Don’t be Fooled by Online Lenders

Safer Than Online Lenders

A Safer Option than Online Lenders.

Safer Than Online Lenders

We know that business owners can get in a pinch financially and feel they need to resort to online lenders for fast cash. Many of these online lenders, such as a Merchant Cash Advance (MCA), offer quick funding with little paperwork, but this decision can have long term effects on your finances. These online lending structures may be based on your business’s future sales, making it a higher risk funding option with a greater liability on your balance sheet. Many of these online options also have very high interest rates, forcing you into a longer payoff period.

We provide a safer financing option.

SouthStar Capital provides a safer alternative to online lenders, through Asset Based Financing. Rather than looking to future sales, like Merchant Cash Advances, or to past performance, like banks, we provide working capital solutions based on your assets, such as accounts receivable, purchase orders, contracts, and equipment. By advancing against your assets, we are able to a provide a more responsible and reliable financing option, without adding debt to your balance sheet.

We are also a fast source of funding, with same day approval, closing in 2-5 days, and 24 hour funding. Unlike online lenders, the financing we provide doesn’t just put a band-aid on the problem. We have a dedicated account team to work with you in structuring the best solution for your business’s current and future growth. Our goal is to provide the resources and support needed to grow your business to a stable and healthy financial position.

SouthStar’s Recent Working Capital Solution

Working Capital Solution

Providing alternative solutions to businesses in need of a fast and reliable source of working capital.

Below is one of our recent funding solutions that provided our client with the working capital needed to ensure the growth and success of their business.

Navy Triangle

$1,000,000 Receivables Line coupled with a $350,000 Equipment Lease, along with a Brokerage Line of $500,000 and a $100,000 Term Note for a Trucking and Storage Company

SouthStar Transaction

Contact us today to discuss the working capital options available to your business.

Is Equipment Leasing Right for You?

Equipment Leasing
Equipment Leasing

In thinking about whether Leasing is the right solution for obtaining Equipment for your business, ask yourself the following questions:

  • Will depleting your available cash put your business in a defensive position?
  • Does technology increase rapidly in your industry, rendering equipment obsolete in three to five years?
  • Do you want to gain a variety of tax benefits?
  • Would you like to get a more expensive piece of equipment, but are concerned about spending additional cash to do so?
  • Do you want to preserve your cash flow?
  • Do you want to have flexibility in how long you will make payments on a new piece of equipment?
  • Do you want to avoid a large outlay of capital from your business to buy a piece of equipment?
  • Are you planning on applying for any financing where your balance sheet will be scrutinized?
  • Is your business seasonal where you need a custom payment structure to properly manage your cash flow?
  • Have you been turned down for a line of credit or has your bank reduced your current credit line?
  • Do you have other assets that can be used for collateral that will reduce the cost of financing?
  • Do you want to maintain your credit?
  • Would you like greater financing flexibility?

If the answer to one or more of the above questions is YES, then you are definitely a candidate for Equipment Leasing.

Learn more about Equipment Leasing with SouthStar Capital today!

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The 5 Types of Equipment Leases

5 Types of Equipment Leases
5 Types of Equipment Leases

Capital Lease / Finance Lease / $1 Buyout

May also be referred to as a nominal or ($1) dollar-buyout lease. These leases share the advantage of fixed monthly payments, but with the guaranteed option to purchase the equipment for a nominal price at the conclusion of the lease. With this type of lease there is no uncertainty about the value of the equipment at the conclusion of the lease as the buyout terms are generally a part of the initial agreement.

  • Finance type lease may not qualify under I.R.S. regulations for deductibility.
  • The lessee is considered the owner of the equipment (unlike an FMV lease) and maintains full control of the residual value.
  • The lessee can depreciate the equipment.
  • Lessee records the equipment as an asset and the lease payments as liabilities on their balance sheets.

 

Sale/Leaseback: (allows you to use your equipment to get working capital)

Sale/Leaseback financing is a unique and effective method for generating capital for your business needs. You use your equipment to get the capital. There are many potential benefits for your business if you choose this option. With a Sale/Leaseback you can continue to use your equipment, so productivity never slows down, and your revenue should remain constant. The extra capital you get can be applied to expanding your business and increasing revenue as it can be used for any purpose. Businesses that use this as a capital option can recover up to 37% in tax savings. Since you will be leasing your equipment back the complete monthly payment is 100% tax deductible. Being approved for Sale/Leaseback financing is not extremely difficult as there is no additional collateral necessary besides your equipment to get this form of financing. There is also the balance sheet benefit because having assets that you pay taxes on converted into contingent liabilities may also lower taxes. More capital is freed up for businesses that do a Sale/Leaseback because the equipment is no longer being financed at a regular bank, nor is it cutting into the lines of credit you have with the banks. You can use those extra lines of credit to expand your business the most effective way possible. There are flexible terms that can fit your businesses budget. These terms can be 36, 48, and 60 months to best match your needs.

 

True Lease or Operating Lease: (Also known as fair market value leases)

The most notable feature of this type of lease is that its structure does not contemplate a full payout of the cost of the equipment as is the case in a “Finance” type lease. Two of the common tests are:

  • The term of the lease is generally not greater than 75% of the equipment’s anticipated useful life.
  • The present value of the lease payments should not exceed 90% of the fair market value of the equipment using the lessee’s incremental cost of borrowing.

A significant benefit is that the monthly payments are also less than on a finance type lease (above) or even a bank loan. Typically the lessee either returns the equipment at the conclusion of the lease or may be granted the opportunity to purchase the equipment from the Lessor for “the fair market value.” Payments under this kind of lease structure are treated (by the I.R.S.) as rental payments and therefore are 100% tax deductible operating expenses. Also, as rental payments, neither the asset nor its corresponding liability needs to appear on the company’s balance sheet. The Lessor retains the right to depreciate the equipment. End of lease features:

  • The lessee may have to option to continue renting the equipment
  • The lessee may have the option to “re-lease” the equipment

 

The “P.U.T.” Option Lease (Purchase upon Termination)

This end-of-lease option establishes a mandatory purchase price, usually expressed as a percentage, e.g. “a 10% Put.” This is a technique for lowering the lease payments during the lease term without creating an unknown end-of-lease risk for either the Lessor or the lessee. As with our programs lease payments are fixed.

 

TRAC Lease

A TRAC lease is a special type of true lease that is generally used for “over-the-road” vehicles like trucks, tractors and trailers. Special provisions of the I.R.S. code allow for pre-determined residual values (as opposed to “future, fair market values”) to be negotiated in advance while maintaining the “full deductibility” of a true lease.

  • This type of lease is generally less expensive than other leases or conventional bank financing.
  • The Lessor would retain the rights to any depreciation.

Contact SouthStar Capital today to discuss how Equipment Leasing can benefit your company!

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The 7 Advantages of Equipment Leasing

Equipment Leasing

Equipment Leasing

“If it appreciates, buy it. If it depreciates or becomes obsolete, lease it.”


When deciding whether Equipment Leasing is the right step for your company, keep in mind these 7 advantages:

        1. Preserve your cash flow. With leasing, you need only a minimal initial investment to get the equipment you need, and you can comfortably spread your payments out over time. This allows you to preserve your working capital for the operation and growth of your business.
        2. Increase flexibility. Your equipment needs will grow and change along with your business. With equipment leasing, you have the option to take on additional equipment or upgrade the equipment you currently possess.
        3. Never Obsolete. Your equipment never becomes obsolete because you can get the newest technology when your lease expires.
        4. Tax deductions. Take advantage of the tax deduction limits for equipment as set out in section 179 of the US tax code. In some cases, as much as 100% of the equipment cost, up to a specified limit, can be immediately deducted from your taxable income.
        5. Balance Sheet. When structured properly, leases may not be disclosed as a liability on your balance sheet. This allows your company a better chance to obtain or increase your line of credit at a bank.
        6. Maintain your credit. Choosing to lease your equipment allows you to keep your available credit line open for operations and short-term financing.
        7. Easy approval. Avoid the strict requirements and long wait associated with traditional financing at the bank. Our simple application takes only a few minutes to complete. You can be approved within 24 hours and get the equipment lease financing your business needs within a week!

At SouthStar Capital, we are dedicated to structuring a financing package that benefits your company today and in the future. SouthStar can tailor fit a financing solution involving Equipment Leasing, along with many of our other products.

Contact us today to learn more about the advantages of Equipment Leasing!

 

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