“Prescribing” the Right Financing for Your Business Using Leasing to Acquire Equipment, Technology and Software

Equipment Leasing Facts/Trends History of Leasing  Thousands of years old: Ancient Samarian city of Ur Agricultural tool rentals to farmers by priests  Utilized By the Automotive industry In the 1950’s  Needed a way to move more cars with increased production capacity  Used a small monthly payment to make a large ticket item more cost efficient to the general public $300 Billion industry and growing 80% of companies lease equipment Paying monthly for the use of equipment, technology or software that generates revenue, or, improves workflow efficiencies and bottom line.

What To Lease, You Ask?!

Benefits of Leasing Conserve Cash & Working Capital Preserve Bank Lines of Credit Pay Only for What You Use Enjoy 100% Financing Tax Advantages Avoid Bank Restrictions Eliminate Equipment Obsolescence Flexibility

Lease Types  Capital Lease  Title transfers to lessee at end of term  $1 Buy Out Get it in writing!  P.U.T. (10%)  Section 179 tax deduction  True/Operating Lease  Fair Market Value  Asset is off balance sheet  Monthly operating expense written off

Flexible Lease Options  Deferred Payments  3 $20/month contact payment  Step Payments  Months 1-3: $150  Months 4-6: $350  Months 7-36: Full lease payment  Seasonal Payments  Monthly payment skip or reduction

Case-in-Point Subject: Pharmacy Financing Todd: I know this is a strange question, after the fact, but do you think the leasing company would restructure Frameworks and lease it to us. I am looking at different ways to affect our cash flow. Monthly lease payments may have been a better bet, but now after we have paid for everything, how much would they have been covered in the lease? Would they have financed any of the training, expenses and startup costs, as well as the licensing of the software. Who would I talk to?

‘Rule of Thumb’  Need capital for less than 12 months  Take advantage of bank relationship Line of credit  Long-term use of a fixed asset  LEASE!

Tax Benefits of Leasing: Special Depreciation Rule *  Section 179 tax code allows for 100% depreciation of capital in 1st year up to $250,000 in Section 179 Deduction: $250,000 50% Bonus Depreciation(2009): $50,000 Regular First Year Depreciation Deduction: $10,000 Total First Year Deduction: $310,000 Cash Savings on Equipment** $108,500 *Clients should consult their tax advisor to determine benefit availability **Assuming 35% tax bracket Example: $350,000 Medication Packaging Unit

Acquiring Credit  Personal Credit Scoring  Timely Payments  Access to Cash % availability of revolving credit  Number of Inquiries  Business Scoring  Time in Business Start-up vs. seasoned business  Business Type S-corp, C-corp, LLC  Industry  D&B Reporting Paydex: Industry Peer Measure Paynet: Financial debt, i.e., loans, leases, credit lines  Type of Leased Asset

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