Who can finance?
Most business structures, sole proprietorship, partnership, corporation, LLC (including non-profit corporations) or trust may enter into a finance agreement. With certain exceptions and restrictions, even the federal government, a state, a county, a school board or a municipality may qualify.
Why should I finance?
Financing offers many advantages. Financing will not deplete other resources like paying cash, or Bank Lines of Credit. 100% financing of the purchase is allowed, unlike a bank loan which will usually require a 20% down payment. There are also tax benefits that may save you money. Financing allows most businesses the opportunity to acquire assets and keep cash untouched for other useful purposes.
What financial or credit information is necessary to apply?
For purchases under $350,000, we usually need only a standard application and a recent bank statement. Sometimes we’ll have additional questions or need clarification on certain things. If we do, we’ll call and let you know. Purchases over $350,000, may also require two years of financial statements + interim statements. If you don’t have this information, or if your accountant doesn’t review it, you may substitute tax returns. Feel free to call us for details. We’ll be happy to talk to you.
What assets can be financed?
All new or used tangible property subject to depreciation (i.e., which remains useful after the year it was purchased) used in a trade or business or held for the production of income can be financed. Some examples are:
furniture, fixtures and office equipment
computer systems and data processing equipment
more options available
Can I stop the financing and return the asset?
The finance agreement is non-cancelable. However, if you need to upgrade to a larger or a newer asset, we’ll structure a new agreement for the upgrade. If you have a need to terminate the finance agreement, we’ll figure a buyout for you.
How are monthly payments determined?
The monthly payment is based on the term and structure of the finance agreement, cost of the purchase, and the credit of the borrower. Standard terms run from 12 to 60 months, although 72 and 84 terms may be available to qualified applicants.
What factors are used to determine credit worthiness?
1. Length of time in business.
2. The financial condition of the business.
3. Trade and secured debt references.
4. Dunn & Bradstreet (D & B) report.
5. Credit Bureau ratings.
What about sales and property taxes?
Applicable taxes must be paid (unless your business is tax-exempt) and can be included in the financing.
How long is the approval process?
Decisions are usually accomplished in less than 24 hours, depending on the size of the transaction and the accuracy of the information provided. If we need additional information, we will contact you.
How much of an initial cash outlay is required?
Usually, two payments, and a document processing fee. Borrowers with relatively higher risks may require additional security.
What are the different types of purchase options and loans?
A $1 Purchase Option Contract allows you to purchase the asset at the end of the contract for the nominal charge of $1. Fair Market Value or "FMV" contract allows you to use the asset for the term of the contract, and then either return the asset or extend the contract term. The purchase option is based on the Fair Market Value of the asset at the end of the contract term. A 10% Purchase Option allows you to purchase the asset at the end of the contract term for 10% of the original cost or renew the contract.
Equipment Finance Agreements are widely used today. EFA’s allow businesses to acquire the asset, utilizing comfortable fixed monthly payments and a set contract term, and the business takes ownership of the asset upfront.
Are there tax advantages?
Financing provides a more rapid write-off because the finance term is shorter than the depreciable life of the equipment, and the monthly payments are often 100% tax-deductible as a pre-tax business expense. Consult your tax advisor for more detailed information.
What costs can I include in a finance agreement?
We will finance the asset and 100% of the soft costs — up to 20% of the total amount being financed. This may include software, freight, installation, maintenance, and training.
What should I do if I have problems with the asset that I financed?
You should contact your salesperson with any service or warranty issues.
Why did you request my personal guaranty?
As an owner/shareholder of a closely held business, we view you and the business as one. Your guarantee confirms your commitment to your business and tells us that you will stand behind its obligations.
What is the Documentation Fee?
We do not charge an application fee. We do, however, charge a nominal fee to compensate us for processing the finance documents, and reimburse us for various fees, incurred such as filing UCC-1 financing statements that may be required in your state.
Why am I required to insure my financed equipment?
In the event the asset is destroyed or stolen, the finance agreement will be paid off from the proceeds of the insurance policy. Most commercial policies cover financed equipment; all you need to do is have your insurance agent forward us an endorsement at no cost to you.