There are four forms of debt financing available to out of home companies: factoring; lease financing; private lending and bank financing. We have previously explained why factoring isn’t used much by out of home advertising companies. Today we talk with Tony Hull of YESCO Financial Solutions about billboard lease financing.
What are the benefits of lease financing for an out of home company?
While we do typically document the financing in the form of a capital lease (also known as a finance lease), one of the many benefits of obtaining financing from YESCO Financial Solutions is that we are owned by the same parent company as YESCO Outdoor Media, one of the largest regional billboard operators in the country. We’re a 105-year old, family-owned business with a passion for the OOH industry! We look at each financing opportunity through the lens of a billboard company, rather than a traditional lender. And we set the terms in a way to maximize the objectives of each borrower.
How does a capital lease work?
A capital lease is essentially a loan. The billboard assets and all tax benefits of ownership (depreciation, etc…), stay with the billboard operator. The term “lease” can have a negative connotation. Some business owners hear that term and think of the photocopy machine lease in the back of their office that they’ve had for 15 years that never seems to end. What we do is not that. In reality, YESCO Financial Solutions is another private credit lender rather than an equipment leasing company. We offer a fixed-rate for the life of the finance term, and when you’re done making the scheduled payments, that’s it. Outside of the first three years, there is no prepayment penalty if you want to pay off the YESCO financing early.
Where in the US do you do lease financing?
YESCO offers financing in 46 states. We don’t provide financing in Utah, Idaho, Wyoming or Montana – where YESCO Outdoor Media operates its billboard plant. We’ll also dabble in Canada. Our borrowers say they value our perspective and experience, and we often visit the proposed site of a new project before or during construction. Whenver possible, we love to meet in person with our borrowers and understand their objectives. We are also known for underwriting and closing quickly.
What qualities are you looking for in someone who wants lease financing?
We underwrite the location first. We know that if a billboard operator has a valid permit and good ground lease (or easement) at an excellent site, the value of the billboard should be considerably more than the cost of construction. That reduces a lot of our risk. The other important factors are experience, financial stability and credit of the operator – but those are secondary factors.
To learn more about how YESCO Financial Solutions can help your out of home company email thull@yesco.com or visit YESCO Financial Solutions.
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