Equipment Lease Financing

EQUIPMENT FINANCING

Creative, Flexible, and Timely are only a few words that describe our business philosophy. Though we don not have a set minimum, we consider lease requests up to $35 million with the typical transaction ranging from $350k to $8 million.

Our focus is helping both established as well as young companies acquire or refinance new and used income producing equipment. Unlike conventional bank financing which can restrict your borrowing capabilities due to government regulation, leasing can help you access the credit you need.

OUR PROGRAMS

New equipment - Most types are considered along w/ soft costs such as software and installation.
Used equipment – Typically hard asset value. Where the Lease term is matched with the equipment's expected useful life and its liquidation value.
Sale lease-back – Can help raise cash from your existing equipment or restructure your existing debt for increased cash flow.

Leasing can conserve your credit line and borrowing capacity. By reducing equity requirements, leasing can enhance your debt to equity ratio. When the transaction is structured as an operating lease your return on assets is enhanced, since the asset is not added to your balance sheet. Accounting administration is also simplified with the operating lease. Payments are treated as an expense, eliminating the need for maintaining depreciation schedules as well as principal and interest payment accounting entries. Tax advantages often make leasing less expensive than other forms of financing.

WHY SHOULD I LEASE BUSINESS EQUIPMENT?

Leasing equipment is synonymous with “use of an asset.” You don not pay your employees a salary in advance, you pay them as they contribute. It should be no different with a contributing asset like business equipment. Leasing enables you to pay as you use the equipment, not before.

NUMEROUS ADVANTAGES OVER OTHER FINANCING METHODS

100% Financing – Including Soft Costs - In addition to financing 100% of the equipment, you may be able to include in the lease "soft" costs such as sales tax, shipping, software, training, maintenance and installation. This leaves you with more money to invest in revenue-generating activities.

Potential Tax Advantages - Unlike borrowed funds, certain lease payments can be treated as an operating expense (tax deductible overhead expense). Therefore, the equipment does not have to be depreciated over a long term, resulting in a rapid write off. Monthly lease payments are paid with your pre-tax income instead of your after-tax profits. Leasing may also help your business avoid the Alternative Minimum Tax (AMT).

Reduced Paperwork and Approval Time - Leasing is simple and easy. Leasing can allow you to respond quickly to new opportunities with minimal documentation and red tape.

Easier Financing Than Bank Loans… - Avoid typical “bank requirements” such as compensating balances, large down payments, client list reviews, cash flow projections and the like.

Credit Preservation - Since leasing represents an entirely separate source of credit, it enables you to preserve your established lines of credit with banks and other financial institutions. Banks are great for short term needs and should be kept open and available for opportunities, inventory, marketing, personnel or emergencies. This not only enhances your borrowing capacity, but may improve your balance sheet by reducing long-term debt.

Avoid Bank Restrictions - Leases don not require blanket liens, restrictive covenants, rate escalator clauses, “call anytime” provisions, compensating balance requirements or any of those other encumbrances often required by traditional lenders.

Minimize Obsolescence - Leasing gets more mileage out of your money simply because your monthly lease payment is a very small portion of the total cost of the equipment. So, rather than trying to "make do" with obsolete equipment (due to heavy capital investment in its ownership) leasing gives you the freedom to react quickly and cost-efficiently to changes in the marketplace

Improved Balance sheet Ratios - Because an operating lease is not considered a long-term debt or liability, it does not appear as debt on your financial statement, thus improving the balance sheet and making you more attractive to traditional lenders when you need them.

Flexible End Of Lease Options - At the end of the lease term you may choose to purchase your equipment, upgrade it, or continue to lease it. Or if your done with the equipment, return it

END OF LEAS OPTIONS

$1.00 Out - This option allows you full ownership of the equipment at the end of the lease term.

10% PUT - This structure offers a slightly lower monthly payment in exchange for a fixed purchase option. At the end of the lease term you purchase the equipment at 10% of its original cost.

Fair Market Value (FMV) - Offers the lowest monthly payment. At the end of the lease term, you can purchase the equipment at the then fair market value of the equipment.

TYPES OF EQUIPMENT LEASES

True Leases - Referred to as a "tax" or "FMV" lease, these are designed to meet IRS tax guideline definitions of a lease and may offer you the fastest way to "write-off" the use of new equipment. A true lease can be treated as an operating expense for tax purposes and either, as a capital expense or possibly an operating expense for accounting purposes.

Capital or Finance Lease - This type of lease transfers ownership for a token sum at the end of the lease. Consider this lease choice if you intend to own the equipment at the end of the lease, or if the asset has an expected long-use-life. A capital/finance lease provides the benefits of ownership with the lessee taking depreciation and interest expenses related to the equipment. At the end of the term, full ownership of the equipment transfers to the lessee at a cost of typically $1.00

Operating Lease - This type of lease can be designed to meet accounting standards for off-balance sheet financing according to FASB (Financial Accounting Standards Board) rules, (to be determined by lessee's accountant).

Sale/Leas backs - In this type of lease, a business that has already purchased equipment sells it to the leasing company, which takes ownership of the equipment and then leases it back to the business. It's an effective way to free up working capital which may be tied up in fixed assets.

Synthetic Lease - A synthetic lease is basically a financing structured to be treated as a lease for accounting purposes, but as a loan for tax purposes. This structure is used by corporations that are seeking off-balance sheet reporting of their asset based financing, and that can efficiently use the tax benefits of owning the financed asset.