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HomeLeasing Education CenterLeases vs. Bank Loans  

Leases vs. Bank Loans

At EFSI we work with our customers to determine the lease or equipment finance agreement that best fits their business needs. The information below highlights some of the important differences between equipment acquisitions achieved through leases versus bank loans.
 

 

EFSI Leasing

Bank Loans

EFSI offers fixed rate financing.  Payment remains the same for full term of lease.  Rates are low when compared with banks Terms and Conditions.    Banks usually require floating rates for loans.  Rates are low now but will change as prime changes.  Banks may require compensating balances and/or charge substantial fees. 
EFSI offers 100% financing and may finance the soft costs associated with the equipment. Banks often require down payments of 20% to 30% or more and may limit terms to 36 months or less with floating rates.
With EFSI you expand your credit lines beyond your bank’s line of credit, building more resources for your growth. An equipment loan is a portion of your total credit exposure, and may limit your access to working capital or other required funding.
EFSI has flexible terms and programs to meet your cash flow needs.    Banks, in general, are not set up for step payments, delayed start of payments, or other unique structures.
The leased equipment is usually all that is needed to secure a lease transaction.  A loan usually requires the borrower to pledge other assets for collateral.
More of the cash flow, especially the option to purchase the equipment, occurs later in the lease term when inflation makes dollars cheaper. A larger portion of the financial obligation is paid in today’s more expensive dollars.
If structured properly, you can make your lease payments with pre-tax dollars and treat them as a business expense.   You must capitalize the bank loan for tax and accounting purposes.
The end user transfers all risk of obsolescence to the lessors, as there is no obligation to own equipment at the end of the lease. The end user bears all the risk of equipment devaluation because of new technology.   
When leases are structured as true leases, the end user may claim the entire lease payment as a tax deduction.  The equipment write-off is tied to the lease term, which can be shorter than IRS depreciation schedules, resulting in larger tax deductions each year.  The deduction is also the same each year, which simplifies budgeting (equipment financed as a conditional sale lease is treated the same as owned equipment). End users may claim a tax deduction for a portion of the loan payment as interest and for depreciation, which is tied to IRS depreciation schedules.
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    Leasing Education Center:

What is a lease

Advantages of leasing

Assets that can be leased

Common lease types

Financing options

Leases vs. bank loans

Glossary of terms

Leasing industry links

 


   EFSI Quick Links:

Get a leasing application

Our leasing process

EFSI lease rates

How to become an EFSI vendor
 


    Partner with EFSI to lease:

Medical equipment

Industrial and manufacturing equipment

Office and computer equipment

Telecommunications equipment

Construction equipment

HVAC and electrical equipment

Oil field service equipment

Agricultural and forestry equipment

Material handling equipment

Restaurant equipment

And so much more!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Enterprise Financial Solutions Inc.

501.375.2822 ph
501.375.2551 fx 
1818 N. Taylor Street #354
Little Rock, AR 72207-4637

Toll Free: 888.700.1414
Em
ail: leaseandfinance@efsolutionsinc.com 

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