Your Cash Position

Lease back is essentially a financial program in which we buy equipment that is already owned by your company, giving you instant working capital, and then lease it back to your company over a specified period of time.  The Lease can be a Fair Market or Dollar Buyout, however, there may be more scrutiny of your finances.  But the end result is you have new financial flexibility through a strong cash reserve.

• $100,000 Principal Amount
•  Interest at 12% per Year
• Lease Residual of $20,000
• 36 month Term

Monthly Loan Payment:  $3,321

There are three predominate forms of Equipment financing:

1)  Self Finance:  Uses your own personal or company cash to buy the equipment.  The company owns the equipment and will have access and use of the equipment until the company decides to sell or salvage it.  Because the equipment is owned by the company, the depreciation is tax deductible, and the asset can be used as collateral for other loans or leases.  In today's business climate it is best to keep as much cash in hand as possible to cover shortfalls in sales and unexpected expenses.  Leasing allows you to minimize the monthly payments so you maximize your cash position so if a downturn occurs you have the cash reserves to meet you obligations. 

2)  Loan:  Loans come from banks, vendors, manufacturers, third parties, friends, and relatives.  When done through a bank or other financial institution the loan counts against your credit and increases your liabilities on your balance sheet.  A loan is based on the total cost of the equipment, less any monies you put up as a deposit, or partial payment for the value of the loan.  You get to deduct the interest on the loan, plus there may be tax benefits, But the monthly payments are often significantly higher than a lease, potentially eating through your cash reserves at a faster pace.  At the end of the loan you own the equipment, and must then decide whether to replace, sell, or salvage it.

3)  Lease:  Operating or True Leases are funded by many different financial institutions and are often easier to attain than a loan.  The lease does not necessarily count against your credit, depending on the credit history of the company, the principals, and the type of lease.  In most lease situations, the equipment is owned by the leasing company and leased to the end user with a specific set of terms and conditions.  You get to deduct the entire amount of the lease payment on your taxes, however, any additional tax benefits may go to the the Leasing company, again, depending on the type of lease you choose.