EQUIPMENT FINANCING PRODUCTS
BUSINESS FINANCING HOME > PRODUCTS
WHATEVER YOUR BUDGET OR TAX STRATEGY MAY BE, WE HAVE A PRODUCT FOR YOU.
Our experienced representatives can help guide you in selecting the right financing structure for your business. UCC will help you maintain your competitive edge.
$1 Purchase Option Lease
10% Purchase Option Lease
Fair Market Value Lease (FMV)
Equipment Finance Agreement (EFA)
Sale Leaseback/Recent Purchase Reimbursement
Secured Working Capital
The $1 Purchase Option Lease is one of the most widely used forms of business financing agreements. This lease agreement transfers ownership of the equipment to you at the end of the lease term after you purchase the equipment for $1. The lease payments should be deducted as a capital expense, and the equipment should be capitalized and depreciated just like a loan or cash purchase*. This option also allows for low out of pocket expenses and has level monthly payments for budgeting purposes. The $1 Purchase Option lease features limited paperwork to complete, plus orders can be placed directly with your equipment supplier by Union Credit Corporation for quicker delivery times.
The 10% Purchase Option Lease is essentially identical to the $1 lease with the exception of a lower monthly payment. This is due to the fact that only 90% of the invoice amount is being financed. Equipment ownership is transferred to you after the 10% purchase option payment is made at the end of the lease term. The monthly payments may be 100% tax deductible*. At the end of the lease term you may return the equipment or purchase it for 10% of the original cost. Like the $1 Purchase Option Lease, Union Credit Corporation can place orders with your suppliers directly while keeping paperwork to a minimum.
The Fair Market Value (FMV) lease option features the lowest monthly payment available. The monthly payments may be 100% tax deductible*. At the end of the lease term you may return the equipment or purchase it at Fair Market Value, which will be determined at the end of the lease. If you do not wish to purchase the equipment for the price you are quoted, you are under no obligation to buy it. This is the best option if you plan to keep your equipment for a short period of time and/or for equipment that becomes obsolete quickly. This option is very popular with computer equipment, for example.
The Equipment Finance Agreement (EFA) is, simply put, an equipment loan. Along with the $1 lease, the EFA is one of the more popular forms of business financing agreements. Ownership of the equipment is transferred to you immediately upon loan funding. For tax purposes, the equipment financed is treated as a depreciable asset and the interest on the loan payments can be expensed*. This option allows you to plan your budget accordingly as monthly payments are fixed, and out of pocket expenses are minimal. Soft costs such as installation, training, and sales tax can be financed as well. EFA’s are most commonly used for titled vehicle/trailer purchases and for recent purchase reimbursement or secured working capital loans.
A Sale Leaseback, or Recent Purchase Reimbursement loan, is used to finance equipment you have already purchased 100% in full within the past 30 days (60 days is some instances). Loan or Lease documents can be used, and you will be reimbursed for the amount you paid to the equipment seller. This option can be extremely useful in auction situations or with private party sellers where you may have to pay cash in order not to miss the opportunity to buy.
Where a Sale Leaseback would be used to finance equipment that was just purchased, the Secured Working Capital loan can be used to finance equipment that you own free and clear, regardless of how long you have had it in operation. With this type of contract, you are essentially getting money back for equipment that you own. Preferred collateral for these types of loans would be items such as trucks, trailers, manufacturing/CNC machines and construction equipment, to name a few. The Secured Working Capital loans are made at a 2:1 ratio. For example, if you pledge $50,000 worth of collateral, you can secure a loan of $25,000. The loan proceeds would be funded directly to your bank account and can be used for any business purpose.
*Union Credit Corporation does not offer tax advice. Always consult a qualified tax professional.