b'GUEST VIEWFinancing Equipment, Accommodation Purchases Through LeasingRV park and campground owners can finance the purchase of vehicles, park model RVs, glamping structures, IT infrastructure, water features, maintenance equipment, golf carts, computer hardware and software, outdoor signage and any other tangiblePaul items needed to operate your business using an equipment lease or an EFA. BosleyWhen I attended The Glamping Showference & Expo in Raleigh, N.C., in No- vestments as presented by the variousEquipment financing can help you stay USA in Aurora, Colo., in October and thevember, I visited with many exhibitorsmanufacturers are to broaden the appealon top of the latest advances in equip-NationalAssociationofRVParksandsellingparkmodelRVsandglampingof your RV park to include families whoment and technology. Most travelers have Campgrounds Outdoor Hospitality Con- structures. The main benefits of these in- do not own an RV yet want to enjoy thesmartphones and laptops to stay con-glampingexperience,thusincreasingnected with family and friends and for en-campground rental income.tertainment options that require good Thepurchasepricesperunitrangedinternet and/or cell service when staying from $10,000 up to $60,000 depending onat your RV park. As a frequent traveler, it the structure chosen, not including the costis frustrating to stay in RV parks with poor to prepare the pad. The good news is the po- connectivity. I personally believe that in-tential rental income derived from these in- vesting in an IT system is a wise choice vestments is significantly greater than theand will enhance the chances of first-time rental income derived from pull-throughcampers becoming repeat customers. and back-in RV sites and campsites.Tax Benefits.Equipment leasing al-Whenseekingtomakecapitalim- lows your business the tax benefits of a provements to your RV park and camp- full deduction of the lease payments to ground, a financing option available andlower your taxable income. Section 179 of often overlooked is equipment leasingthe IRS tax code allows business owners andequipmentfinancingagreementsto accelerate the depreciation and deduct (EFA). RV park and campground ownersup to $1 million. I recommend you check can finance the purchase of vehicles, parkwith your tax advisor to determine the tax model RVs, glamping structures, IT infra- benefits for your business of leasing as structure, water features, maintenancecompared to paying for the equipment in equipment, golf carts, computer hard- full from your liquid assets. ware and software, outdoor signage andMoreAttractiveBalanceSheet. any other tangible items needed to oper- Monthly lease payments are viewed as a ate their business using an equipmentbusiness expense instead of long-term lease or an EFA.debt. Reporting less debt on your balance Thereareseveralimportantdiffer- sheet will improve your chances to secure ences between financing using an equip- additional business financing if needed. ment lease and an EFA.Most leases in the RV park and camp- The leasing company will own theground industry are capital leases, so the equipmentwhenfinancingusinganequipment will be owned by the business equipment lease and the borrower willat the end of the lease term. Once the own the equipment at the end of the leaselease is repaid, you then can report the term. Alternatively, when the equipmentasset at its current, depreciated value on is being financed using an EFA, the equip- your balance sheet. Alternatively, if you fi-ment is always owned by the borrower.nance using an EFA, both the asset and li- When leasing, the borrower reportsability are reported on your balance sheet. the lease payment as an expense on theirThe typical lease and EFA for a start-up tax return. When financing using an EFA,business will require a 20% down payment the interest is reported as an expense andand the repayment term will be 36 months. the equipment is depreciated over its es- The typical terms of an equipment lease timated useful life.and an EFA for an existing company will re- Finally, when financing using a lease,quire a down payment ranging from one (1) the sales and property taxes are billed tolease payment up to 20% of the amount fi-the leasing company and passed throughnanced.Documentationfeeswillrange to the borrower as an additional expense.from $95 to $495 and repayment terms typ-When the equipment is financed using anically range from twelve (12) months up to EFA, all taxes are billed directly to the RVseventy-two (72) months.park and campground owner.In the case of an equipment lease, the The following is a list of four (4) keybuyout can range from $1 up to 10% of benefits of equipment financing to yourthepurchaseprice.Allowner(s)with RV park and campground:more than 20% equity in the business will Conserve and Control Cash. Equip- be required to personally guarantee the ment leasing and an EFA will preserveequipment lease and EFA. The good news your working capital which can be usedis that the equipment is the only collateral alternatively for day-to-day and unex- required, so this transaction is compatible pectedexpensesandbusinessexpan- with and has no impact on your existing sions. In addition to saving your workingmortgage. capital, a lease provides a pre-determinedIf you have any additional questions monthly line item, which can help youand for more information, reach me by budget more effectively. With predictableemail at paul@businessfinancedepot.com monthly expenses, you can develop long- or by calling 800-788-3884. term plans for your business with confi- Paul Bosley is the managing member dence and get the equipment you need,oftheBusinessFinanceDepot,which while keeping your working capital avail- helps park owners and developers secure able for other expenditures. If you requirefinancing for new developments, expan-a substantial amount of equipment, whysions, equipment purchases and more. tie up a large amount of cash especiallyBosley is also a Service Corps of Retired when you could use that same money toExecutives (SCORE) volunteer and has grow your business in other ways?helped business owners around the coun-UpgradeOutdatedEquipment.try improve their businesses. WCM22 March 2022 Woodalls Campground Magazine'