Learn the financing benefits. 

Announcer (00:02):

Welcome to The Sweepers and Tankers Podcast. This podcast covers topics on the street sweeper and sewer cleaning equipment market. Now, let's welcome our host, Matt Starnes.

Matt Starnes (00:16):

Hey! Welcome, Jake OST of NCL Government Capital. How are you doing, Jake?

Jake Ost (00:21):

Hey, not too bad. Thanks for having me.

Matt Starnes (00:23):

Yeah, thanks for joining us on our inaugural video version of The Sweepers and Tankers Podcast. So just for folks who aren't aware of you or what NCL does, can you give us a quick little elevator pitch, or what you do, in a nutshell?

Jake Ost (00:38):

Yeah, absolutely. NCL Government Capital is a new name for us. We were National Cooperative Leasing for over 20 years. We recently rebranded our name to NCL Government Capital to really tell the story better, who we serve, and that's the government agencies. So NCL Government Capital, we specialize in government financing, unique programs available to all government agencies, cities, states, counties, K through 12 higher education, federal and tribal.

Jake Ost (01:10):

The unique thing about NCL Government Capital is our ability in specializing government financing. We actually hold a contract through Sourcewell, the only one of it's kind.

Matt Starnes (01:22):

Oh, okay. Yeah.

Jake Ost (01:23):

Very similar to Bucher Municipal's, also has a contract. So to sum it up, NCL, we are a preferred government lending institution for many vendors out in the market. We work very closely with them, their dealers, and providing solutions for customers, is really what it's all about.

Matt Starnes (01:44):

That's fantastic. At the time of this recording, we're in October here, start of Q4 for a lot of folks in their planning, COVID's still around. What are you hearing when you talk to, let's say municipalities, what's the word on the street, as far as, what you're hearing about budgets and projections for 2021? I know, obviously it's going to be tighter, but what are you specifically hearing, because you've talked to so many different types of people too.

Jake Ost (02:17):

Correct. Yeah. The discussions we have are great. It leads me to get some great information on how we can assist customers. Every municipality is different, was affected differently with COVID, but you're correct. A lot of the conversations come down to, this year a lot of the money was budgeted for and allocated to make purchases. Some were cut this year, some didn't purchase equipment because of it.

Jake Ost (02:47):

But looking forward to 2021, it's going to be a little bit harder for a lot of government agencies, because of the sales tax revenue is still not known.

Matt Starnes (02:57):

Sure.

Jake Ost (02:58):

There's a lot of people still working from home. They're not shopping as much, the online sales is more. So, it's definitely affected many government agencies. There are pockets in the United States that seem to be business as normal, but there's still areas that, they're really not doing much.

Jake Ost (03:17):

The government agencies aren't having their meetings. They're not passing any resolutions of purchase equipment. It's kind of like a freeze, so it's kind of scary out there a little bit, from time to time. But at the same time, that's why we're here. At the end of the day, these government agencies still have to provide a service for their citizens, and essential equipment is needed.

Jake Ost (03:39):

Very similar to the equipment you guys sell. You need clean sewers and you need clean streets to keep it moving. That's what we're here to assist with. So definitely looking forward to 2021. It's going to be unique, that's for sure.

Matt Starnes (03:55):

Yeah. Jake, just briefly, how do you solve for some of those problems, as far as when you hear, "Okay, we've got a shrinking budget for town of X, for 2021." Just at a high level, what are some of the things that you guys can do to help out?

Jake Ost (04:22):

That's a great question. I love understanding where the constraints are, where the struggles are, and the pain points. Because once we know those, we can really customize every solution to meet a customer's needs.

Jake Ost (04:35):

Helping them understand certain, like a tax-exempt municipal lease, you don't have to budget for the whole process, and only have to budget for the annual payment, which, helping them understand that, helps that budget process a lot.

Jake Ost (04:50):

But also something that we've done a lot of, that I believe will be a huge solution for customers in 2021, is deferred payments. Customers can get essential equipment now, or at least, place the order, get it to the manufacturers so they can get moving on it, and not make a payment for 12 months. What a better situation to take advantage of? Record low rates right now, combine that with deferred payments for 12 months. If a manufacturer dealer has the equipment right now, not having to make a payment until next year, next October 7th, if you closed on a deal today. Just think of that.

Matt Starnes (05:27):

Wow!

Jake Ost (05:27):

That gets you a full other fiscal year that you don't have to budget for any equipment that could be used in it.

Matt Starnes (05:34):

Yeah, that's a really good point too, with the finance rates going down. Just even, I moved at the end of July and my wife and I bought a house, and we got a really low rate. That we were able to buy the house, which was wonderful. But that also is true of what you're talking about, these essential equipment, like, let's just say, street sweepers, sewer cleaners, and winter equipment. Can you talk a little bit about that? How people can kind of walk in that great rate right now? And really, I guess, pay on that rate, if I'm correct there. Or...

Jake Ost (06:10):

Correct. Yeah. So what we do to help out a lot of our customers to be able to take advantage of that. You got to think outside the box a little bit too, it's not always the rate, it's also rising equipment costs. Cause every year normally, equipment goes up in price. That's never going down.

Jake Ost (06:27):

So what we do, is we work with the customer, we get a payment schedule put together for them. We provide them final documents to sign. Once they sign those documents, we actually fund it into an escrow account. That protects their rate and payment. That can't change. So even if the payment's deferred for 12 months, or we got to order the equipment, and it's a six month lead time to get the equipment. What if rates go up a half a percent, or a percent? With election year, everything is unknown after this. And because of COVID obviously, as well.

Jake Ost (07:02):

But it's a huge solution for them to be able to take advantage of that. What I tell customers is, we'll throw 3% out there for a random number. Just think about, if you can finance equipment for 3%, but you know next year, or the year after, that equipment is going to go up 3 to 5% normally, every year. Well, if you push a purchase out for two years, on a $300,000 machine say, well, you're actually spending more by waiting a year, than you are just purchasing it now and financing it.

Jake Ost (07:35):

We have great programs available, tax-exempt municipal leases. We do FMV leases, whatever it may be, we're going to find the solution to match that customer's budget and their real needs. So we do kind of take a fine comb through everything, that's what we're here to do, with our focus on that. We customize everything. Nothing can be the same for any two government agencies. It's all going to be different.

Matt Starnes (08:00):

That's so true, even on a marketing side, helping the sales team working some of those deals. You've been pretty instrumental in a lot of our deals. I think one of the things is, and myself included, when you say leasing... We've chatted off offline about it, and you've helped me understand it a lot better, but I think I was naive. I was thinking, "Oh, this is like a car lease. I've got to make sure I don't get a scratch on it. And I only have a thousand miles for the whole year." All those kinds of connotations you have. But that's not really the case, is it? When you're talking these lease, it's really more like a financing type of situation.

Jake Ost (08:44):

You're 100% correct. The word "lease", traditionally we think of, you and I going out to a car dealership, getting a vehicle, you have it for 36 months, there's a balloon payment, or you have restrictions on mileage. When we're working with municipalities, yes, that structure is available, it's called a Fair Market Value lease.

Jake Ost (09:06):

But the end of the day, most and majority of our solutions that we provide, it's called the tax-exempt municipal lease. To be honest with you, it's really a glorified loan, with a non-appropriation clause included. But that's the structure, the legal name is a tax-exempt municipal lease, it's the lease owned, it's a dollar buyout.

Jake Ost (09:24):

The customer has ownership day one, we're just a secure party. That's the advantage with them being the owners of the equipment, versus a Fair Market Value lease. We're traditionally used to hearing the word "lease", so it really comes down to ownership, and because of that, they can take advantage of a better rate. We can get them a better payment program put together, and at end of the day, it's a great solution for them.

Matt Starnes (09:49):

Yeah, definitely agree. So when I think about what you guys are able to do, you touched on it a little bit before, but how can municipalities save their money? Let's say, they have $300,000 for a street sweeper, let's just say. Cause you've told me offline, really, how you can actually get a lot more for your money by doing financing and approaching it that way. I think people might be surprised at, especially municipalities, of how much value you can get of taking this approach.

Jake Ost (10:30):

Correct. Yeah. If you're thinking about, if you have $200,000 in your budget to purchase a piece of equipment, you really can, with that $200,000, leverage that, and get about, normally, six times that amount of equipment.

Jake Ost (10:45):

It seems like a big number and obviously, they don't have to take advantage of that totally, but by financing, you don't have to use that capital money. That could be used for, especially now, in times of emergencies, there's a lot of government agencies that didn't budget for buy-in, maybe 20,000 or 50,000 dollars worth of PPE equipment. That wasn't needed a year ago.

Jake Ost (11:11):

So that's the way you got to think of it, is if you're budgeting for a $200,000 purchase, understand that in a tax-exempt municipal lease to own, really only have to budget for the annual payment. And if we can defer that for a year, you're really not budgeting for it for next fiscal year. So, a $200,000 purchase, you really, maybe need to budget, let's just say $40,000. Well, now we have 160 leftover, what do we need to do with that? Okay, you can use that for emergency purchases. If a vehicle breaks down, you have extra cash available. Or maybe, let's use street sweepers for an example, maybe there's really a need for two of them. You really should replace two, but you're only going to replace one, cause that's all you had in your budget.

Jake Ost (11:58):

Now you have the ability to utilize that. Cut the maintenance costs from old equipment. Maybe your repairs are costing you five to $10,000, if not more, a year. Let's get rid of that old equipment, and put yourself in a good situation where you have the advanced technology, emissions keep changing. So everything really gets affected and the solution is there.

Jake Ost (12:21):

Also, keep in mind, in a tax-exempt municipal lease, I referred to it a second ago, the non-appropriation clause, we include that with all our documents. It's very important for government agencies to understand that, that's available, because it allows them to have the annual appropriations of the lease payment, which, they have the ability to utilize operating budgets over capital budgets. So they can choose where they make their payments out of, and that might help them. Maybe the capital budget is depleted, but there's extra money in the operating funds. Well, you can make a lease payment out of your operating budget.

Jake Ost (12:55):

So there's so many advantages to it. It's a great conversation to have, I appreciate us doing this today, because it's another way for customers to understand the benefits of leasing and financing. Because it's going to be really, a great tool for them moving forward. It has been this summer and fall, but I truly believe in 2021, it's even going to be a larger solution for many agencies across the nation.

Matt Starnes (13:21):

Yeah. A lot to unpack there. I think, just a wealth of information there. We'll actually put this up on our website, buchermunicipal.com, and we'll put it in, of course, the financing section there. So people can, if they missed it or want to watch it again, they can watch it there. Also, we'll put it on YouTube.

Matt Starnes (13:42):

I think just a lot of really good information and to your point, sometimes we hear that when we're out, because we have a larger solution line at Bucher. So people will say, "Well, I've got money for a street sweeper. I also need a sewer cleaner truck, a tanker." Or, they might say, "Hey, winter's coming up, but we're up here in the North, Northwest, Northeast, and we really need a plow."

Matt Starnes (14:08):

So, I think what you're talking about is really beneficial for those folks. They might be able to afford both and not have to wait, and not have to get into a much more expensive, like you were talking about, situation where they're having to constantly repair and... I don't know, duct tape, flex tape something, so it can last.

Jake Ost (14:29):

Yep. Really, it just comes down to helping them leverage their money to get all the essential equipment they need, when they need it. Not waiting years when costs keep going up, that's the true value of it. And understanding the whole process will bring them great value.

Matt Starnes (14:47):

Jake, anything else you think we should cover or add on?

Jake Ost (14:56):

If customers have any questions, I would just say, they can give me a call anytime. 320 763 7600, or my email is just, jakeo@nclgovcap.com.

Matt Starnes (15:09):

Excellent.

Jake Ost (15:10):

And really, to close it out again, appreciate the opportunity to do this. This was great. I think the information is great, and partnering with you guys to provide solutions for your customers has been wonderful for me, and a great relationship we have built.

Matt Starnes (15:27):

We definitely appreciate it and look forward to helping folks find those solutions they need, especially moving into 2021. Cause, I know the holidays are going to be here pretty quick for 2020.

Jake Ost (15:40):

Yeah. It's approaching quickly for some reason.

Matt Starnes (15:43):

Yeah. All right. Well, Jake, thank you so much. And we would love to have you back on, most likely on a quarterly basis, as we go through 2021. Whether we do video and audio, or vice versa. But we're very excited and thanks again for joining us.

Jake Ost (16:00):

Hey, thank you very much. You have a wonderful day.

Matt Starnes (16:02):

You too.

Announcer (16:03):

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