Financing

Here is a transcript of the above video for your reference:

Clark: [00:00:00] Hey Clark Covington here with Nic Campesi, Nic, how are you?

Nic: [00:00:05] Great Clark how are you?

Clark: [00:00:06] I’m doing great. Today I just want to talk to you a little bit about the Jelly Bean rubber mulch product and the financing that you guys offer. Can you tell me a little bit about Jelly Bean rubber mulch to begin with?

Nic: [00:00:20] Absolutely man, yeah. You know Jelly Bean rubber mulch is a pre-consumer virgin rubber product. This is a non-tire rubber mulch 100 percent free of contaminants and it’s initial use is the trimming off of a rubber play tile that is initially designed for kids to play on. So it’s just a much cleaner product than other alternatives in the marketplace and it’s guaranteed to be free of contaminants steel and other nasty things that can get stuck into rubber mulch so just a much cleaner product.

Clark: [00:00:53] Absolutely absolutely. So this product. It’s a play surface. Do you finance the product, is that correct?

Nic: [00:01:02] We do we offer the ability to spread the cost over as many as five years.

Clark: [00:01:09] OK so is it a lease or or a purchase or both. Can you can you explain that to me?

Nic: [00:01:15] So for federal tax us tax regulations it’s actually structured as a dollar out lease. Now you’re buying the product and you’re going to own it at the end and it’s just structured that way so for-profit entities can take advantage of accelerated depreciation.

Clark: [00:01:33] Absolutely absolutely it makes total sense and they can do that the first year right?

Nic: [00:01:38] That is correct.

Clark: [00:01:40] That’s excellent. So is this done through a third party or do you guys hold the note how does that work?

Nic: [00:01:46] It is. There’s a third party that handles all of the paperwork and processing and it’s a really painless process. You know usually we can have you approved in sometimes hours and have everything ready for for for sign off and really it’s almost quicker than sometimes writing a check.

Clark: [00:02:06] Wow that’s that’s excellent. And it makes me think about. Who would be eligible for this kind of financing would it be municipalities like parks and schools or just for-profit entities or how would that work?

Nic: [00:02:19] So it is any commercial entity so you can be non-profit for-profit. It could be a park it could be a school district. It could be a local private school even an HOA.

Clark: [00:02:32] Oh wow. That’s excellent. So can you give me a use case or two on how the cost of a playground safety surface like Jelly Bean might be structured in a lease finance situation that you mentioned?

Nic: [00:02:45] Certainly. So you know a good example is a school that’s tied in with a church that we that we recently were contacted by and they they wanted to redo their playground. They’ve been putting wood chips out every year and you know they’re spending a few thousand dollars a year putting wood chips out they’re rotting kids have allergies to them and they ultimately are saying hey we’ve got to upgrade to something else and you know they get into the world of synthetics and you’re going to spend quite a bit more up front but in the long term you know a synthetic product like ours is going to be way way more cost effective now. Good example they could ultimately. You know they could have written a check for 30,000 but you know they had other things they also had to repair around the church and what they ended up doing was they just spread the cost out over five years. So it was like seven thousands dollars year one seven thousand two and it really was very close to the same amount of wood mulch that they were putting down every year. And the nice thing about our product is that in five years they own it. And it’s free and clear.

Clark: [00:03:55] That’s excellent. And what if you know when you think about financing. You might think about how much it’s going to cost. What if a buyer doesn’t know how much it’s going to cost? Would they be able to get in touch with you and you can kind of assist them to figure out how much surface they’re going to need?

Nic: [00:04:09] Absolutely. You know that’s the start of everything is as we identify how much area you need to cover what’s needed and then we’re able to give you quote.

Clark: [00:04:21] OK OK that’s that’s great. And I’ve asked this before but let me ask it again would financing take away from any of the benefits that you enjoy by purchasing direct such as your best-in-class 20 year warranty?

Nic: [00:04:34] Not at all. Everything is covered 100 percent whether you finance pay cash write a check credit card you know it does not affect the product warranty.

Clark: [00:04:45] OK that’s excellent to know. Now we you mentioned earlier about a tax savings and I know you’re not an accountant but give me an idea if a for-profit say daycare might consider purchasing the Jelly Bean play surface through this lease purchase option. What kind of tax savings would they receive and when would that be?

Nic: [00:05:07] So you know a good example and you know a lot’s changed in the tax landscape. So we ultimately always say you know you got to talk to the CPA but you know very common deduction that a lot of businesses enjoy as you know the Section 179 accelerated depreciation and it allows you to depreciate the entire asset upfront sometimes even with a bonus. And so you could purchase the Jelly Bean rubber mulch as a safety surface for your playground at the daycare. Make the payment for year one but actually write the entire amount off in year one. So it’s almost nothing out of your pocket for into two years. It’s it’s it’s free because you’re going to get to enjoy the tax savings upfront. And now ultimately it’s going to depend on your unique tax situation. But once again you have to consult with your own adviser. However it really lowers the overall cost. And this is money that you would have been sending to the IRS anyway that you could put back in to your business to help it grow.

Clark: [00:06:17] Yes that’s excellent. That is one of the biggest benefits even for some might make sense to finance if they didn’t even need to.

Nic: [00:06:26] Absolutely.

Clark: [00:06:27] Now let me ask you this is if a buyer is looking at a play surface like Jelly Bean and they’re also looking at play equipment or other ancillary things that might go on a playground or near playground like fencing so forth. Can they bundle the financing in together with the equipment?

Nic: [00:06:46] They absolutely can.

Clark: [00:06:48] That’s great. That’s great. I’ve spent some time researching other play surface manufacturers and I don’t see many offering financing. Why do you think that is?

Nic: [00:06:59] You know there are some costs involved and there are some administrative fees that we we we absorb and we absorb it because we we know that you know we have a wonderful product that’s going to be long term good value for the customer and for us that that’s a cost of doing business to to help people get involved with our product because we know in the long run that they are going to be better off with a lower cost surface. And so we know it’s part of part of our overall market is to be able to a get the number one objection that someone could go over say would be price you know hey we know you have a great product Nic we know is the best better product than other safety surfaces we’re looking at. However it costs a little bit more you know I’m not sure if we’re going to be able to swing it well this completely takes that objection off the table.

Clark: [00:07:58] Absolutely. And last question I’ve got for you. You know we talked a little bit about wood mulch is a very popular play surface. Give me an idea let’s say over five to 10 years the cost of say putting wood mulch in and having to replace it versus financing Jelly Bean.

Nic: [00:08:22] So you know that five years kind of a magic number and sometimes it’s low you know sometimes it’s right there. I mean we’ve had everywhere from three years to five years is kind of the payback on our period on our product over a wood mulch product now it’s going to vary depending on where exactly you are located. You know are you using proper playground certified wood chips you know or you know that that’s all going to come into play on what the actual payback is. But it’s usually under five years and and that’s the beauty about our product is is that you can install it you make your payments and then you’ve got 15 years of warranty left on a safety surface that you would still be paying wood mulch every year. So I mean if you look at it over a 20 year period would mulch is four times as much or more cost than the Jelly Bean product.

Clark: [00:09:21] Yeah that’s remarkable. Look I know every situation is unique for financing. Can people get a hold of you to talk more about it?

Nic: [00:09:29] Absolutely. And you know the best the best thing to do is to start out you can you can request a quote on the website or if you want to call us direct at any time. Our number is 8 7 7 2 4 9 8 8 1 8.

Clark: [00:09:46] Wonderful thank you so much Nick

Nic: [00:09:48] All right. Thanks Clark.