By Dave Millhouser

Harry Truman once said banks were willing to lend you money . . . just as soon as you proved you didnt need it. Probably true then, surely true now.

The current situation in the financial markets is influencing the coach business in a number of ways, and some are not obvious (at least not to the guy who, a few weeks ago, explained how NOT to rebuild an engine).

In an effort to stimulate the economy and mitigate the effects of the mortgage crisis, the Federal Reserve has lowered some key interest rates. Logically, there should be tons of money available for bus financing, at low rates. Not necessarily.

It turns out that the institutions that do most bus financing peg their rates to Treasury Bills, rather than the short-term rates that influence the prime rate. Those jewels bottomed out a couple of months ago, and may be on the rise. Interest rates for coaches are near historic lows . . . but may not stay there.

If a new coach is in your future, another thing to consider is that the Economic Stimulus Act of 2008 provides for some nice depreciation and expense deductions. If you need equipment . . . sooner might be better than later.

There are a couple of caveats (a caveat is NOT a tooth problem). Several manufacturers report a tightening of credit. Lenders arent making a ton on loans; they seem to be more careful about who they fund. Theyre asking for more information, and examining it microscopically.

Coach operators spend considerable effort avoiding taxes. Using every legal means, they shelter earnings from the government. Its akin to flying a stealth bomber . . . if the enemy cant see you, neither can that oncoming 747. If the government cant see the profits, neither can the lender.

Successfully avoiding, or postponing, taxes can impact your ability to obtain loans, and impact down payment size and the interest you pay. Within the bounds of law (and decency) theres a balance.

One way to tilt the balance in your favor is to deal with "bus savvy" lenders.

Few coach operators look great on paper, but some lenders (and brokers) specialize in the bus business, and understand its quirks. The person arranging your financing is really doing a twofold job, hes working with you and hes selling you to the lender. Youre looking for someone who understands coaches in general, and your business in particular.

Youll find folks like this at all the major manufacturers, as well as at high quality brokers. Its more important than ever that you help them represent you by providing current, accurate data presented in a professional manner. Some lenders are going so far as to interview applicants. Theyre also looking at your personal credit.

Theres an urban myth that 30-day delinquencies dont hurt. In real life, they always did, but now they can be lethal.

The coach business has its own version of the subprime lender. There are a wide variety of them, some reputable, some not. One thing they all have in common is that they require large down payments, and charge high interest rates. They provide a service for segments of our industry, but like any tool, need to be used carefully.

When traditional financial sources dont work out, consider a few things before going the subprime route. Lenders only make money if they lend. If they turn you down, its because theyre afraid its not going to work. Respect their opinion, at least enough to take a hard look at where you are. Maybe its not time yet.

Its possible your company is sound, but youve been too successful at sheltering profit. If you take some time and show profitability, the extra tax burden may be far less than your savings in lower interest rates and down payment.

If you have an opportunity that traditional sources cant recognize, and feel you must use a second-tier financial source, be careful. Understand all the terms, know how much interest youre paying, and what other assets are being tied into the deal. Make sure you know who owns the coach at the end of the payments.

Assuming theres substantial "upfront money" . . . is it a down payment or deposit? Who gets it at the end?

In the current environment a top-notch accountant will pay for him/herself. They can help you in "selling your company" to lenders, and assist in getting good terms and lower interest rates. Along the way, they can provide insight into how your business is really doing, and help build relationships with lenders.

To get the favorable deals available now, a good credit history and comprehensive information, professionally presented, are crucial. Otherwise lenders may offer another quote from Harry Truman . . . "The buck stops here."

Dave Millhouser is a marketing consultant for ABC Companies. Contact him at: dave_millhouser@hotmail.com.