When it comes to leasing equipment, two common types of lease agreements are the Dollar Buyout Lease and the Fair Market Value (FMV) Lease. Here’s a comparison of the two:

Dollar Buyout Lease

Definition: Also known as a $1 buyout lease, this type of lease allows the lessee to purchase the equipment at the end of the lease term for a nominal fee, typically $1, some states requires $101.

Key Features:

• Ownership: At the end of the lease term, ownership of the equipment transfers to the lessee.
• Monthly Payments: Generally higher than FMV leases because the total cost includes the price of eventual ownership.
• Depreciation: Lessee can depreciate the equipment on their taxes since it’s treated similarly to a loan.
• Flexibility: Less flexible in terms of upgrading or returning the equipment before the lease ends.

Ideal For:

• Businesses that want to own the equipment at the end of the lease term.
• Those who prefer consistent, predictable payments.
• Companies that need equipment with a long useful life.

Fair Market Value (FMV)  – True Lease

Definition: An FMV lease allows the lessee to use the equipment for a set term with the option to purchase it at the end of the lease for its fair market value.

Key Features:

• Ownership: The lessee does not automatically gain ownership of the equipment. They have the option to purchase it at its fair market value, return it, or renew the lease.
• Monthly Payments: Generally lower than a dollar buyout lease because the cost of ownership is not included.
• Tax Benefits: Lease payments are typically fully deductible as an operating expense.
• Flexibility: Offers more flexibility to upgrade, return, or extend the lease term.

Ideal For:

• Businesses that want lower monthly payments.
• Those looking for flexibility at the end of the lease term.
• Companies that may want to upgrade to newer technology frequently.

Comparison Summary

• Cost: Dollar Buyout leases have higher monthly payments but ensure ownership, while FMV leases have lower payments with flexibility at the end.
• Tax Treatment: Dollar Buyout leases allow for depreciation of the asset, whereas FMV leases treat payments as operating expenses.
• Flexibility: FMV leases offer more options at the end of the term (purchase, return, renew), whereas Dollar Buyout leases result in ownership.

Choosing between a Dollar Buyout Lease and an FMV Lease depends on a company’s financial goals, tax strategy, and equipment needs. If ownership is the primary goal, a Dollar Buyout Lease may be more suitable. If lower payments and flexibility are more important, an FMV Lease would be a better option.

“App-Only” financing up to $250,000 typically refers to a streamlined application process for equipment financing that can be completed entirely through a digital or mobile application.

Here’s a detailed explanation of how it works and its benefits:

What is “App-Only” Financing?

Definition: “App-Only” financing allows businesses to apply for equipment financing or leasing of equipment up to $250,000 will require strong business and will not ever apply to Startup or low credit clients without additional collateral, without the need for extensive documentation or lengthy approval processes.

Key Features

1. Simplified Application Process:
   
   • Meaning you will get approved
     without full financial.
   • Requires minimal documentation,
     often just basic business bank account, invoice, and ownership information.
   • Quick and easy submission
     process.
2. Fast Approval:
   
   • Decisions are typically made
     within minutes to a few hours.
   • Uses automated underwriting
     processes to assess creditworthiness.
3. Hard Credit Pulls Upon Funding:
   
   • Working with an equipment loan
     broker will save you from unwanted inquiries. Our soft credit check does
     not impact the applicant’s credit score.
   • Some providers may conduct a
     hard pull later in the process upon funding
4. Convenient:
   
   • Simple docs
   • Simple credit
   • Simple funding
5. Competitive Rates:
   
   • Often offers competitive
     interest rates and terms, like traditional financing options.
   • May include special promotional
     rates or incentives for using the app.
   • Might not be the lowest rate due
     to the fact that it’s a low doc funding.

How It Works

1. Apply Online:
   
   • The business owner downloads the financing app from the provider’s website or app store.
2. Complete the Application:
   
   • Fill in required fields, including business information, ownership details, and the amount of financing needed.
   • Upload any necessary documents, hough requirements are usually minimal.
3. Submit for Approval:
   
   • Submit the application for review.
   • Once approved, we’ll send you a credit term sheet with details of your approval.
4. Receive Decision:
   
   • Receive an approval decision of funding update once Term-Sheet and necessary funding documents have been completed and signed.
   • If approved, review and accept the financing terms during verbal conversation with the funding underwriter
     to confirm release of funds to the vendor.
5. Fund Disbursement:
   
   • Funds are disbursed quickly, often within 24 hours.
   • Can be used to purchase equipment, inventory, or for other business needs if you are using working
     capital or business term loan funding if equipment financing is out of the question.

Benefits

• Speed: Rapid application and approval process, often within the same day.
• Convenience: Entire process can be managed digitally, reducing the need for paperwork and physical meetings.
• Accessibility: Available to businesses of various sizes, including small and medium enterprises (SMEs).
• Flexibility: Can be used for a variety of business needs, not just equipment financing.

Ideal For

• Small to Medium-Sized Businesses: Looking for quick access to financing without extensive documentation.
• Startups: Needing capital quickly to seize growth opportunities.
• Established Businesses: Seeking to streamline their financing processes and avoid traditional bank loan complexities.