Equipment financing can work hand-in-hand with relief funding programs
The U.S. government is providing an unprecedented amount of money to help the country recover from the COBID-19 pandemic. On March 27, 2020, the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES), a $2.2 trillion economic stimulus bill. Shortly after taking office in January 2021, President Joe Biden proposed a $1.9 trillion economic stimulus bill. The details of Biden’s proposal continue to be hashed out, but in the end the federal government is likely to allocate something in the neighborhood of $4 trillion to help the country get through the pandemic.
Equipment leasing companies like North Star Leasing find themselves in a unique position. Funding purchases can help mine the vein of public assistance money being pumped into the economy by state and federal governments, and in doing so help businesses grow and emerge on the other side of the COVID-19 pandemic even stronger.
Simply put, nimble, creative financing offered by North Star Leasing can allow your businesses to quickly leverage the assistance being offered and help fortify you for the future.
A real world example
About an hour west of Nashville, Gutter Bound Distillery was just six months old when the COVID-19 pandemic started. Gutter Bound quickly pivoted to make hand sanitizer, albeit just three gallons a day. Gutter Bound soon realized they needed to invest in additional equipment to increase production.
Under the 2020 CARES Act, the state of Tennessee set up a grant program (Coronavirus Agricultural and Forestry Business Fund) that awarded money to food and value-add production businesses like Gutter Bound Distillery. The issue for Gutter Bound was that the grant was a reimbursement program, meaning the 6-month old company needed to pay upfront around $200,000 in order to buy a mash tun, fermentation tanks, control boxes and other equipment.
“Here was this great opportunity to get what we needed, expand our business and help out the community – dangling like a carrot in front of us,” said Jess Markham, co-owner of Gutter Bound. “The problem was we couldn’t qualify for the money since we needed to pay it up front.”
Gutter Bound got creative. They worked with North Star Leasing Company to procure the short-term financing they needed to buy the equipment. North Star Leasing was repaid when the state relief program reimbursed the distillery for their investment. With the additional capacity for hand sanitizer (about 15 gallons a day) and liquor production, Gutter Bound now stands prepared to push higher as consumers settle into what is becoming the new but ever-changing normal.
Opportunity might knock
Business owners should keep an eye out for opportunities that use federal reovery money to help offset equipment purchases. They’ll come from organizations both large and small. Under the 2020 CARES Act, for instance, the city of El Monte, Calif., had grants of up to $10,000 for small businesses to invest in any equipment needed to continue operations. The state of Connecticut administered grants up to $75,000 for companies to buy equipment that produced critical supplies needed to combat the virus. Florida’s Seminole County offered grants for equipment purchases needed for companies to reopen safely. Hawaii Electric oversaw a grant program that allowed for the replacement of commercial kitchen equipment with new, more efficient models.
No question: businesses are going to be enticed to adapt and grow in this new normal and there will be state and federal money to assist with that. For many businesses, that includes investing in equipment and North Star Leasing certainly knows a thing or two about that.