ELA Responds to New Jersey Star Ledger Article on Norvergence

ELTnews

In response to the October 27, 2004 Star Ledger article "Customers left holding the bag: NorVergence has gone under, but customers still face years of bills," Equipment Leasing Association President Michael Fleming responded with the following letter to the editor. The letter was sent to the reporter and the editor of the paper and is pending publication.

Regarding the October 27, 2004's Star Ledger article "Customers left holding the bag: NorVergence has gone under, but customers still face years of bills," the Equipment Leasing Association strongly disagrees with the article's assertion that the Norvergence case illustrates risks involved with leasing. With more than 20,000 leases signed every day without issue or interruption, leasing affords most small businesses the opportunity to acquire the assets they need to make their business productive.

The Norvergence matter is not an issue about leasing. It is about a business that sold a service that they were not able to deliver. Unfortunately, many Norvergence customers leased the equipment necessary to make the service work. The problems related to equipment they no longer need would be the same whether the customer had leased, bought for cash, or borrowed money to buy the equipment.

In the Norvergence matter, Norvergence's customers selected the equipment and signed acceptances that they received the equipment and the equipment worked. The lessors did not select the equipment or make judgments that it was the appropriate equipment for the business. We encourage all lessees to visit www.ChooseLeasing.org before making an equipment acquisition. From there, they may access a lease versus loan analysis, a glossary of terms and questions to ask before signing a lease.

Small businesses depend heavily on leasing to acquire the equipment they need to jump-start their businesses. A recent study conducted among the 2004 SBA State Small Business Winners found that 86% of the small businesses lease some or all of their equipment. Many small businesses wouldn't be able to start their businesses without leasing as a financing option.

Norvergence was an unfortunate business failure, but it wasn't a failure of the leasing transaction. When this business failed, it created a loss for everyone who obligated or spent money, including the leasing companies.