PRODUCTS
Loans / Equipment Finance Agreements
This is structure represents a fully amortized repayment of the amount borrowed, plus interest. From a taxation and accounting perspective, the asset is placed on the borrower’s balance sheet and the borrower is entitled to the corresponding depreciation on the asset.
Amounts: $20,000 to $5,000,000
Terms: 24 months to 120 months
Leases
Capital Lease ($1 out)
A finance or capital lease is a full-payout, non-cancelable agreement, in which the Lessee is responsible for maintenance, taxes and insurance on the lease collateral. Reporting for this type of lease for taxation and accounting purposes by the Lessee is exactly the same as a loan.
FMV Lease
This lease structure provides lower payments through the initial term, and is normally characterized by allowing the Lessee to choose between the following three (3) options at end of the initial term of the lease:
1) Purchase the leased property for “Fair Market Value”;
2) Renew the lease at a rate to be determined;
3) Return the equipment to the Lessor.
There are tests this structure pass in order for it to qualify as an Operating Lease or “Off-Balance Sheet” treatment.
TRAC / Split-TRAC Lease
A tax-oriented lease of motor vehicles, trailers and qualified construction equipment that contains a “Terminal Rental Adjustment Clause” –TRAC, and otherwise complies with the requirements of all applicable tax laws.
True Lease
A type of transaction that qualifies as a lease under the Internal Revenue Code. It allows the Lessor to claim ownership and the Lessee to claim rental payments as tax obligations.
Synthetic Lease
A synthetic lease is a financing structure which is treated as a lease for accounting purposes, but as a loan for tax purposes. The structure is used by entities that are seeking “Off-Balance Sheet” reporting of their asset based financing, and that can similarly use the tax benefits of owning the financed asset.