Flexible Financing Solutions
Selecting the right financing solution for your business equipment is easy. With Scottrade Bank Equipment Finance, you have access to a flexible range of financing programs, based on your strategic needs. For more information, contact one of our sales associates.
Leasing and Financing Options
Scottrade Bank Equipment Finance offers a variety of financing products, terms and buyout options. Click on the tabs below to learn more about your financing options.
Equipment Finance Agreement (EFA)
An EFA is a fixed-term contract with consistent monthly payments in which the borrower (business) is the owner of the equipment and the lender (Scottrade Bank Equipment Finance) has a security interest in the equipment. Essentially, an EFA is the same as an installment loan but is modeled after a lease.
A finance lease is a fixed-term contract between a business lessee and funding lessor (Scottrade Bank) that establishes equal monthly payments over a term of usually 36 to 60 months. Finance leases span the useful life of the equipment as it generates income for your business. This structure allows a lessee to take advantage of tax depreciation benefits. A finance lease allows a lessee to retain the equipment at the end of the lease term, typically for a buyout of $1 or for a fixed residual amount.
This is a lease in which equipment can be purchased for a predetermined amount upon expiration of the lease. These leases can be structured with either purchase options or purchase agreements. Depreciation benefits are typically transferred to the lessee.
Fair Market Value (FMV) Lease
An FMV lease is a financing program in which the lessee has an option to purchase leased equipment for its market value following the end of the lease term. Scottrade Bank Equipment Finance holds the title as well as any tax benefits that can be claimed for the property until the lessee chooses to exercise a purchase option.
With a tax lease, Scottrade Bank Equipment Finance assumes ownership of the equipment while retaining any related tax depreciation deductions and benefits and subsequently passes these savings on to the lessee in the form of lower monthly lease payments. The Customer typically has the ability to expense monthly payments rather than capitalizing the asset on their books. At the end of the term the customer can purchase the equipment for its then fair market value or return the equipment with no obligation.
CAP leases are tax leases that allow the lessee to purchase the equipment at lease-end for its fair market value, not to exceed a predetermined percentage of the original equipment cost.
The advantage of a CAP lease when compared to an FMV lease is that the CAP protects a customer from the final buyout amount exceeding an agreed percentage of the equipment cost at the onset of the contract, which might be more economical at the end of the term than an FMV lease would be.
Early Buyout (EBO) Lease
An early buyout option (EBO) tax lease allows a customer to end a contract prematurely by purchasing the leased equipment for a price determined at the commencement of the agreement.
$1 Purchase Option Lease, Capital Lease or Equipment Loan
Equipment loans, $1 buyout option leases and capital leases are financing arrangements by which an acquisition of equipment is financed on a fixed rate basis. The lessee or borrower assumes the tax benefits of the equipment and any depreciation they may qualify for, essentially becoming the equipment owner.
Operating leases are agreements whereby Scottrade Bank Equipment Finance (the lessor) essentially owns the equipment and then rents it to a business customer (lessee) for a fixed term of 36 to 84 months. Off-balance sheet financing benefits might be realized with an operating lease if it complies with Financial Accounting Standards Board (FASB) guidelines.
Municipal Tax-Exempt Lease
SBEF offers a tax-exempt municipal lease for municipal entities, which include schools, cities and counties. A tax-exempt municipal lease allows governmental entities to obtain essential-use assets for said municipality, ranging from fire trucks and school buses to emergency vehicles, police cars and computer software for school districts and city buildings.
Regardless of what level of tax-exempt debt a public agency plans to issue during the year, SBEF funds both Bank-Qualified and Non- Bank Qualified equipment.
A tax-exempt municipal lease has certain advantages. For example, interest can be exempt from federal and state income tax, enabling significant savings, a low fixed interest rate, increased equity and ultimately an opportunity for ownership that will not a create a debt obligation.
First Amendment Lease
With a First Amendment lease, the lessee agrees to purchase the equipment at the lease expiration for its fair market (appraised) value or for a predetermined price, whichever is greater. This is considered an attractive option if the equipment still has productive, revenue-generating life at the end of the lease term and may be a better value than an upgrade to newer equipment.
Business Line of Credit (LOC)
To establish buying power before shopping for equipment, Scottrade Bank Equipment Finance can pre-approve business customers for a line of credit. This gives a company negotiating leverage with their equipment vendor or dealer. Typically lines of credit are available for 120 days but can be extended.
Matching Financing Solutions to Your Business Strategy
Some equipment leases may qualify for early buyout options. Typically, the larger the residual buyout that is deferred to the end of the lease, the lower each monthly payment will be during the term. If your equipment has proven to be reliable and beneficial to your business, you may opt to purchase it outright at the end of the term, replace it with newer equipment, or return the equipment to Scottrade Bank Equipment Finance.
$1 buyout – A nominal buyout used to transfer full ownership of equipment from the lessor (Scottrade Bank Equipment Finance) to the lessee (business customer) following receipt of all monthly payments agreed to within the term of the customer’s contract.
10 Percent Purchase Option – This buyout is calculated based on the original equipment cost and can help make your monthly payments more affordable. Payment of the lump sum will transfer full ownership of the rented equipment to the business. Otherwise the business (lessee) can waive the opportunity to purchase the equipment and the lessor will take full ownership.
Fair Market Value (FMV) – This end-of- term purchase amount is calculated based on a percentage of the estimated or appraised market value of the equipment at the end of the lease term. The FMV purchase option helps reduce and make more affordable monthly payments during the lease term.
To determine which financing options are most affordable for your budget and best match your business growth and strategic initiatives, contact one of our associates. We’ll provide you with free consultation and no-obligation quotes for various financing options. We are centrally-located in St. Louis, MO, and can be reached toll-free at 855.326.9776 or by email.