Re: [WISPA] Quesiton on Funding / Financing / Capital Availability
Sure do, Cti would have to fly me there Sent from my Motorola Startac... On May 23, 2009, at 12:11 AM, Charles Wu c...@cticonnect.com wrote: Well Gino, it looks you're buying ski tickets next time =) -Charles -Original Message- From: wireless-boun...@wispa.org [mailto:wireless-boun...@wispa.org] On Behalf Of Gino Villarini Sent: Friday, May 22, 2009 3:54 PM To: WISPA General List Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability Option 3 Gino A. Villarini g...@aeronetpr.com Aeronet Wireless Broadband Corp. tel 787.273.4143 fax 787.273.4145 -Original Message- From: wireless-boun...@wispa.org [mailto:wireless-boun...@wispa.org] On Behalf Of Charles Wu Sent: Friday, May 22, 2009 4:50 PM To: WISPA General List Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability Lease, lease, lease. Agreed that leasing is a great option, but in looking at my numbers these past few months, I've noticed that the amount of leasing that we do is a fraction of what we used to do 12 months ago (if it wasn't for the Motorola 3% program, I don't think we'd be doing any leasing) - part of it is because many of our leasing vendors aren't leasing anymore (e.g., GE Capital), but given that infrastructure sales haven't dropped off that much in this economy (in fact, our March numbers for 2009 were BETTER than our March 2008 numbers), I'm trying to understand why people who may have leased in the past no longer seem to be leasing (obviously, you're still leasing away so this question doesn't apply to you =)... So if you were leasing 12 months ago, but no longer are, Is it because 1. The economy sucks and you're not buying new equipment? 2. The economy is fine, you want to lease equipment but can't get approved? 3. The economy is fine, but you're making so much money that you no longer need to lease equipment? Just curiosity on my side -Charles --- - WISPA Wants You! Join today! http://signup.wispa.org/ --- - WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/ --- --- --- --- WISPA Wants You! Join today! http://signup.wispa.org/ --- --- --- --- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/ --- --- --- --- WISPA Wants You! Join today! http://signup.wispa.org/ --- --- --- --- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/ WISPA Wants You! Join today! http://signup.wispa.org/ WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
Re: [WISPA] Quesiton on Funding / Financing / Capital Availability
So I will take option 4 from a previous post since Travis made the point. Up to 60 months with $1 buyout is the same as a 5 year bank loan. I want to run debt free as soon a possible. That being the case I don't lease and have not leased to keep debt down. I do have a start-up loan that is being paid on a little slower than I would like, but we have paid off 1/2 of it in 5 years and based on our payments, we are cash flow positive. Granted, my WISP is a lot smaller than many that post here and our growth rate is small, but some of that is managing growth to stay cash-flow positive. I have seen several companies die because they became cash rich, but still could not cover the debt. Travis Johnson wrote: The banks can sell a car with little effort. They already have relationships with dealers and auctions. And often, if the consumer's credit is questionable, the dealer will guarantee to take the car back if the loan defaults. Who is going to buy a $10,000 radio that has been repo'd? Even for $5k, I wouldn't touch it. I'd buy a new radio with warranty, that I know is good and hasn't been fried or broken. The banks will never loan on the equipment alone. There is no security there... but again, why do you need a bank loan for equipment when you can just lease it and get the same results? Up to 60 months with $1 buyout is the same as a 5 year bank loan. What's the difference? Travis Microserv Tom DeReggi wrote: Maybe when talking about CPE. But what about when one is talking about a $10,000 Part101 radio? Just like a car, all that the lender should need is to hold the title of the radio until paid off, and get a down payment of $2000 to cover the cost of tower climber/repo man, and a signed letter of authorization from lanlord stating the location of the tower gear is installed on and they acknowledge that the gear is not abandoned equipment. (So it does not automatically become property of landlord in 4 months, and teh landlord knows the equipment owner has first rights to the gear). Think about it... Wouldn't repo costs be reduced when the repo man knows exactly where to find the radio? A car can easilly be relocated and hard-to-find, when the owner skips town. Plus the home likely has an owner with a shot gun or a big dog, which the tower/MTU likely does not. The MTU building might even have a security guard to escort teh lender safely to the roof :-) Tom DeReggi RapidDSL Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: jp j...@saucer.midcoast.com To: WISPA General List wireless@wispa.org Sent: Friday, May 22, 2009 11:13 AM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability In a worse case scenario, a car is probably considerably easier to repo than the antenna on my roof and radio in my attic. And the car would be worth a magnitude more money. The installed infrastructure is worthless if it costs a huge amount to get to it. On Thu, May 21, 2009 at 07:27:09PM -0400, Tom DeReggi wrote: I've never found a lender willing to lend against using the in-place used equipment as colladeral. It is the biggest double standard. I find it highly ironic that they'll use a car for colladeral that looses 50% of its value the day it leaves the lot, and has a rate of failure and risk of damage higher than just about any product on the market, and it has a huge cash burn (gas :-). but yet lendors won't put equivellent value on wireless gear, that holds its value, Ebay boasting easilly 50% after 3-4 years of use, even after fully depreciated. I'll never understand the lending market. Tom DeReggi RapidDSL Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: rea...@muddyfrogwater.us To: WISPA General List wireless@wispa.org Sent: Thursday, May 21, 2009 1:55 PM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability Answers in-line. insert witty tagline here - Original Message - From: Charles Wu c...@cticonnect.com To: WISPA General List wireless@wispa.org Sent: Thursday, May 21, 2009 8:49 AM Subject: [WISPA] Quesiton on Funding / Financing / Capital Availability With all the hype being generated by the stimulus bill, we have been approached by a multitude of third party financial organizations that have a renewed interest in potentially financing rural broadband...now, specifically, for WISPs, in the past, equipment leasing has been a very popular option for financing, but in looking at our numbers over the past year, I've noticed a marked decline in the amount of leasing that we do - that said, I have the following questions for the listserv about financing Assuming that WISPs are still need to buy equipment... 1. Are you able to just purchase equipment out of cash-flow organically generated from
Re: [WISPA] Quesiton on Funding / Financing / Capital Availability
Travis, I'd agree, except, I'm finding a loan or Line of Credit is as easy to get as a lease. When the leasor considers a radio, the opposite of a car, non-liquidatable, does the lender really benefit by leasing it instead of lending for it? Tom DeReggi RapidDSL Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: Travis Johnson To: WISPA General List Sent: Friday, May 22, 2009 6:04 PM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability The banks can sell a car with little effort. They already have relationships with dealers and auctions. And often, if the consumer's credit is questionable, the dealer will guarantee to take the car back if the loan defaults. Who is going to buy a $10,000 radio that has been repo'd? Even for $5k, I wouldn't touch it. I'd buy a new radio with warranty, that I know is good and hasn't been fried or broken. The banks will never loan on the equipment alone. There is no security there... but again, why do you need a bank loan for equipment when you can just lease it and get the same results? Up to 60 months with $1 buyout is the same as a 5 year bank loan. What's the difference? Travis Microserv Tom DeReggi wrote: Maybe when talking about CPE. But what about when one is talking about a $10,000 Part101 radio? Just like a car, all that the lender should need is to hold the title of the radio until paid off, and get a down payment of $2000 to cover the cost of tower climber/repo man, and a signed letter of authorization from lanlord stating the location of the tower gear is installed on and they acknowledge that the gear is not abandoned equipment. (So it does not automatically become property of landlord in 4 months, and teh landlord knows the equipment owner has first rights to the gear). Think about it... Wouldn't repo costs be reduced when the repo man knows exactly where to find the radio? A car can easilly be relocated and hard-to-find, when the owner skips town. Plus the home likely has an owner with a shot gun or a big dog, which the tower/MTU likely does not. The MTU building might even have a security guard to escort teh lender safely to the roof :-) Tom DeReggi RapidDSL Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: jp j...@saucer.midcoast.com To: WISPA General List wireless@wispa.org Sent: Friday, May 22, 2009 11:13 AM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability In a worse case scenario, a car is probably considerably easier to repo than the antenna on my roof and radio in my attic. And the car would be worth a magnitude more money. The installed infrastructure is worthless if it costs a huge amount to get to it. On Thu, May 21, 2009 at 07:27:09PM -0400, Tom DeReggi wrote: I've never found a lender willing to lend against using the in-place used equipment as colladeral. It is the biggest double standard. I find it highly ironic that they'll use a car for colladeral that looses 50% of its value the day it leaves the lot, and has a rate of failure and risk of damage higher than just about any product on the market, and it has a huge cash burn (gas :-). but yet lendors won't put equivellent value on wireless gear, that holds its value, Ebay boasting easilly 50% after 3-4 years of use, even after fully depreciated. I'll never understand the lending market. Tom DeReggi RapidDSL Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: rea...@muddyfrogwater.us To: WISPA General List wireless@wispa.org Sent: Thursday, May 21, 2009 1:55 PM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability Answers in-line. insert witty tagline here - Original Message - From: Charles Wu c...@cticonnect.com To: WISPA General List wireless@wispa.org Sent: Thursday, May 21, 2009 8:49 AM Subject: [WISPA] Quesiton on Funding / Financing / Capital Availability With all the hype being generated by the stimulus bill, we have been approached by a multitude of third party financial organizations that have a renewed interest in potentially financing rural broadband...now, specifically, for WISPs, in the past, equipment leasing has been a very popular option for financing, but in looking at our numbers over the past year, I've noticed a marked decline in the amount of leasing that we do - that said, I have the following questions for the listserv about financing Assuming that WISPs are still need to buy equipment... 1. Are you able to just purchase equipment out of cash-flow organically generated from operations Other than originally starting with our own personal seed money, that's what we've done. 2. Have you gone to more traditional forms of money (e.g., bank / SBA / RUS loans)? I could not qualify for any of them. 3. Are you doing more
Re: [WISPA] Quesiton on Funding / Financing / Capital Availability
The biggest difference I have seen with a loan or line of credit, even for us (a corporation in business for 13 years and profitable since the first year) is that the banks want personal guarantees... and we haven't done a personal guarantee on leasing equipment for 5+ years. When you have 20+ current leases totalling over $1,000,000 having that show up on your personal credit reports makes it very hard to re-finance your house, or buy a car, etc. Yes, it can be done (because I have done it), it just creates 10x the work... and there is no benefit (tax wise, equipment wise, company wise, etc.) so we take the easy way. ;) We lease, it stays corporate (as it should), and everything is good. :) Travis Microserv Tom DeReggi wrote: Travis, I'd agree, except, I'm finding a loan or Line of Credit is as easy to get as a lease. When the leasor considers a radio, the opposite of a car, non-liquidatable, does the lender really benefit by leasing it instead of lending for it? Tom DeReggi RapidDSL Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: Travis Johnson To: WISPA General List Sent: Friday, May 22, 2009 6:04 PM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability The banks can sell a car with little effort. They already have relationships with dealers and auctions. And often, if the consumer's credit is questionable, the dealer will guarantee to take the car back if the loan defaults. Who is going to buy a $10,000 radio that has been repo'd? Even for $5k, I wouldn't touch it. I'd buy a new radio with warranty, that I know is good and hasn't been fried or broken. The banks will never loan on the equipment alone. There is no security there... but again, why do you need a bank loan for equipment when you can just lease it and get the same results? Up to 60 months with $1 buyout is the same as a 5 year bank loan. What's the difference? Travis Microserv Tom DeReggi wrote: Maybe when talking about CPE. But what about when one is talking about a $10,000 Part101 radio? Just like a car, all that the lender should need is to hold the title of the radio until paid off, and get a down payment of $2000 to cover the cost of tower climber/repo man, and a signed letter of authorization from lanlord stating the location of the tower gear is installed on and they acknowledge that the gear is not abandoned equipment. (So it does not automatically become property of landlord in 4 months, and teh landlord knows the equipment owner has first rights to the gear). Think about it... Wouldn't repo costs be reduced when the repo man knows exactly where to find the radio? A car can easilly be relocated and hard-to-find, when the owner skips town. Plus the home likely has an owner with a shot gun or a big dog, which the tower/MTU likely does not. The MTU building might even have a security guard to escort teh lender safely to the roof :-) Tom DeReggi RapidDSL Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: jp j...@saucer.midcoast.com To: WISPA General List wireless@wispa.org Sent: Friday, May 22, 2009 11:13 AM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability In a worse case scenario, a car is probably considerably easier to repo than the antenna on my roof and radio in my attic. And the car would be worth a magnitude more money. The installed infrastructure is worthless if it costs a huge amount to get to it. On Thu, May 21, 2009 at 07:27:09PM -0400, Tom DeReggi wrote: I've never found a lender willing to lend against using the in-place used equipment as colladeral. It is the biggest double standard. I find it highly ironic that they'll use a car for colladeral that looses 50% of its value the day it leaves the lot, and has a rate of failure and risk of damage higher than just about any product on the market, and it has a huge cash burn (gas :-). but yet lendors won't put equivellent value on wireless gear, that holds its value, Ebay boasting easilly 50% after 3-4 years of use, even after fully depreciated. I'll never understand the lending market. Tom DeReggi RapidDSL Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: rea...@muddyfrogwater.us To: WISPA General List wireless@wispa.org Sent: Thursday, May 21, 2009 1:55 PM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability Answers in-line. insert witty tagline here - Original Message - From: Charles Wu c...@cticonnect.com To: WISPA General List wireless@wispa.org Sent: Thursday, May 21, 2009 8:49 AM Subject: [WISPA] Quesiton on Funding / Financing / Capital Availability With all the hype being generated by the stimulus bill, we have been approached by a multitude of
Re: [WISPA] Quesiton on Funding / Financing / Capital Availability
Hi Scott, Regarding debt...I've found that there's a scale inflection point in running a WISP (or any business for the matter) that needs to be reached -- the main purpose for taking on debt (because due to interest, you end up paying more in the longer term instead of buying cash), is to accelerate growth so one can progress beyond this point e.g., if you can organically fund 30 new installs a month with cash, if you take on debt, you could leverage yourself and now do 100 installs / month Now, from a business perspective -- in looking at the WISP As a stand-alone sustainable business -- it costs a minimum of about $30k / month to operate a small WISP -- now, I'll argue that that $30k/month in operations remains relatively constant and whether it's supporting 300, 800 or 1500 customers -- however, at 300 customers, the business is bleeding cash...at 800 customers the business is just about at a break-even, and at 1500 customers, the business is a cash machine -Charles -Original Message- From: wireless-boun...@wispa.org [mailto:wireless-boun...@wispa.org] On Behalf Of Scott Reed Sent: Saturday, May 23, 2009 4:20 PM To: WISPA General List Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability So I will take option 4 from a previous post since Travis made the point. Up to 60 months with $1 buyout is the same as a 5 year bank loan. I want to run debt free as soon a possible. That being the case I don't lease and have not leased to keep debt down. I do have a start-up loan that is being paid on a little slower than I would like, but we have paid off 1/2 of it in 5 years and based on our payments, we are cash flow positive. Granted, my WISP is a lot smaller than many that post here and our growth rate is small, but some of that is managing growth to stay cash-flow positive. I have seen several companies die because they became cash rich, but still could not cover the debt. Travis Johnson wrote: The banks can sell a car with little effort. They already have relationships with dealers and auctions. And often, if the consumer's credit is questionable, the dealer will guarantee to take the car back if the loan defaults. Who is going to buy a $10,000 radio that has been repo'd? Even for $5k, I wouldn't touch it. I'd buy a new radio with warranty, that I know is good and hasn't been fried or broken. The banks will never loan on the equipment alone. There is no security there... but again, why do you need a bank loan for equipment when you can just lease it and get the same results? Up to 60 months with $1 buyout is the same as a 5 year bank loan. What's the difference? Travis Microserv Tom DeReggi wrote: Maybe when talking about CPE. But what about when one is talking about a $10,000 Part101 radio? Just like a car, all that the lender should need is to hold the title of the radio until paid off, and get a down payment of $2000 to cover the cost of tower climber/repo man, and a signed letter of authorization from lanlord stating the location of the tower gear is installed on and they acknowledge that the gear is not abandoned equipment. (So it does not automatically become property of landlord in 4 months, and teh landlord knows the equipment owner has first rights to the gear). Think about it... Wouldn't repo costs be reduced when the repo man knows exactly where to find the radio? A car can easilly be relocated and hard-to-find, when the owner skips town. Plus the home likely has an owner with a shot gun or a big dog, which the tower/MTU likely does not. The MTU building might even have a security guard to escort teh lender safely to the roof :-) Tom DeReggi RapidDSL Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: jp j...@saucer.midcoast.com To: WISPA General List wireless@wispa.org Sent: Friday, May 22, 2009 11:13 AM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability In a worse case scenario, a car is probably considerably easier to repo than the antenna on my roof and radio in my attic. And the car would be worth a magnitude more money. The installed infrastructure is worthless if it costs a huge amount to get to it. On Thu, May 21, 2009 at 07:27:09PM -0400, Tom DeReggi wrote: I've never found a lender willing to lend against using the in-place used equipment as colladeral. It is the biggest double standard. I find it highly ironic that they'll use a car for colladeral that looses 50% of its value the day it leaves the lot, and has a rate of failure and risk of damage higher than just about any product on the market, and it has a huge cash burn (gas :-). but yet lendors won't put equivellent value on wireless gear, that holds its value, Ebay boasting easilly 50% after 3-4 years of use, even after fully depreciated. I'll never understand the lending market. Tom DeReggi RapidDSL Wireless, Inc
Re: [WISPA] Quesiton on Funding / Financing / Capital Availability
Charles, I agree with you... but at what point does that happen? If your growth is growing (meaning you are doing more installs every month then the previous month), I don't think you can ever reach the point of paying cash for CPE... without completely strapping the entire business. I just don't see a reason that it makes sense to pay cash for the CPE. Yes, we pay cash for all of our backhauls, AP's, antennas for CPE, accessories (CAT5, mounts, etc.) but when it really costs so little in the long run to finance the CPE and have extra cash flow for other things, it seems the easy solution... especially during heavy growth periods. All I can say is if you are "holding back" on doing more installs because you can't afford it, you need to find some financing and get installing. Once that customer is installed with something else (DSL, Cable, competitor), it's 10x harder to get them to switch to you. You have to get the customers NOW. Travis Microserv Charles Wu wrote: Hi Scott, Regarding debt...I've found that there's a "scale inflection point" in running a WISP (or any business for the matter) that needs to be reached -- the main purpose for taking on debt (because due to interest, you end up paying more in the longer term instead of buying cash), is to accelerate growth so one can progress beyond this point e.g., if you can organically fund 30 new installs a month with cash, if you take on debt, you could leverage yourself and now do 100 installs / month Now, from a business perspective -- in looking at the WISP As a stand-alone sustainable business -- it costs a minimum of about $30k / month to operate a small WISP -- now, I'll argue that that $30k/month in operations remains relatively constant and whether it's supporting 300, 800 or 1500 customers -- however, at 300 customers, the business is bleeding cash...at 800 customers the business is just about at a break-even, and at 1500 customers, the business is a cash machine -Charles -Original Message- From: wireless-boun...@wispa.org [mailto:wireless-boun...@wispa.org] On Behalf Of Scott Reed Sent: Saturday, May 23, 2009 4:20 PM To: WISPA General List Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability So I will take option 4 from a previous post since Travis made the point. "Up to 60 months with $1 buyout is the same as a 5 year bank loan." I want to run debt free as soon a possible. That being the case I don't lease and have not leased to keep debt down. I do have a start-up loan that is being paid on a little slower than I would like, but we have paid off 1/2 of it in 5 years and based on our payments, we are cash flow positive. Granted, my WISP is a lot smaller than many that post here and our growth rate is small, but some of that is managing growth to stay cash-flow positive. I have seen several companies die because they became cash rich, but still could not cover the debt. Travis Johnson wrote: The banks can sell a car with little effort. They already have relationships with dealers and auctions. And often, if the consumer's credit is questionable, the dealer will guarantee to take the car back if the loan defaults. Who is going to buy a $10,000 radio that has been repo'd? Even for $5k, I wouldn't touch it. I'd buy a new radio with warranty, that I know is good and hasn't been fried or broken. The banks will never loan on the equipment alone. There is no security there... but again, why do you need a bank loan for equipment when you can just lease it and get the same results? Up to 60 months with $1 buyout is the same as a 5 year bank loan. What's the difference? Travis Microserv Tom DeReggi wrote: Maybe when talking about CPE. But what about when one is talking about a $10,000 Part101 radio? Just like a car, all that the lender should need is to "hold the title" of the radio until paid off, and get a down payment of $2000 to cover the cost of tower climber/repo man, and a signed letter of authorization from lanlord stating the location of the tower gear is installed on and they acknowledge that the gear is not abandoned equipment. (So it does not automatically become property of landlord in 4 months, and teh landlord knows the equipment owner has first rights to the gear). Think about it... Wouldn't repo costs be reduced when the repo man knows exactly where to find the radio? A car can easilly be relocated and hard-to-find, when the owner skips town. Plus the home likely has an owner with a shot gun or a big dog, which the tower/MTU likely does not. The MTU building might even have a security guard to escort teh lender safely to the roof :-) Tom DeReggi RapidDSL Wireless, Inc IntAirNet- Fixed Wireless Broadband - Original Message - From: "jp" j...@saucer.midcoast.com To: "WISPA General List" wireless@wispa.org Sent: Friday, May 22, 2009 11:13 AM Subject: Re: [WISPA] Quesiton on Funding / Financing / Capital Availability
