad for our collaboration. We are going to finance the second line of construction as well. The contractors are from Ukraine, the equipment is offshore. The lease includes a set of silos system and equipment with the cost of several millions EUR. In such a way, we participate in the second construction line. The third one is negotiated,” Pavlo Mukhin pointed it out.

“Lease is not just an instrument of financing, but a socially oriented business. It is one of the ways to develop the infrastructure, to modernise it. Leasing is good for small and medium business, and has great perspectives. But, sure, we should deal with its promotion,” such a conclusion was made at the meeting.

 

Svitlana Penzova, Odessa