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HEF Solutions

 

Huntington Equipment Finance Delivers Solutions

Maximize Cash Flow

  • Finance 100% of equipment cost and use cash for working capital and business growth, not equipment purchases.
  • Freight, taxes, fees, rigging and set-up charges may be included in the equipment cost and amortized over the least term.
  • Lower payments through exchanging tax benefits. When Huntington owns the asset, it retains certain tax benefits (i.e., depreciation) and passes those benefits to its clients through lower lease payments.
  • Generate cash through sale/leaseback.
  • Match payments to cash cycle.

Minimize and Leverage Tax Positions

  • Avoid the negative impact of asset purchases
    • Minimize Alternative Minimum Tax (AMT) impact. Lease payments/rentals are not treated as a tax preference item. Company-owned equipment is depreciated via MACRS faster for tax purposes than for book purposes. A company’s book income is typically greater than its tax income. Generally 50% of the excess book income over tax income is treated as a tax preference item used to calculate AMT. So lease it – no depreciation, no preference item, no AMT problem!
    • Leverage the 40% rule/Mid-Quarter Depreciation Convention. If more than 40% of a company’s annual equipment acquisitions (via cash purchase or loan financing) occur during its fourth fiscal tax quarter, the company must use the Mid-Quarter Depreciation Convention instead of the preferred Mid-Year Convention. Therefore, companies incurring significant CAPEX in the fourth quarter may find it more prudent and economically beneficial to lease versus own/depreciate.
  • Utilize net operating loss carry-forwards.
  • Exchange tax benefits for lower cost of money.
  • Reduce property taxes by reducing the “basis” in the equipment at the end of the lease term.
  • Write off equipment purchases in the form of rental payments and reduce taxable income faster than allowable accelerated depreciation methods.

Optimize Financial Reporting

  • Improve earnings in the near term. Lease payments are usually less than depreciation and interest expense during the first three years.
  • Comply with primary bank ratios and revenue bond covenants.
  • Improve Return on Assets.
  • Minimize financial restrictions.

Leverage Assets

  • Properly match use to ownership risks.
  • Reduce cash requirements during the useful life of the equipment.
  • Avoid stranded assets.
  • Trade up to avoid obsolescence.

Our Knowledge and Expertise Mean Specialized Benefits For Your Company

The questions below will help us learn more about your business needs, so that we can recommend optimal equipment financing solutions to you.
What are your capital expenditure needs this year?
If your response is... Then consider...
Capital intensive company with frequent equipment purchases Lease line of credit – see below for further detail
One-time equipment purchase Term loan or single lease schedule – see questions below for further detail
IRB limitations on capital expenditures Fair market value (FMV) tax lease with early buyout option (EBO)
Do you have tax issues that prevent you from using all of your depreciation expense?
If your response is... Then consider...
Yes – We are an alternative minimum taxpayer (AMT) Tax lease structures – see questions 3, 4 and 5
Yes – We have had net operating loss carry forwards (NOLs) Tax lease structure – see questions 3, 4 and 5
Yes – We are a not-for-profit corporation Tax lease or municipal lease structure – see questions 3, 4 and 5
No Term loans or non tax lease structure – see questions 3, 4 and 5
Do you prefer Off-Balance Sheet financing or operating lease treatment for capital assets? Why?
If your response is... Then consider...
Yes – Prefer Off-Balance Sheet and cannot fully use depreciation FMV tax leases or shared risk TRAC leases
Yes – Prefer Off-Balance Sheet financing, but also want to keep the depreciation for tax purposes Tax retained operating leases (TROLs)
No – Do not care if financing is on Balance Sheet Term loans, financing leases, TRAC leases or TROLs
Is there any seasonality to your business that requires you to make irregular payments? Why?
If your response is... Then consider...
Yes – Primary concern is getting 100% financing Any lease product
Yes – We have seasonal cash flow Skip payment, step payment or rent holiday lease structures
Yes – Need lower monthly payments TMV tax leases, TRAC leases, shared risk TRAC leases, TROLs
Are you concerned about technology obsolescence? Do you want the flexibility to trade or upgrade your equipment?
If your response is... Then consider...
Yes – We want the flexibility of returning equipment FMV tax leases