Types of Financing and Their Advantages
| TYPES OF FINANCING | ADVANTAGES OF FINANCING |
|---|---|
| Loans Companies are offered a loan product to give them the ability to own equipment without using their working capital to do so. Our loan agreement can provide a fixed and floating interest rate. Terms vary from 12-84 months, depending on your needs. |
Flexibility Many business conditions including cash flow, equipment needs, and tax situation may dictate the terms of the finance agreement. Regardless of your situation, we will be able to provide numerous financing options. |
| Capital/Finance Leases This program is designed for a company that would like to retain the tax benefits (depreciation) associated with the purchase of capital equipment. Terms range from 24-84 months, and we currently offer a fixed rate based on treasury bills. A fixed purchase option from $1.00 up to 20% of the original equipment cost is available. |
Protection Against Equipment Obsolescence Your risk of getting caught with obsolete equipment is lower, because you can return equipment or secure an upgrade. Moreover, your equipment needs can change over time. Financing helps you keep your options open. |
| Operating/Tax Leases This program is designed for the customer that wishes to expense the total payment monthly. This is commonly known as “off balance sheet” financing. Terms range from 36-84 months with fixed rates well below the prime rate. Per IRS rules, the purchase option must be at fair market value at the completion of the term, or you may return the equipment with no further obligation. |
Cash Flow Management Borrowing reduces lines of credit while leasing keeps your lines of credit open, so you don’t tie up your cash in equity with costly down payments. Advantages, such as off-balance sheet financing, help you better manage your assets and liabilities. Reduce Cost of Inflation Pay for equipment you obtain and use now with tomorrow’s dollars. |
| Rentals This program is designed for the customer who wants to use the equipment with the option to return it. Terms range from 12 to 36 months. |
Tax Advantages The lessor realizes the depreciation benefits, enabling you to deduct 100% of rental payments as regular operating expenses. Moreover, if you are subject to the alternative minimum tax, you benefit because lease payments are not considered as tax preference items. Please consult with your tax advisor. |
| Sale/Leasebacks The Sale/Leaseback allows a company to unlock valuable cash/working capital from equity it may currently have in a piece of equipment. TFS would purchase the equipment and lease the machine back to the original owner, who continues to use the equipment and pay a monthly lease payment. A Sale/Leaseback offers tax advantages to fully depreciated assets. Lease payments can be expensed, and this transaction may be kept off of your balance sheet. |
Overcome Tight Budget Limitations Because lease payments can be expensed, you don’t have to go through the process of approving a purchase. |
Disclosure: The information provided on this page is for informational purposes only and does not constitute financial, legal, or tax advice. Financing options, terms, and conditions are subject to approval and may vary based on creditworthiness and market conditions. Tax benefits and accounting treatments should be reviewed with your tax professional or accountant to determine their applicability to your specific situation. Please consult with your financial professional before making any financing decisions.