“Prescribing” the Right
Financing for Your BusinessUsing Leasing to Acquire
Equipment, Technology and Software
Equipment Leasing Facts/Trends
History of Leasing Thousands of years old: Ancient Samarian city of Ur
• Agricultural tool rentals to farmers by priests Utilized By the Automotive industry In the 1950’s Needed a way to move more cars with increased
production capacity Used a small monthly payment to make a large ticket
item more cost efficient to the general public
$300 Billion industry and growing80% of companies lease equipment
Paying monthly for the use of equipment, technology or software that generates revenue, or, improves
workflow efficiencies and bottom line.
What To Lease, You Ask?!
Benefits of Leasing
Conserve Cash & Working Capital Preserve Bank Lines of Credit Pay Only for What You Use Enjoy 100% Financing Tax Advantages Avoid Bank Restrictions Eliminate Equipment
Obsolescence Flexibility
Lease Types
Capital Lease Title transfers to lessee at end of term $1 Buy Out
• Get it in writing! P.U.T. (10%) Section 179 tax deduction
True/Operating Lease Fair Market Value (FMV) Asset is off balance sheet Monthly operating expense written off
Flexible Lease Options
Deferred Payments 3 months @ $20/month contact payment
Step Payments Months 1-3: $150 Months 4-6: $350 Months 7-36: Full lease payment
Seasonal Payments Monthly payment skip or reduction
Case-in-PointSubject: Pharmacy Financing
Todd: I know this is a strange question, after the fact, but do you think the leasing company would restructure Frameworks and lease it to us. I am looking at different ways to affect our cash flow. Monthly lease payments may have been a better bet, but now after we have paid for everything, how much would they have been covered in the lease? Would they have financed any of the training, expenses and startup costs, as well as the licensing of the software. Who would I talk to?
‘Rule of Thumb’ Need capital for less than 12 months
Take advantage of bank relationship• Line of credit
Long-term use of a fixed asset LEASE!
Tax Benefits of Leasing: Special Depreciation Rule*
Section 179 tax code allows for 100% depreciation of capital in 1st year up to $250,000 in 2009.
Section 179 Deduction: $250,00050% Bonus Depreciation(2009): $50,000Regular First Year Depreciation Deduction: $10,000Total First Year Deduction:
$310,000Cash Savings on Equipment** $108,500
*Clients should consult their tax advisor to determine benefit availability**Assuming 35% tax bracket
Example: $350,000 Medication Packaging Unit
Acquiring Credit
Personal Credit Scoring Timely Payments Access to Cash
• % availability of revolving credit Number of Inquiries
Business Scoring Time in Business
• Start-up vs. seasoned business Business Type
• S-corp, C-corp, LLC Industry D&B Reporting
• Paydex: Industry Peer Measure• Paynet: Financial debt, i.e., loans, leases, credit lines
Type of Leased Asset
yooj Rewards
The size of success.TM
Questions?Comments?Thoughts?Needs?