Financing Scarlet (Or anything RED for that matter)

[D Fuller]

Bro, I am college educated in economics and finance. I know what I'm talking about. And Gavin is right, it is a very good idea to utilize the various legal structures that limit your personal liability. And look at the most successful businesses in the world and find the ones that don't use many different forms of financing. Even companies with large liquid assets and cash reserves borrow money, especially when money is cheap like it is right now.

I'm glad you have no personal debt, neither do I. But business debt and personal debt are two different things. How many things do people go into debt personally to generate income? Very few. Businesses that can meet greater demand with either increased labor or equipment should consider borrowing money if the expected return is high enough. When money is cheap and inflation is fairly high (like right now), you are practically stealing from the bank.

If we are talking about starting a new business, the theory does not strictly track with the real world. No bank will give your company a loan without a personal guarantee, even if they accept the camera as collateral. So your personal credit will not be protected from your business debt.

There are still very good reasons it incorporate. Tax advantages are significant, and you are protected, to some degree, from personal liability for most things for which you have not signed explicit personal guarantees. But you won't escape personal liability for the bank debt you take on through your business.

 

[Eric J Kosinski]

I'll jump in here for sake of argument and say I'm on no real side here. Sometimes it benefits to buy equipment on loan and other times it doesn't. For instance if you are busy and have production clients and regular jobs, but not a whole lot of equity or liquid cash, but have accounts receivable to pay it off soon. Or if you feel completely comfortable with payments for the long term without missing them. There would be no point to pay high interest rates on equipment that was sitting on the shelf not paying itself off. Believe me RED gear is the shit, but if you are not using it for profit, don't buy it yet.

Second I"ll say that buying gear on loan isn't real easy. I just bought a motorcycle a few months back and I paid about 60% down and the other over 6 months as it actually helped my credit. That was easy because they can pick it up if I don't pay. I didn't want to risk the other money at the time and knew it would benefit my score by early completion of the loan. I kind of agree with Jon stating don't buy stuff you can't afford, but also see how how sometimes it is necessary to take risks so you can only make the choice based off of your situation. Also, I'm not one to judge, but I have been in debt and it feels like shit, but just because I wasn't always the best person to balance a lot of debt, payments etc I can't say others aren't. Do what works for you. I learned my lessons and I'm much more mature for it.

Finally I'll say this. It isn't easy to get a loan for gear. Chances are if you can't afford the camera, you don't have the equity to secure the loan. This isn't a car, it is a piece of gear that will have to be unsecured debt for the most part, or at least the bank will look at it this way. This means that if you do not repay the loan, they can't just come and pick it up. It will be unsecured. If you can secure the loan, you have to ask if you wish to risk those things besides your credit score.

If a bank or credit company will loan for things like gear, normally it is actually a long term lease, NOT a loan, meaning you can do a buyout on your last payment, however there is no prepay option, meaning you'll have to pay all the payments and all the interest, even if you pay upfront and early. This fuckin' sucks and offers no option to get out of the loan early. It is a big problem with gear loans/lease options and is done for a reason.

This is probably the worst economy to get a loan for gear in; not because your circumstances are that you can't pay it, but just because banks aren't giving money away. If they do, you pay out the ass for the gear; probably more than it is worth and probably more than you can make on it. Good luck.

 

[Nicholas Fitch]

JustinC made some good points on when it ,makes sense to consider financing gear. In regard to personal guaranties on equipment financing arrangements... unless your LLC or INC is 10+ years old and you are able to provide complete financial statements, a personal guaranty is almost always required in today's market. If you are renting out gear, rather than traveling with your gear and providing production services, you should be an LLC or INC. I don't think there are too many rental houses (big or small) that operate under a sole proprietorship structure. Just think if your camera fell off a crane, hit someone on the head, and paralyzed them... you don't want to be held personally liable if/when your insurance stops paying out. I've heard crazy stories about people's equipment doing harm to others and being held personally responsible for damages.

 

[Cedric Akins]

JustinC made some good points on when it ,makes sense to consider financing gear. In regard to personal guaranties on equipment financing arrangements... unless your LLC or INC is 10+ years old and you are able to provide complete financial statements, a personal guaranty is almost always required in today's market. If you are renting out gear, rather than traveling with your gear and providing production services, you should be an LLC or INC. I don't think there are too many rental houses (big or small) that operate under a sole proprietorship structure. Just think if your camera fell off a crane, hit someone on the head, and paralyzed them... you don't want to be held personally liable if/when your insurance stops paying out. I've heard crazy stories about people's equipment doing harm to others and being held personally responsible for damages.

I have tried applying but have yet to hear from your company.

 

[Jeffrey Loewe]

Just wondering if anyone has ever applied for a business loan? I haven't at this point but I'm just curious if anyone has ever done that to purchase gear and get there business started?

 

[Istvan Lettang]

I did. In 2005 leased two Sony Z1Us. I had no jobs what so ever. 15000 in dept. The 2 cameras ended up making around 200,000 in weddings.


Just got the Red Epic for my business Eclipp.com through financing. Just a tip for those who are new in the market for a lease. I was shopping around for quotes. WATCH OUT! There are many lease brokers who are trying to lear you in to all kind of dodgy deals. They tried to sign with me a paper that they can change the quote they promised at the final approval, but on the paper with fine prints was if I don't take they final deal I will owe them a 2% of the equipment price... I ended up going with Reds safest bet Southern California Leasing Inc company, the official Red affiliate. They are the safest, no shenanigans with paper work, hidden costs etc. Also I got few days to test my equipment before they did the final money transfer to Red to make sure I was happy with the product.

Some people blow money on boats and other toys. If filming is what you like is always worth it as long as you don't keep it on the shelf while you paying the bills.

 

[Cid J Salcido Uyarra]

Thats a great first post Istvan thx for sharing.

I will take your advice!