Also called a Fair Market Value Lease, a True Lease allows you to write off each lease payment as an operating expense. When the lease term is up, you can renew the lease, upgrade the equipment, purchase it at Fair Market Value, or send it back.
A Capital Lease is designed for you to own the equipment at the end of the payment period. An easy way for you to purchase the equipment at the end of the term for just $1 (or $101, depending on your state tax laws).
The lender has the ability to structure an agreement as a Rental. Choose the term that suits your needs, commence the agreement, and simply rent the equipment or software. Rental Agreements are a great way to overcome budget constraints.
Equipment Finance Agreement
EFA is a simple loan to your business that allows you to buy the equipment you need. Make your payments, and you are done at the end of your term. You choose what to finance, including equipment, shipping, taxes, warranties, etc.
The unique 90 or 180-Day Deferred Payment Plan gives your company 90 to 180 days to build cash flows before making monthly payments.
Section 179 Tax Deduction
It allows taxpayers to deduct the cost of certain property as an expense when the property is placed in service. For tax years beginning after 2017, the Tax Cuts Job Act increased the maximum Section 179 expense deduction from $500,000 to $1 million. The phase-out limit increased from $2 million to $2.5 million. These amounts are indexed for inflation for tax years beginning after 2018.
The Section 179 deduction for 2020 is one million dollars. U.S. companies can deduct the full price of qualified equipment purchases, up to $1,000,000, with a “total equipment purchase” limit of $2.5 million. The deduction includes both new and used qualified equipment. In addition, businesses can take advantage of the 100% bonus depreciation on both new and used equipment for the entirety of 2020.
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