Lease, Loan, or Cash Purchase?

  Cash SLC Lease Bank Loan
Flexibility of Financing Doesn’t allow your customer to add more equipment/services based on the Total up-front cost. Our business is convenient. We are service oriented. We offer lease programs up to $75,000 without financials. Often we can approve your equipment lease with just our simple, 1 page application. Regardless of the amount requested, most banks won’t begin to review your credit until you supply a full financial package.
Ease of Approval Process Not applicable in a cash sale. Southlake Capital turnaround time for a credit decision is typically within 24–48 hours under $75k. Over $75k, typically 2–4 days. A bank may take days or even weeks to approve a loan, especially today, if they will consider it at all.
Balance Sheet Implications Decreases cash flow immediately. Leased equipment is considered an “expense” on operating leases. Such assets do not appear on balance sheets which improves financial ratios. Banks require owned equipment to appear as an asset on budget sheets which will affect your line of credit.
Effect on Bank/Credit Lines Consumes most of the customer’s budget up-front as a cash sale depletes their bank account of income-earning funds. Cash is King! Customer’s bank line of credit is not affected and Southlake Capital can be utilized as an additional source for all equipment needs. Bank lines of credit/loans may be tied up and unavailable for future needs. Bank also could place a lien on all assets.
Restrictive Covenants Not applicable in a cash sale. Generally, there are no such restrictive covenants. Bank loans often require that the borrower maintain certain minimum financial ratios and report them to the bank on a quarterly or semi-annual basis. If the borrower fails to maintain those ratios, the bank can call the loan. They can also place restrictions on or limit future borrowings from any institution.
Upfront Cost You must pay the full cost of the equipment at time of sale. Able to finance the complete purchase including soft costs and sales tax. Out-of-pocket costs are usually limited to the first month’s investment. Banks usually require the customer to pay a down payment between 20-40% of the equipment cost, exclusive of soft costs such as shipping, installation, training, etc.
Upgrade or Adding Equipment Up-front purchases reduce the possibility of a customer spending more on a future sale. By offering a monthly payment, your customer can afford more equipment without the large up-front budget cost. Southlake Capital can also process the application quickly since he/she is a repeat customer. Customer must re-apply for a new loan to add new equipment. Most banks also will not allow the customer to roll in services (i.e. maintenance, shipping, installation) into their loan. Leases do allow it.
Available Terms Not applicable in a cash sale. In most cases, you choose the terms and purchase option of your equipment lease. We offer up to 60-month terms on most equipment and up to 84 months on some harder asset classes. Banks tend to be somewhat less flexible than leasing companies. That’s good if you are looking for a standard term, not so good if you need flexibility. Typically, will only go up to 48 months on equipment loans.
Tax Advantage Depreciate over its useful life. Depletes cash flow immediately. Additional out of pocket expense. Can be structured to be an Operating Expense paid with pre-tax dollars and takes advantage of shorter depreciation schedules. Usually desires a floating rate. Depreciate equipment over its useful life, typically 5 to 7 years.
Equipment Types Not available in a cash sale. Our funding resources capability ensures we can finance most equipment types. Banks won’t finance equipment they don’t understand or feel has limited collateral value.