Monday, August 18, 2008

FAQs: Equipment Leasing

If you are researching equipment finance companies or equipment leasing in general chances are you have several questions and would like a great resource to assist in your decision making.

How long does the process take?

With most transactions that are under $100K the prequalification process is completed within 1 - 2 business days. We will then issue the final documentation and when the equipment is delivered we are ready to pay the supplier. In most cases the financing only takes a few days. The longest lead time is typically associated with the equipment availability.

What factors are used to determine credit worthiness of the business?

The length of time in business, references from bank and trades, Dunn & Bradstreet and credit bureau ratings.

How is a lease structured?

A lease is flexible and can be tailored to your business needs. Lease terms typically range from two to seven years. Payment schedules can be fixed or timed to fit your needs. The most common is equal monthly payments.

What are the tax advantages of leasing?

In some instances the monthly lease payment is treated as an operating expense and creates a "line item deduction" against revenue. In other instances the equipment is depreciated and written off over the useful life of the asset. Because every business is unique, we encourage you to seek out a qualified accountant to assist with the specific situation regarding your business or organization.

Brad Harmon is the President at a leading financing company, First Star Capital (http://www.firststarcapital.com/ ). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.

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