FINANCING
SENNEBOGEN CAPITAL
Benefits of Financing
Financing has tax advantages
Within the Federal Tax reform Act of 1986, treatment of certain “preference” items raises the possibility of the Alternative MinimumTax (AMT). Financing may provide a means to minimize or even negate the impact of the AMT. (For further details consult a tax advisor.)
Simplifies equipment replacement
With financing, possession of and responsibility for the equipment is only for the lease term (unless the equipment is purchased at the end of the term). Financing eliminates the need to sell or store the equipment at the end of its economic life cycle.
Financing simplifies accounting
Leasing offers off-balance sheet financing in some situations. Accounting for a true lease agreement becomes little more than a matter of recording payments, thereby reducing accounting costs. (For further details consult a tax advisor.)
Financing offers unmatched flexibility
Equipment may be acquired piece-by-piece, lease-by-lease or can be tied all together in a Master Lease. Financing provides for the option to purchase, upgrade, return or extend an equipment lease at the end of the term.
What’s in it for your business?
Financing conserves capital
Capital is best used for income-producing investments, not necessarily equipment. With financing, the problem of equipment vs. capital is solved. Businesses get use of the equipment while capital stays where it belongs — working for the company.
Financing keeps equipment up to date
Purchasing equipment is not only expensive but overall usage may increase or equipment needs may change in a few years. Financing provides the ability to upgrade to the most current equipment as these needs change.
Financing protects other credit sources
When financing is used to acquire equipment, businesses are less dependent on other conventional credit lines, which can then be used for other income-producing activities or investments.
Financing provides a hedge against market fluctuations
The finance contract signed today remains fixed in today’s dollar and at today’s rates. As a result businesses are better able to budget future operating expenses.