The Section 179 tax deduction has been extended for 2017. This bill allows for a full deduction of equipment up to $500,000 which makes it advantageous to purchase new or used equipment for your business. Have your Accountant or CPA use form 4562. More information is available at www.section179.org
Good credit is obviously an important piece to qualifying for a loan, but is only one of many factors lenders will look at. Approval, as well as rates for a loan or lease, will be determined by time in business, home-owner or not, type of business, how many guarantors on the loan, history of like-size loans in the past, etc.
An Equipment Finance Agreement is a very popular financing option. Although it works “like a lease” it is technically not a lease. With an EFA the borrower owns the property and it is secured by a UCC filing or a title. This means that only the equipment is the collateral versus an installment loan that can have a blanket lien on all of your business assets. There are numerous other benefits of an EFA as well.
A Collateral loan is when other lien-free equipment is used as collateral to secure the new financing. Typically a lender will want a 2:1 ratio which means if $30,000 was desired to purchase a piece of equipment an additional $30,000 in equipment would need to be put up as collateral. This type of financing is often used when credit challenges exist.
If a bankruptcy is not “discharged” then credit will not be available. After discharge different lenders will consider offering loans after 2 – 5 years. A significant parameter will be how much credit has been established since the bankruptcy. Non-conventional financing options do exist upon bankruptcy discharge
All potential lenders will do a credit check on a potential borrower but some lenders will only do a “soft” pull. This is when public data is pulled but not through a credit agency. Some lenders feel this is an adequate amount of information to determine if a loan should be approved. The advantage for the borrower is that it does not count as in inquiry on your credit report and thus lower your personal credit score.
Some Brokers will charge a fee up-front for their services and then get paid by the lender as well when a deal funds. Joslen Commercial Funding will never charge any fees to you, the customer. We also pay for all shipping by giving our Federal Express account number. Once a loan has been placed and you have received your equipment then the lender will pay JCF according to that lender’s referral pay schedule.
All loans, Equipment Finance Agreements or Leases can be paid off at any time. Almost all commercial loans, however, are not simple interest loans where simple amortization is used like a personal car loan would be. Commercial loans are generally contracts for the payments agreed upon and for the term. Most lenders will give a discount if a leasee would like to pay early for any reason. Many lenders will also let a borrower out of their current contract if they desire to upgrade their equipment and finance another piece.
Almost every lender defines a “Start-up Business” and being in business 2 years or less. There are some lenders that require 3 years. To show that time frame I will go to the Secretary of State website to see the date that an LLC or Corporation was formed. If someone is a sole proprietor doing business as a DBA then the lender will require a business license or tax returns from a year that would prove the length of time in business.
Joslen Commercial Funding offers the expertise that you need in determining what type of financing is best for you. We work with most of the Nation’s top lending institutions so after an application is processed and evaluated, our staff will determine where your best interests will be met. We work with all types of borrowers no matter what their business or credit experience is. We pride ourselves in the ability to place loans where our competitors just can’t. We also understand that your credit score is important to you so we take every precaution that lenders are not affecting your score by running unnecessary reports. We are always your advocate in every way. Our membership in the NAELB shows our commitment to always be current on issues that could affect your bottom line.