Financial Solutions for Growth…. Equipment Financing. Why Choose Financing?. More companies acquire equipment through leases than loans Businesses recognize the value of equipment comes from its use, not necessarily it’s ownership. Reasons Companies Finance.
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Reasons Companies Finance
Businesses profit immediately from equipment use:
Better, high-end equipment for minimal change in monthly payment (avg. $20 increase for every additional $1000 financed!)
Lease payments are a 100% tax-deductible expense for your business!
Consider the productivity of new equipment and an affordable $500 Monthly Lease Payment (Usage/Rental Fee)
Daily Cost of Equipment
Monthly payment $500 by 30 days = $16.67/day!
Hourly Cost of Equipment
$16.67 by 8 workday hours = $2.36/hour!Benefit from Equipment Use
Tax Savings: Non-Tax LeaseNon-Tax Leases: Attractive to companies that want the tax benefits of ownershipLessee purchases equipment upon lease termination at a pre-agreed amount: $1.00 Buyout, 10% PUT, SD=BO, or EFA (Equipment Finance Agreement)Tax Benefit: Accelerated depreciation using IRC Section 179 in year purchased and put in use and interest write-off throughout the life of the lease
Tax Savings: Tax LeaseTax Leases: Attractive to companies that continually update equipmentLessee wants use of equipment without ownership and may return it at lease-end Tax lease is not considered debt and does not appear as debt on the tax return, making the lessee’s balance sheet more attractive to traditional lenders Tax Benefit: Deducting 100% of lease payments as an expense lowers a businesses' taxable income
Time Value of Money:
The value of money based on where/when it’s invested.
1.CASH: Consider investing $25,000 in a 5 year investment with an average return of 8% (second example shows 15% return). After 5 years, the $25,000 = $36,733 or $50,284 with a 15% return.
2.LEASE: In comparison, finance $25,000 in equipment via a five year lease with a monthly payment of $517.50 and an end of the lease option of 10%. The cost to lease, not including the 10% option is ($517.50 x 60) = $31,050.
Time Value of Money
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