bank finance vs tax/true lease
DESCRIPTION
For those companies that can qualify, the Tax/True Lease of Curtis Funding Group's Pro Lease for Solar equipment solutions is an effective way to "Go Green" in both dollars and sense.TRANSCRIPT
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20 Division St., Coldwater, MI 49036 -- p: 888.510.1355, ext 12 * f: 888.548.9213
www.curtisfunding.com ~ [email protected]
Conventional Finance (Debt) Pro Lease
Bank – A down payment of 10%-20% is usually required by banks and other equipment finance providers. For a $500,000* system, the down payment can be as much as $50,000-$100,000
100% financing – no down payment required; first lease
payment only at time of approval
Bank – The Investment Tax Credit (ITC) is realized only when filing taxes and can be taken only if the owner has generated the profit necessary to qualify for the credit available
Investment Tax Credit is captured at the onset of the transaction by the lessor to pay down total cost of financing; NO FORMS TO FILE, NO IRS MEASURES TO QUALIFY FOR
Bank – Solar assets must be depreciated; depreciation is only realized when filing taxes
Depreciation is captured by the lessor and used to pay down total cost of financing; lease payments are deductible as an expense of doing business;
Bank – Monthly loan or capital lease payment; equipment must be depreciated which in turn is registered as an expense
Leasing provides favorable tax treatment versus depreciation:
Monthly Lease Payment > $2,982.50* Finance Term > 84 months Tax bracket > 35% (assumption) Monthly Tax Savings > $2,982.50 x .35 = $1,043.88 Lease tax savings > 84 x $1,043.88 = $87,685
Bank – Impacts total borrowing capacity with lender; can be very detrimental when other operations borrowing needs persist
Retain borrowing capacity at your bank; a Tax or True Lease, such as our Pro Lease, only impacts cash flow
Bank – Are terms from your bank as favorable? Terms of 5, 6 and 7 years or more are available
Bank – What is the interest rate for the entire term? Qualifying companies realize –– NNEEGGAATTIIVVEE –– finance cost
Bank – For conventional bank loans, equipment finance agreements, capital leases, etc., off-balance sheet accounting is not generally available (consult with your accountant or tax advisor)
Can be treated as an off-balance sheet arrangement, i.e., it can be regarded as non-debt for accounting and tax purposes (consult with your accountant or tax advisor)
*Calculations are based on a $500,000 Solar Project