Equipment Leasing & Finance Options

Rental - How does it work?

Rental is a funding arrangement where the applicant pays an agreed rental to use the equipment without any obligation to purchase. At the end of the agreement one of the following can occur:

1) the equipment can be purchased for a negotiated amount
2) the equipment can be returned to the financier or
3) the equipment can continue to be rented by the client

Note: a rental facility is off balance sheet for accounting purposes.

Rental - Key Benefits

• Reduced risk of financial loss due to technological obsolescence
• Payments are fully tax deductible.
• For Government bodies repayments are treated as operating expenditure and not included in capital expenditure budgets.
• Client has no risk for the re-sale of equipment; however, equipment can be purchased subject to negotiations.
• Payments are fixed for the term of the agreement.
• Maintenance and service can also be included in a rental agreement
  

Please Note: We strongly recommend that all applicants consult their Accountant for advice on tax consideration of rentals.

Finance Lease - How does it work?

Finance lease is a simple way for clients to fund the purchase of equipment required for their business. Primarily, the business hires/rents the required equipment for an agreed monthly lease/rental amount over a fixed term with an agreed residual value. The residual value is the amount payable on the expiry date of the lease term to acquire full ownership of the equipment. This residual value is agreed between the financier (lessor) and the client (lessee) at the commencement of the finance arrangement.

The lease payments pay the lease down to the residual value (which is guaranteed by the lessee). Lease payments are usually paid monthly in advance and can be tailored to suit the individual business. The leased asset is reflected on the balance sheet of the business as is the lease liability.
Lease payments for equipment used to generate income are fully tax deductible.

The business owner remains responsible for maintaining and insuring the equipment for the life of the asset.

Finance Lease Key Benefits

• Fixed rental payments for contract term.
• Ability to structure repayment term to the estimated life of the asset
• No capital expenditure restraints
• First rental is usually the only initial outlay.
• Rentals are fully tax deductible.
• Reduced risk of financial loss due to technological obsolescence
  

Term purchase - How does it work?

Term purchase is also known as Commercial Loan, Asset Purchase, Commercial term purchase or Lease Purchase. Term purchase is a lending facility whereby the business owner obtains the required equipment in return for fixed monthly repayments.

Ownership of the equipment is transferred automatically to the business once the final repayment is received by the financier. Term purchase facilities are also recorded on the Balance Sheet of the business and for accounting purposes; the business is treated as the owner and can claim the depreciation and interest in their deductions. The Interest rate is fixed for the duration of the Term Purchase Agreement.

Deposits at the commencement of the agreement can be offered in the form of both cash and/or equipment trade-ins.

Term purchase - Key Benefits

• A large (balloon) payment can be structured at the end of the agreement to lower the monthly repayments.
• Up to 100% financing for equipment purchases.
• Equity is built in equipment with each payment.
• Depreciation and interest is fully tax deductible.
• Ownership is guaranteed at the end of the agreement