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FAQs

Q?

How is accounts receivable factoring different from asset-based financing?

A.

Accounts receivable factoring companies never deal with loans based on collateral. They do not take over the small business or equipment to repay on a debt. Factoring involves the small business selling its invoices to our company at a discount. The purchase amount will be based on the original invoice, as the small business will receive this amount as immediate cash that they can use for their business operations.

We then collect invoice payments from the customer. We forward the remaining payments to the small business as we take out our fee. We do not engage in collection calls with the customers as we only contact them to verify the invoice amount they need to pay and where they can send their invoice payments. If the customer does not pay the invoice, the small business can buy back the invoice or they may swap out that invoice with a different one.

Q?

What is a Lease Purchase for Equipment Financing?

A.

Leasing Equipment instead of making outright purchases has many advantages, especially for new or expanding companies. A Lease Purchase Agreement enables you to obtain equipment that you may otherwise be unable to afford, but that you need to grow your company and increase your profits. It allows you to purchase the equipment to increase revenue while you pay it off over time.

Q?

Are there different types of leases?

A.

Yes. There are two fundamental types of leases. A true or operating lease and a finance or capital lease.

True or operating leases are usage agreements and typically fall under a Fair Market Value (FMV) or 10% Purchase Option lease.

10% Purchase Option Lease
This type of lease allows you to use the equipment you need now and own it later, if you want!
Lower monthly payments
Typically 100% tax deductible; just like office rent or utilities*
Several end of lease options: Buy It for 10% of the original equipment cost, continue to rent it, return it or trade it up

Fair Market Value (FMV)
This option, also known as a true or operating lease, also provides flexibility at the end of the lease. You can decide to own the equipment, extend the lease, or upgrade based on business need. This option does not have a fixed purchase amount.
Lower monthly payments
End of lease options, however does not offer a fixed end of lease purchase amount
Several end of lease options: Buy It for the current Fair Market Value, continue to rent it, return it, or trade it up

Finance or Capital leases are also considered conditional sale contracts. The lessee owns the equipment, but lessor retains a security interest until the obligation is paid in full.

$1.00 Buyout Option
This type of program, also known as a Financing or Capital Lease is perfect if you want to own the equipment now but pay as you go. You can account for the lease as a purchase and depreciate the asset on your balance sheet, all without committing a large amount of capital.
Your payments buy the equipment
Take advantage of IRS Section 179 or just depreciate it*

Q?

Are lease payments eligible for a tax write-off?

A.

Leasing gives your company the opportunity to deduct your installments from taxable income. Typically, the IRS will allow you to write off up to 100% of your lease payments on a True or FMV lease. Simply consult your tax professional, as every business is different.

Q?

What is the process to get started?

A.

Our equipment leasing application takes only several minutes to complete. Usually, you will receive a response within hours of submitting your application, and we can provide same-day funding in many cases. In addition, our professionals will be working with you throughout the entire process to ensure your expectations are met and to answer any questions you have