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“BUY WHAT APPRECIATES, LEASE WHAT DEPRECIATES”
Bank of the Sierra understands you need competitive financing options when it comes to maximizing your business. Keep your business on the edge of technology! Manage the lag time between payables and receivables, use every financial tool available to retain working capital and avoid tying up money in equipment that continuously loses value.
SierraLease
A program designed specifically for businesses and professionals seeking additional financing options. Obtain the most advance equipment in the market today while maximizing your cash flow. SierraLease is your connection to the capital you need, if it depreciates - lease it! Lease Calculator
- 100% Financing
Eliminate the need for a down payment, use the cash elsewhere for your company
- Tax Savings
Payments on qualifying leases are written off as direct operating expense, reducing your current taxable income.
- Fixed Payments & Terms
Facilitate with a stable payment structure, we offer lease terms of 12, 24, 36, 48, 60 and with qualified equipment 84 months.
- Purchase/Renewal Options
At the end of the lease, you choose to purchase your equipment or upgrade to new equipment!
Lease FAQ
LEASE OVERVIEW
What is Leasing? Leasing is an alternative method of purchasing Capital Equipment that helps businesses grow and operate more efficiently. It requires a customer (Lessee) to make specific monthly payments over a mutually agreed fixed period of time (typically one to five years). Title for the equipment rests with Bank of the Sierra (Lessor) for the term of the lease. At the end of the term, a purchase option provision may be exercised by the Lessee, and the title of the equipment is passed at that time.
Who Can Lease? Any sole proprietorship, partnership, corporation (including non-profit corporations) or trust may be a lessee under a lease agreement. With certain exceptions and restrictions, even the federal government, a state, a county, a school board or a municipality, may be a lessee. Bank of the Sierra will not lease equipment to an individual for personal use.
Why Should I Lease? Leasing offers many advantages over other types of financing. Leasing will not deplete financial resources like paying cash. There are tax benefits to leasing that saves you money. Leasing allows businesses to match cash inflows and outflows, letting equipment pay for itself.
What Kind of Equipment Can I Lease? The SierraLease program allows manufacturing firms, medical and dental professionals, agricultural and machine shops lease any kind of equipment you would like. Machine tools... construction equipment... farm equipment... computers... medical/dental equipment... from single items to an entire office or plant. All are available through our leasing program.
What are Capitalized Costs? The cost of equipment to be leased plus other Initial direct costs” that may be capitalized. The total capitalized cost (or basis) is the amount upon which the tax benefits on the equipment are based.
What Terms are Available? Bank of the Sierra offers lease terms of 12, 24, 36, 48, 60 and with some types of equipment 84 months. Other options and customized terms are available to qualified applicants.
How is a Lease Different from a Loan? A Lease is a rental agreement for a specific period. Because you’re paying for the use of the equipment, it’s a business expense. As a business expense, it’s usually a tax-deductible item. Your accountant or tax advisor is the best authority on how to treat this in your specific situation.
How is Leasing Different from Renting? While there are several differences between leasing and renting, leasing gives you the added flexibility by giving you the option to purchase the equipment, return it or renew the lease.
What Type of Leases & Options are Available? Fair Market Value or “FMV” lease allows you to use the equipment for the term of the lease and then either return or purchase the equipment or extend the lease term. The purchase option is based on the Fair Market Value of the equipment at the end of the lease term.
What Costs can I Include in a Lease? Bank of the Sierra will finance 100% of the soft costs – up to 15% of the total amount be financed. This may include software, freight, installation, maintenance, and training.
Will Bank of the Sierra Lease to Start-up Businesses? Yes. Bank of the Sierra’s SierraLease is willing to finance companies that have been in business for less than two years. However, because you are considered a higher risk company, you should expect to pay a slightly higher rate. Additionally, you will be required to provide a personal guarantee and in some cases additional collateral.
Can I Lease if my Company is in the Process of Acquiring Another Company? In most cases this indicates strength in your business. In many cases, expansions will add multiple locations and additional officers. If this is the case, you will need to specify on your application what equipment is going to what location and the individual locations will need to be approved.
Is There a Maximum or a Minimum Lease Amount? The minimum lease amount SierraLease will consider is $10,000
What is the Interest Rate in this Lease? Since you are leasing and not taking out a bank loan to finance your purchase, there is no “interest Rate” as we usually think of one. It’s more like leasing office space. You’re paying to rent the equipment, with the monthly payment amount based on the type of leasing plan you choose, the terms of the lease, and the cost of the equipment.
Can I Finance the Remaining Balance if I Have Placed a Down Payment on the Equipment? Yes, if you choose to make a down payment you can subtract that amount from the total owed on the equipment. For example, if you purchase $60,000 worth of equipment and make a $10,000 down payment, your lease would only finance $50,000. Remember, that you will not own the equipment until the lease ends. You can still lease equipment even after purchase, this is what is known as a sale-leaseback.
BENEFITS FROM LEASING
Are there Tax Advantages to Leasing? Leasing provides a more rapid write-off because the lease term is shorter than the depreciable life of equipment, and the monthly payments are often 100% tax deductible as a pre-tax business expense. Consult your tax advisor for more detailed information.
Project Costs More Accurately. You have known payments over a specified period. There are no depreciation figures to be questioned and no varying interest costs to be estimated. Leasing helps take the guesswork out of budgeting.
Build your Available Credit. With leasing, you get the equipment you need now without disturbing your present bank credit lines. Preserving your bank lines for other possible uses means the same thing to you as expanding available credit.
Alleviate Dilution of Equity. Leasing offers you a viable alternative to having to raise additional capital through adding more shareholders or partners, or limiting your lines of credit with loans on your fixed assets.
Hedge Against Inflation. When you lease equipment, you pay for it as you use it. When you purchase, you pay in current dollars for future use of equipment. So, if inflation continues, leasing can help provide protection against future decrease in dollar value.
RESPONSIBILITIES OF LEASING
When Do My Lease Payments Begin? After we confirm the equipment is delivered and we have received all of the required documents, your equipment supplier is paid. Your lease contract will begin and an invoice is sent to you for the first payment. Included on the first invoice is a charge for interim rent which covers the period between when we pay your vendor and when the first lease payment is due. In most cases you will pay the 1st and last payment in advance.
Can I Stop the Lease and Return the Equipment? The lease is non-cancelable. However, if you need to upgrade to larger or new equipment, we’ll structure a new lease for the upgrade.If you have a need to terminate the lease, we’ll figure a buyout for you. You then pay the buyout plus the purchase option to keep the equipment.
How are Leasing Payments Determined? The monthly payment is based on the term of the lease, cost of the equipment, and the credit of the lessee. The initial term of a lease normally runs from 24 to 60 months. The following determines credit worthiness.
- Length of time in business
- Financial condition of business
- Trade and secured debt references
- Dun & Brad report
- Credit bureau ratings
What about Sales Tax? In California the Lessor is required to collect a Use Tax on each monthly payment. Since the lease payment was calculated in advance and tax rates change from time-to-time, this amount is included in your monthly payment billing. In some cases the full amount of taxes is due at the inception of the lease. In these situations, the tax is added to the equipment cost to calculate the monthly payment. California also charges an annual tax on tangible personal property. Since the Lessor is the legal owner of the equipment,, we are required to pay this tax. We pass this cost on to you by special billing.
How Much Initial Cash Outlay? Usually, the 1st and last month’s payment and a document processing fee. Leases with relatively higher risks for the lessor may require additional security. Additional security could take the form of advance rentals or a Capitalized Cost reduction.
Who is Responsible for Maintenance & Warrant? The vendor providing the equipment is solely responsible for any service or warranty issues. You should contact them for warranty issues. You are responsible for normal maintenance of the equipment.
Why do you Need my Personal Guaranty? As an owner/shareholder of a closely held business, we view you and the business as one. Your guarantee confirms your commitment to your business and tells us that you will stand behind its obligations.
What is a Documentation Fee? Bank of the Sierra does not charge an application fee. We do, however charge a nominal fee to compensate us for processing the lease documents and reimburse us for the fees incurred with filing UCC-1 financing statements that may be required. This fee is normally 1 – 2 ½% of the Capitalized Cost.
Why am I Required to Insure my Equipment? Since the equipment is owned by the lessor and the lease is for its use, the lessor must ensure that if the equipment is destroyed or stolen, our lease will be paid off from the proceeds of the insurance policy. Most commercial policies cover leased equipment; all you need to do is have your insurance agent forward us an endorsement at no cost to you.
What Happens at the end of the Lease? Unless you have chosen one of our fixed purchase option plans, you are responsible for returning the equipment in good working condition within 30 days of your last payment due date. If you do not return the equipment, the lease will renew for 12 months. If you chose a fixed purchase option, you must exercise your rights within 30 days of the last payment due date.
Am I Guaranteed to Have my Lease Funded if I Submit an Application? Naturally, we cannot guarantee that every deal will be funded, but if your business and credit traits meet our criteria it is likely your request will be approved.
Do I Have to Give a Personal Guarantee for a Company Lease? The younger your business, the more likely it is that a personal guarantee will be required. If your company is closely held you will be asked to personally guarantee.
My Equipment Supplier Requires a Deposit, What are my options? In this scenario, there are a few possible options. First, you may pay the deposit and lease the balance, or lease the entire cost of the equipment including the deposit. Also, you will be able to request a deposit reimbursement upon your application. This means that we pay the equipment supplier in full, and the equipment supplier will return your deposit.
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