A Roofing Contractor Drives Sales and Leads with Fast and Easy Energy-efficiency Financing

After 15 years in the roofing business, I’ve seen countless construction, design trends and sales methods change over time. The one thing that has always stayed the same? That first discussion with the customer around the kitchen table, looking at the scope of the job and then getting right down to finances. It’s the conversation that can make or break a project: Can the customer get the financing he or she needs to complete the job? Do we need to offer other options? Scale back? Or, even better, can we expand the job and sell into higher-quality products and designs built to last?

Supported by local governments, the YgreneWorks PACE program allows property owners to perform energy-efficiency and resiliency upgrades on their homes or businesses with zero down, a low interest rate and simple annual payments made through their property taxes.

Supported by local governments, the YgreneWorks PACE program allows property owners to perform energy-efficiency and resiliency upgrades on their homes or businesses with zero down, a low interest rate and simple annual payments made through their property taxes.

Regardless of project size or complexity, customers have two top-of-mind factors when considering a reroof: cost and time. As roofing contractors, we strive to deliver the highest-value renovation in the shortest time possible. To keep our team at Cal-Vintage Roofing of Northern California, Sacramento, at the industry forefront with competitive product and service offerings, we’ve developed a partnership with Santa Rosa, Calif.-based Ygrene Energy Fund to offer customers the latest in financing. The result has been a much happier kitchen-table conversation, alleviating customer concerns about reroofing costs and ultimately increasing our business by 20 percent.

KEEPING PACE WITH A GROWING TREND

Ygrene Energy Fund is a leading multi-state provider of Property Assessed Clean Energy (PACE) financing. Supported by local governments, the YgreneWorks PACE program allows property owners to perform energy-efficiency and resiliency upgrades on their homes or businesses with zero down, a low interest rate and simple annual payments made through their property taxes. These “green” roofing projects can include everything from cool roof shingles that slow heat build and save on electricity costs to reflective insulation providing a better thermal barrier for a building.

Increasingly, Cal-Vintage customers are more concerned with how projects impact the environment and are always interested in ways to lower utility bills. In fact, many PACE-qualifying upgrades are now being mandated by law; for instance, Title 24, Part 6, of the California Code of Regulations requires that residential and nonresidential buildings adhere to strict energy-reduction standards mandated by local governments. This has resulted in an uptick in owners who need major roof renovations and also need a way to afford the upgrade. As similar laws gain popularity amongst U.S. cities and states, PACE is a valuable tool for customers looking for better reroof financing options. As a large roofing company, we at Cal-Vintage must take it upon ourselves to offer every way to comply with these rules.

To qualify, Ygrene considers the equity in the property, not the personal credit of the property owner, unlocking finance doors for entire groups of customers. So far, more than 40 Cal-Vintage clients have taken advantage of the PACE option to avoid dipping into savings, escape lengthy paperwork and skip extensive background checks. Securing traditional reroofing loans can be a long and difficult process. With PACE financing, our customers have been able to complete larger, longer-lasting projects faster because the financing comes through in two to three days rather than two to three weeks.

BECOMING A CERTIFIED PACE CONTRACTOR

many PACE-qualifying upgrades are now being mandated by law; for instance, Title 24, Part 6, of the California Code of Regulations requires that residential and nonresidential buildings adhere to strict energy-reduction standards mandated by local governments.

Many PACE-qualifying upgrades are now being mandated by law; for instance, Title 24, Part 6, of the California Code of Regulations requires that residential and nonresidential buildings adhere to strict energy-reduction standards mandated by local governments.


Our job as roofing contractors is to provide the best value to our customers and community, and in a world of changing regulations and housing needs, this value extends to financing. The entire Cal-Vintage team is trained through Ygrene’s Certified Contractor Education program to know when and how to offer PACE financing as an option at the kitchen-table discussion.
The Ygrene education and certification program includes in-person training for our sales teams matched with webinars and online tutorials that can be accessed from the web anywhere, anytime. Topics cover all the information we need, including details about the PACE program, important consumer protections, step-by-step instructions for helping customers fill out the online application and how to ensure we receive our payment in a timely manner.

The Cal-Vintage sales team also received an in-person, individual training by a Ygrene regional area manager dedicated to our team. The training included information about program features and benefits, access to the web portal, the proposal tool and in- depth answers to our questions. As PACE requires a number of legal disclosures and approvals, our contractor team was briefed on the application and approval and funding processes so we could properly answer any custom- er questions. Additionally, Ygrene offers a support call-center to field any additional questions on the financing.

GETTING STARTED

We heard about Ygrene through a customer and reached out to the company’s local representative to become certified. The process was simple, and all of our questions were answered in the training session. Since the company’s inception, Ygrene has trained nearly 3,000 contractor companies in communities across its service territory. With $1 billion in approved applications and $350 million in closed contracts, Ygrene has been generating successful outcomes for customers and contractor partners across the U.S. Those interested in becoming a certified contractor can visit Ygrene Works’ website.

PHOTOS: CAL-VINTAGE ROOFING OF NORTHERN CALIFORNIA

PACE Financing is the Key to Unleashing Energy-efficiency and Renewable-energy Retrofits in Commercial Buildings

Architects, contractors and managers who make a living improving the energy efficiency of buildings know the drill: They fight hard for cost-effective energy-efficient designs, and they fight even harder to ensure these designs and systems survive cost-cutting efforts that can arise.

Through the GreenFinanceSF program, San Francisco-based Prologis used PACE financing to fund lighting upgrades, HVAC improvements and rooftop solar. These upgrades reduced purchased electricity costs by 32 percent. PHOTO: PACENation

Through the GreenFinanceSF program, San Francisco-based Prologis used PACE financing to fund lighting upgrades, HVAC improvements and rooftop solar. These upgrades reduced purchased electricity costs by 32 percent. PHOTO: PACENation

Technically sound projects don’t always get off the ground for several economic reasons. Sometimes the split incentive embedded in leases means the owner makes the capital investment but the tenant reaps the economic benefit. Other times, architects, contractors and managers must face the fact that they simply cannot get internal capital allocated to energy-efficiency projects despite their undeniable cost effectiveness. For small business owners, it can come down to lack of funds. For larger companies, the capital allocation process often translates into investment hurdle rates that are hard to attain because energy-efficiency projects must meet two- or three-year simple paybacks.

If an energy retrofit project makes economic sense and internal capital won’t be allocated to it, textbooks suggest the use of external capital. In practice, it’s not that easy. For small business owners, getting third-party financing often requires personal guarantees, some equity investment or other conditions. For larger companies, the use of external capital involves lengthy discussions that may include the downside of borrowing when a building’s holding period is up in the air, the cost of project capital versus corporate debt, and the balance sheet impact of the borrowed funds.

Enter Property Assessed Clean Energy (PACE) Financing. PACE is a tax-lien financing program that allows interested property owners to finance qualifying energy-efficiency and clean-energy improvements on their properties through a voluntary benefit assessment placed on their property tax bill.

This exciting form of third-party financing provides unique benefits to building owners:

The 542 Westport Avenue Shopping Plaza, Norwalk, Conn., financed a $285,000 lighting upgrade, which reduced electricity costs by more than $17,000 per year. PHOTO: Hartt Realty Advisors LLC

The 542 Westport Avenue Shopping Plaza, Norwalk, Conn., financed a $285,000 lighting upgrade, which reduced electricity costs by more than $17,000 per year. PHOTO: Hartt Realty Advisors LLC

  • The cost of PACE financing and the benefits generated can be shared with tenants, thus eliminating the split-incentive issue that derails so many energy-efficiency projects.
  • One-hundred percent of project costs, including soft costs such as development fees, can be financed through PACE, which removes the requirement for out-of-pocket expenses for owners.
  • PACE financing is available with flexible terms up to 20 years, making it possible to generate positive cash flow—and operating income—from projects with simple paybacks as long as 12 years. This increased operating income translates to higher property values for building owners.
  • PACE is entirely property-based financing. As a result, it requires no personal or corporate guarantees.
  • PACE is attached to a property tax bill, so the obligation to repay the financing automatically transfers to the new owner upon the sale of the property, along with the energy-saving benefits generated by the project. This eliminates any holding-period concern owners may have.
  • It’s generally accepted that PACE does not affect a building owner’s typical loan covenants, such as debt to equity ratios.

PACE funding is provided or arranged by a local government for 100 percent of a project’s costs and is repaid with a voluntary assessment during a term of up to 20 years. The property owner pays its typical tax bill, which now includes the PACE finance charge, and the local government redirects that payment to the investor.

Capital provided under a PACE program is secured by a lien on the owner’s property. Like other tax assessments, PACE assessments assume a first lien priority and the repayment obligation automatically transfers to the next property owner if the property is sold.

Similarly, in the event of default, only the payments in arrears would come due and the PACE financing does not accelerate. Because assessments are repaid through the property tax bill—a secure payment stream—PACE projects are seen as less risky than other financing mechanisms and, therefore, benefit from lower interest rates from the private sector with no government financing required.

The 542 West Avenue Shopping Plaza features a solar canopy that powers the exterior LED lights. PHOTO: Hartt Realty Advisors LLC

The 542 West Avenue Shopping Plaza features a solar canopy that powers the exterior LED lights. PHOTO: Hartt Realty Advisors LLC

PACE builds on a long history of benefit assessments that a government can levy on real-estate parcels to pay for the installation of projects that serve a public purpose, such as sewers and sidewalks. PACE serves a public purpose by reducing energy costs, stimulating the economy, improving property valuation, reducing greenhouse-gas emissions and creating jobs.

Pioneered by the city of Berkeley, Calif., in 2008, PACE is now a proven and effective tool to attract private capital to clean-energy projects. Commercial PACE programs are currently operating in 16 states and Washington, D.C., including more than 2,000 municipalities.

More than 700 energy-efficiency retrofits have been financed to date by commercial and industrial building owners using PACE. Indianapolis-based Simon Property Group, a global leader in retail real estate and an S&P 100 company, first used PACE in 2009 and has accelerated its use since then. Prologis, a leading developer of industrial real estate, used PACE to perform an energy-efficiency and renewable-energy retrofit at its headquarters in San Francisco in October 2012.

In Connecticut, hundreds of owners have elected to use PACE to retrofit their buildings, including the Norwalk Center, a family-owned shopping center, whose owner found PACE was ideal to finance energy-efficiency and renewable-energy improvements. In Bridgeport, Forstone Capital used PACE to retrofit the mechanicals and envelope of its 100,000-square-foot office building, which will save the owner nearly $250,000 in energy costs annually. Without PACE, it would have implemented only a fraction of its desired work scope.

Property owners across the U.S. are using PACE because it saves them money and makes their buildings more valuable. PACE pays for 100 percent of a project’s costs and is repaid for up to 20 years with an assessment added to the property’s tax bill. PACE financing stays with the building upon sale and is easy to share with tenants.

PACE is a simple and effective way to finance energy-efficiency, renewable-energy and water-conservation retrofits to buildings. Building owners who want to take advantage of PACE financing can find out where PACE is available via PACENation, a recognized source of impartial, independent and consensus-based information about PACE.

Trust in a Partner

By day, my husband Bart is an ag lender, loaning money to farmers for land, equipment and livestock. By night, he co-owns a sports bar in the lake town in which we live. When we got engaged, he joked about the roles I would soon be playing in his business. I laughed then, but once we moved in together and were married, I more consistently heard about the stressors he was experiencing in the bar business. Obviously, I wanted to take some of this stress off of him and, consequently, have been helping publicize the bar’s events for the past 10 weeks.

I’m no marketer, but I’ve been sharing knowledge from my career in magazines. I’ve started weekly meetings with the owners and managers, which has helped everyone’s communication. I’ve expanded the bar’s social media presence. And I’ve brought in one of my own trusted partners, a graphic designer who now is creating fliers, promos and coupons for the bar. At this point, I’m not sure whether my efforts truly are making a difference—though the bar has been packed the past few weekends—but I do know my husband is grateful to have me more involved.

Relying on trusted partners also can have a positive effect on your roofing business. For example, Pete Mazzuca III, co-founder, executive vice president and sales manager for Cal-Vintage Roofing of Northern California, Sacramento, explains his partnership with Santa Rosa, Calif.-based Ygrene Energy Fund in “Business Sense”. Through the partnership, Mazzuca’s roofing company now can offer customers YgreneWorks PACE financing for energy-efficiency and resiliency upgrades, including roofing, on their homes or businesses. Ygrene considers the equity in the property, not the personal credit of the owner, unlocking finance doors for entire groups of customers. Consequently, the partnership with Ygrene Energy Fund has increased Mazzuca’s business by 20 percent.

Trusting a partner’s expertise can ensure roofing projects meet a building owner’s needs while being cost-effective. In our “Cover Story”, Atlanta-based Diamond Roofing Co., which has its own sheet-metal shop, opted to partner with a supplier to source prefabricated edge metal for the roofing project at Gordon Hospital, Calhoun, Ga. The prefabricated edge metal had been formally tested to meet or exceed the FM 1-105 criterion required by hospital officials. In addition, by ordering the large volume of edge metal the hospital project needed, Diamond Roofing saved time and labor costs.

Last but not least, Thomas W. Hutchinson, AIA, FRCI, RRC, CSI, RRP, principal of Hutchinson Design Group Ltd., Barrington, Ill., and a member of Roofing’s editorial advisory board, often regales us with stories from his in-the-field experiences. In “From the Hutchinson Files”, Hutch explains how to be a better partner when communicating and coordinating between trades—in this case, plumbing, steel and roof design during implementation of roof drains according to new energy code requirements. Because—as Hutch will tell you—it’s not enough to just be a partner and provide generic details; you should be the best partner you can be and really think through roof system design.

Ygrene Energy Fund and Solar Roof Dynamics Offer Affordable Financing Options for Rooftop Solar

Ygrene Energy Fund Inc., a multi-state provider of residential and commercial PACE financing, announced a strategic partnership with Solar Roof Dynamics LLC, a premier distributor of best-in-class solar solutions for California’s roofing industry. Leveraging Ygrene’s unique PACE financing model, YgreneWorks, Solar Roof Dynamics can now offer consumers through its broad base of commercial and residential partners the ability to pay for their rooftop solar upgrades over time through property taxes.

Via Solar Roof Dynamics’ roster of expertly trained solar contractors, YgreneWorks is now making California’s cleanest, least expensive and most abundant renewable resource—solar—affordable for an even greater percentage of California’s businesses and homeowners, creating the potential for unprecedented growth. This is an exciting addition to Solar Roof Dynamics’ already innovative, value-added business model. Solar Roof Dynamics is transforming the solar industry by working directly through its network of authorized roofing contractors with extensive experience in installing roofing and solar systems. This network of contractors gives consumers the opportunity to install solar panels at the same time that they are replacing their existing roof.

“We have a long history of introducing quality solar products and services to local roofing contractors,” says Aaron Nitzkin, CEO of Solar Roof Dynamics. “With YgreneWorks, we can offer one of the best financing options for solar and roofing available on the market, reach more consumers, and most importantly, generate more clean, cost-effective solar energy to enhance California’s sustainable infrastructure.”

Available in more than 180 communities throughout California and Florida, YgreneWorks provides financing for energy efficiency, water conservation, renewable energy and climate retrofits for homes and businesses. PACE financing programs such as YgreneWorks are authorized by local governments in an effort to stimulate local economies, generate jobs, address climate change and provide constituents with access to low-cost, money-saving home improvement funds. Since its inception, YgreneWorks has approved more than $1 billion in funding nationally for upgrades to the built environment, producing more than $2.6 billion in economic stimulus, 15,500 new and sustained jobs and 65 megawatts of energy, as well as conserving 4.5 billion gallons of water and enough energy to power 1,026,635 homes for a full year and keep 1.2 million metric tons of CO2 from entering the atmosphere.

“California remains at the forefront of renewable energy innovation and the Solar Roof Dynamics partnership will ensure that PACE-financed solar power will be made available to as many homes and businesses as possible,” says Stacey Lawson, CEO of Ygrene. “We’re proud to support California’s accessible and cost-competitive solar installation platform.”

ELFA’s Website Offers Wider Range of Resources for Financing Equipment

Visitors to the Equipment Leasing and Finance Association‘s end-user website, Equipment Finance Advantage, will find new enhancements that make it a more powerful resource for helping businesses take advantage of the benefits of financing equipment. The site, found at www.EquipmentFinanceAdvantage.org, has improved navigation for a better user experience and offers a wider range of resources focused on how companies of all types and sizes can use leasing and financing to their strategic advantage to acquire the equipment they need to operate and grow. ELFA launched the original Equipment Finance Advantage website two years ago.

Highlights of the site’s user-friendly content include:

  • Equipment Finance 101: Overview of the benefits of equipment finance, the types of financing, the top 10 questions to ask before entering an equipment financing agreement, a customizable digital toolkit and more.
  • Success Stories: Real-world examples of companies using equipment finance for strategic advantage.
  • Resources: How-to articles, Q&As, updated end-user industry fact sheets, infographics and more to help businesses develop their financing strategy.
  • Videos: A series of short videos on a range of topics, from maximizing cash flow to staying ahead of the curve to end-of-lease factors to consider.
  • Find a Provider: A searchable list of ELFA members that provide equipment leasing and finance services.

“The critical role the $903 billion equipment finance industry plays in the U.S. economy, manufacturing and jobs is fundamentally because of the participation of individual businesses,” says ELFA President and CEO William G. Sutton, CAE. “They have found the information at Equipment Finance Advantage to be an invaluable resource informing their equipment leasing and financing decision-making during the past two years, and we are excited to offer the newly upgraded EFA website to help keep them up-to-date with the latest research and informational content available.”

Confidence in Equipment Finance Sector Is Steady

The Equipment Leasing & Finance Foundation (the Foundation) released the December 2014 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Designed to collect leadership data, the index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the $903 billion equipment finance sector. Overall, confidence in the equipment finance market is 63.4, steady with the November index of 64.2.

When asked about the outlook for the future, MCI-EFI survey respondent David Schaefer, CEO, Mintaka Financial LLC, said, “We are very pleased with our year-over-year growth in application volume, originations, approval rates and access to capital. We think next year will be positive again but expect to see slight increases in delinquency and credit losses. We have seen extraordinary portfolio performance the past three years, but we’re planning for a more normal period in 2015.”

December 2014 Survey Results:
The overall MCI-EFI is 63.4, steady with the November index of 64.2.

    · When asked to assess their business conditions over the next four months, 28% of executives responding said they believe business conditions will improve over the next four months, up slightly from 27.3% in November. 72% of respondents believe business conditions will remain the same over the next four months, up from 69.7% in November. None believe business conditions will worsen, down from 3% the previous month.

    · 22% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 30.3% in November. 72% believe demand will “remain the same” during the same four-month time period, up from 66.7% the previous month. 6.3% believe demand will decline, up from 3% in November.

    · 22% of executives expect more access to capital to fund equipment acquisitions over the next four months, up slightly from 21.2% in November. 78% of survey respondents indicate they expect the “same” access to capital to fund business, down slightly from 78.8% in November. None expect “less” access to capital, unchanged from the previous month.

    · When asked, 43.8% of the executives reported they expect to hire more employees over the next four months, a decrease from 45.4% in November. 50% expect no change in headcount over the next four months, up from 48.5% last month. 6.3% expect fewer employees, essentially unchanged from November.

    · 3% of the leadership evaluate the current U.S. economy as “excellent,” unchanged from last month. 97% of the leadership evaluate the current U.S. economy as “fair,” and none rate it as “poor,” both also unchanged from November.

    · 47% of the survey respondents believe that U.S. economic conditions will get “better” over the next six months, an increase from 42.4% who believed so in November. 53% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, down from 54.6% in November. None believe economic conditions in the U.S. will worsen over the next six months, down from 3% last month.

    · In December, 37.5% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 42.4% in November. 62.5% believe there will be “no change” in business development spending, an increase from 54.6% last month. None believe there will be a decrease in spending, down from 3% last month.

December 2014 MCI-EFI Survey Comments from Industry Executive Leadership:

Bank, Small Ticket
“Lower energy costs will benefit consumers and small businesses. These are the segments of the economy that has been lagging compared to historical recoveries. I believe stronger spending will lift corporate revenues and, in reaction, business investment. Finally ?!” Paul Menzel, President & CEO, Financial Pacific Leasing, LLC

Bank, Middle Ticket
“Energy costs are the new looming uncertainty. In some sectors/industries this is a positive while in others it is a negative. How that balances out from a national as well as global standpoint remains to be seen, but it will give some pause to growth plans.” Harry Kaplun, President, Frost Equipment Leasing and Finance

Independent, Middle Ticket
“With gas prices declining truck and car sales continue to increase and the economy seems to continue to be slowly improving.” William Besgen, President and Chief Operating Officer, Hitachi Capital America Corp.

Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.

Who participates in the MCI-EFI?
The respondents are comprised of a wide cross section of industry executives, including large-ticket, middle-market and small-ticket banks, independents and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry’s confidence.

How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:

    1. Current business conditions
    2. Expected product demand over the next four months
    3. Access to capital over the next four months
    4. Future employment conditions
    5. Evaluation of the current U.S. economy
    6. U.S. economic conditions over the next six months
    7. Business development spending expectations
    8. Open-ended question for comment

How may I access the MCI-EFI?
Survey results are posted on the Foundation website included in the Foundation Forecast newsletter and included in press releases. Survey respondent demographics and additional information about the MCI are also available at the link above.

Equipment Leasing & Finance Foundation Releases February Confidence Index

The Equipment Leasing & Finance Foundation has released the February 2014 Monthly Confidence Index for the Equipment Finance Industry (MCI-EFI). Designed to collect leadership data, the index reports a qualitative assessment of the prevailing business conditions and expectations for the future as reported by key executives from the $827 billion equipment finance sector. Overall, confidence in the equipment finance market is 63.3, the second highest index in two years and off slightly from last month’s two-year index high of 64.9.

When asked about the outlook for the future, MCI survey respondent Valerie Hayes Jester, President, Brandywine Capital Associates, Inc., said, “I am optimistic that there is increasing demand for equipment and therefore financing to acquire that equipment. The brutal winter experienced by a significant portion of this country has slowed down many projects that would have been in progress by now. I am hoping that the last third of this quarter will show the signs we had experienced at year end, as demand increased.”

February 2014 Survey Results:
The overall MCI-EFI is 63.3, a decrease from the January index of 64.9.

    When asked to assess their business conditions over the next four months, 21.2% of executives responding said they believe business conditions will improve over the next four months, down from 33% in January. 72.7% of respondents believe business conditions will remain the same over the next four months, up from 61% in January. 6.1% believe business conditions will worsen, up from 5.6% who believed so the previous month.

    24.2% of survey respondents believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 36% in January. 69.7% believe demand will “remain the same” during the same four-month time period, up from 61% the previous month. 6.1% believe demand will decline, up from 2.8% who believed so in January.

    31.3% of executives expect more access to capital to fund equipment acquisitions over the next four months, up from 25% in January. 65.6% of survey respondents indicate they expect the “same” access to capital to fund business, down from 75% in January. 3.1% expect “less” access to capital, up from no one who expected less access the previous month.

    When asked, 40.6% of the executives reported they expect to hire more employees over the next four months, an increase from 33% in January. 53% expect no change in headcount over the next four months, down from 58.3% last month. 6.3% expect fewer employees, down from 8.3% who expected fewer employees in January.

    3% of the leadership evaluates the current U.S. economy as “excellent,” relatively unchanged from 2.8% last month. 93.8% of the leadership evaluates the current U.S. economy as “fair,” down slightly from 94.4% last month. 3% rate it as “poor,” also relatively unchanged from last month.

    34.4% of the of survey respondents believe that U.S. economic conditions will get “better” over the next six months, a decrease from 41.7% who believed so in January. 59.4% of survey respondents indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 55.6% in January. 6.2% believe economic conditions in the U.S. will worsen over the next six months, an increase from 2.6% last month.

    In February, 56.3% of respondents indicate they believe their company will increase spending on business development activities during the next six months, an increase from 55.6% in January. 43.8% believe there will be “no change” in business development spending, an increase from 39% last month. No one believes there will be a decrease in spending, a decrease from 5.6% who believed so last month.

February 2014 MCI Survey Comments from Industry Executive Leadership:

    Bank, Small Ticket
    “Weather has created some slow down in equipment deliveries and inventory which may slow first quarter growth.” Kenneth Collins, CEO, Susquehanna Commercial Finance, Inc.

    Independent, Middle Ticket
    “I’m conflicted about the near-term. All small to medium-size customers claim activity is sporadic and are not willing to commit capital for new equipment. Thus we see demand is off, but funding availability is strong.” George Booth, Managing Director, Black Rock Capital, LLC

    Bank, Middle Ticket
    “The economy and the equipment finance market continue to experience peaks and valleys. The good news is the valleys aren’t getting any deeper; the bad news is the peaks aren’t getting any higher. Hopefully, in 2014 the economy will gain enough confidence to break through the peaks.” Thomas Jaschik, President, BB&T Equipment Finance

Why an MCI-EFI?
Confidence in the U.S. economy and the capital markets is a critical driver to the equipment finance industry. Throughout history, when confidence increases, consumers and businesses are more apt to acquire more consumer goods, equipment and durables, and invest at prevailing prices. When confidence decreases, spending and risk-taking tend to fall. Investors are said to be confident when the news about the future is good and stock prices are rising.

Who participates in the MCI-EFI?
The respondents are comprised of a wide cross section of industry executives, including large-ticket, middle-market and small-ticket banks, independents and captive equipment finance companies. The MCI-EFI uses the same pool of 50 organization leaders to respond monthly to ensure the survey’s integrity. Since the same organizations provide the data from month to month, the results constitute a consistent barometer of the industry’s confidence.

How is the MCI-EFI designed?
The survey consists of seven questions and an area for comments, asking the respondents’ opinions about the following:

    Current business conditions
    Expected product demand over the next four months
    Access to capital over the next four months
    Future employment conditions
    Evaluation of the current U.S. economy
    U.S. economic conditions over the next six months
    Business development spending expectations
    Open-ended question for comment

Financing Available for Renewable Energy Projects of 500 kW to 25 MW

Conergy, a solar photovoltaic service and solution provider, has launched its Conergy Fund I program. The program, which provides financing to large-scale construction projects in the United States, makes the use of and savings from solar power a possibility to businesses.

With an initial target volume of $100 million and backing by Conergy’s main investor, Kawa Capital Management, The Conergy Fund I provides financing for solar power plants and qualified commercial projects with renewable energy capabilities between 500 kilowatts and 25 megawatts of power. The fund streamlines the financing process by managing the financial analysis, credit rating, administration and finance, billing, and collection of power purchase agreements (PPAs) on behalf of the project.

“The Fund is ideal for mid-to-large size organizations such as municipalities, school districts, utility companies, and investment-grade corporations because the savings achieved last for decades,” says Anthony Fotopoulos, CEO of Conergy Americas. “Not only are these entities reducing energy consumption, but the fixed energy prices secured through the PPAs are significantly lower than market prices for conventional grid power, providing additional savings to the end-user.”

Access to competitive financing that can monetize local and federal incentives is a key barrier to the widespread adoption of solar photovolatics (PV) via PPAs – only about 40 percent of commercial buildings or power plants are able to secure this financing. The fund bridges this gap by removing the funding barrier that has historically hampered organizations from installing photovoltaic (PV) systems on their facilities.

Through The Fund, Conergy and its partners also provide project development and engineering, procurement and construction (EPC) services, including engineering, design, and subsequent operations and maintenance management.

Kawa Capital Management acquired Conergy in August 2013 to create a globally unique player in the solar energy industry. Conergy’s expertise in providing complete solar energy solutions and Kawa’s established financial and management strategies were the groundwork for the Conergy Fund I program and will serve as the foundation for future financial solutions in the US electricity market.

“The Conergy Fund I program is the first step in a long relationship with Kawa. We already have five projects in the United States utilizing The Fund and expect to develop and acquire projects in other growth markets in 2014,” says Fotopoulos.

Resources to Assist with Equipment Finance

The Equipment Leasing and Finance Association has released three resources to help businesses take advantage of the benefits of equipment finance. The multimedia resources—a video, digital toolkit and an infographic—highlight how companies of all types and sizes can use leasing and financing to their strategic advantage to acquire the equipment they need to operate and grow. The tools are available on the association’s website.

Investment in Equipment Expected to Grow in 2014

Investment in equipment and software is expected to grow 3.1 percent in 2014 as economic conditions solidify and business confidence continues to recover, according to the Annual 2014 Equipment Leasing & Finance U.S. Economic Outlook released by the Equipment Leasing & Finance Foundation. Equipment investment is expected to grow across most verticals, as underlying economic fundamentals continue to improve. Overall in 2014, growth is forecast to be mixed, with some sectors outperforming others. The Foundation’s report, which is focused on the $827 billion equipment leasing and finance industry, forecasts 2014 equipment investment and capital spending in the United States and evaluates the effects of various related and external factors in play currently and into the foreseeable future. The report will be updated quarterly throughout 2014.

William G. Sutton, CAE, president of the foundation and president and CEO of the Equipment Leasing and Finance Association, said, “Looking into 2014, businesses will be making financing decisions in a dynamic environment. While the threat remains that policy uncertainty could negatively impact the U.S. economy and capital investment, potential stability in the federal budgeting process and an increase in GDP growth will drive up demand for equipment finance.”

Highlights from the study include:

  • • The U.S. economy is expected to grow 3 percent in 2014, the fastest pace since the 2008-09 recession. Assuming there is a solution to the current budget discussions, economic growth will be driven by a number of positive factors. Specifically, a strong housing market recovery, falling natural gas prices, robust auto sales, record high household wealth, steadily improving credit availability, and improving employment. However, these positive trends are counter-balanced by high oil prices, slow international growth, moderating fiscal consolidation and the continued threat of policy uncertainty.
    • In 2014, more dependable economic growth will help to generate stronger overall investment in equipment and software. Additionally, a rising interest rate environment could induce companies to lock in lower rates. Overall, these trends could yield a positive result for the equipment finance industry.

Trends in equipment investment include:

  • • Agriculture equipment investment is expected to remain weak on a quarter-to-quarter basis, and is projected to decline by 4 percent in 2014.
    • Computers & Software investment is expected to continue growing at the current below average rate. Annual growth should be in the 2 to 4 percent range during Q4 of 2013.
    • As expected, construction equipment investment declined in Q3 of 2013, falling 2.8 percent year-over-year. After reaching record-levels of investment in 2013, this vertical will likely decline by 5 to 10 percent in 2014.
    • Industrial equipment investment accelerated to 5 percent annual growth in Q3, and is expected to maintain a steady growth trend going forward. Employment, new orders, and earnings data point to a positive 2014.
    • Medical equipment investment grew in Q3 but the sector’s leading indicators suggest little to no growth going forward.
    • Transportation equipment investment saw modest growth in the third quarter, and improving indicators point stronger momentum over the next six to 12 months.

The foundation produces the Equipment Leasing & Finance U.S. Economic Outlook report in partnership with economics and public policy consulting firm Keybridge Research. The annual economic forecast provides a three-to-six-month outlook for industry investment with data, including a summary of investment trends in key equipment markets, credit market conditions, the U.S. macroeconomic outlook and key economic indicators. The report will be updated quarterly throughout 2014.