1. Article 179 – Section 179 of the IRS Tax Code allows a business to deduct the full price purchase price of qualifying equipment purchased or financed during the tax year. As such, by leasing equipment and deducting the full purchase price you essentially get “Free” usage of your equipment for over a year.
Example: You buy a $100,000 piece of equipment and finance it on a 60 month lease/purchase contract with a monthly payment of about $2200. If you are in a 34% bracket your first year write-off comes to $34,000, which is enough to make the first fifteen lease payments (34,000 2200 = 15.45).
2. Direct Tax Expensing – Companies that do not qualify or choose to employ the Article 179 Alternative, lease payments are written off as they are made. This eliminates the need for depreciation schedules and allows faster write off. This results in increased cash flow for your customers.
3. “100% Plus” Financing – LeaseStation leases can cover everything you need to make your equipment work for you. This includes software, installation, related leasehold improvements, training and even some supply items. This minimizes your initial costs and allows you earn profits from your new equipment faster.
4. Proven Alternative – Leasing is a well accepted concept. Over 32% of all equipment acquired in the US is acquired under a lease contract. This makes leasing the single largest form of external corporate finance in the country. Over 80% of companies – from small start ups to “Fortune 500″ giants – lease some or all of their equipment.
5. Variable Payments – Lease payments can be matched to project revenues, seasonal cash flow variations, budget limitations and other challenges. The need to divert cash or add to loan balances is removed. Our leases can be structured with no payments for up to six months, longer amortizations, PUTs, TRACs or other optional alternatives to lower payments even further.
6. Financial Reporting Advantages – LeaseStation can structure leases to meet FASB requirements for “off balance sheet” accounting treatment. Since the total committed lease payments now show as a footnote rather than as a liability the overall ratios are improved and there is less risk of lending covenant violations.
7. Protecting Bank Lines – Banks are great for short term needs and you should use them in that way. An available line of credit is an extremely valuable tool to address unforeseen emergencies. Therefore reducing those open lines by using them to finance equipment can be dangerous. Furthermore, bank terms, appetites and flexibility on equipment transactions range from “less than optimum” to “downright difficult”. Let your bank do what it does best.
8. Avoiding Bank Restrictions – Leases do not include blanket liens, restrictive covenants, rate escalator clauses, “call anytime” provisions, compensating balance requirements (a five year 6% loan with a 20% compensating balance requirement actually yields about 15.7%) or any of those other nasty little surprises that tend to be a part of traditional lending arrangements.
9. Simple and Easy – LeaseStation leases feature simplified documentation, easy one page applications, no financial statements in most cases, accelerated approval times and more. LeaseStation leases are designed to get you the equipment you need without delay.