Add me to mailing list    |           |      Search

Sales Make it Happen

Lease Packaging

by Robert Teichman, CLP

Recently I discussed the importance of moving into larger transactions in addition to working with application-only leases, and talked about the importance of learning packaging techniques.

Packaging doesn't mean collecting bunch of financial statements and dumping them on a funding source in hopes that the funder will magically transform the material into a coherent application. It is the broker/lessor's responsibility to provide the funder with more than the bare bones.

Large deals are good business, but they require attention to detail. It is important to know as much as possible about the deal, the company, the guarantors and the equipment, and be able to communicate that information to the funding source. Often, funders do their own due diligence, including checking banks and trades and performing financial analysis, however a narrative detailing the transaction is necessary as it tells the story about the company, why they want the equipment and how they are to pay for it.

The minimum components of a good financial package include the Narrative, Lessee Information, Equipment Information, Terms of the Deal, Bank and Trade References, Financial Information on the Lessee (and any guarantors) and preliminary Financial Analysis.


Each segment of the Narrative should answer the questions, "who, what, where, when, why and how?" The Narrative should cover the entire story about the deal, the company, its financial condition and trends. For instance, in the introduction describe who are the participants (customer, vendors, guarantors, related companies, banks, trades, stockholders/owners, other interested parties?), what is the deal (rate, term, residual, fees, deposits, advance payments?), where are all the parties and the equipment, when will it happen, why (is the equipment needed; any unusual requirements?) and how (will the deal be funded?).

In the same way you can describe all the other aspects of the transaction.


Lessee Information must include the name, address and telephone numbers, equipment location (if different), time in business, names of the stockholders/owners and their percentages, and company type. And yes, funders see a lot of applications without this basic information.


Equipment information should include the name and address of the vendor and the equipment location. If the lease is a master lease, all the equipment details may not be available at the time the application is submitted. In that case, a general description will usually be acceptable. Equipment justification and purpose is very important, whether the transaction is going to a collateral lender or to a balance sheet lender, even though the latter will not be as concerned with the collateral value as the former.

Describe the TERMS OF THE DEAL

if you have not yet covered it in the Narrative.

Professionalism is in the details. For instance, make sure you collect all the material needed, such as the complete tax returns (and not just the first four pages) and the complete financial statements, including the accountant's cover letter and all the footnotes. Check the package before it is sent out to the funder to make sure that all pages are copied. Sometimes lessees supply two-sided copies, which may be overlooked in the copying process.

Always verify your funder's requirements be fore sending the package. For example, some funders may require three years of financial information. If you send only two years of statements your transaction will be delayed.

Your Financial Analysis can be as complete or as brief as you choose, but it should be enough for you to understand and explain the financial condition of your customer. There are various standard financial analysis spreadsheet programs available, or you can devise your own. You can also ask your funders if they have a format you can use.


Usually this includes a recap of the strengths and weaknesses of the deal. Try to be as objective as possible. This is not always easy to do, but don't omit any negative information. Remember that credit managers hate surprises, particularly negative ones. However, they appreciate a package that shows that the lessor put time and effort into its preparation.

Funders are flooded with applications. The package which is missing information and is disorganized will either be returned, or will, at best, be delayed. A well-prepared, organized and neat package will always get faster attention and service, and therefore a better chance of approval. And, it will demonstrate to your funder that they can expect a professional package from you, the leasing professional.