Leasing gives you the best of both worlds: the ability to purchase needed equipment when you need it and the flexibility to maintain healthy cash flow. Learn how we can help you capitalize on this win-win solution for your business.
Reduce Upfront Expenses and Boost Liquidity
Your decision to purchase or upgrade needed equipment should be based on business priorities, not budget constraints. By eliminating the need to buy equipment outright, leasing removes cost pressures from the decision-making process. So even if there’s no room in the capital budget to buy an asset with cash, lease payments from the operating budget provide an attractive alternative.
A lease is basically a contract between two parties: the lessor and the lessee. The lessor is the legal owner of the asset, while the lessee obtains the right to use the asset in return for regular rental payments. This allows you to minimize upfront costs and maintain strong cash flow with affordable and predictable lease payments over time. And, by upgrading equipment sooner, you can reduce costly downtime and maintenance expenses longer term.
- Lower upfront costs, so you preserve more cash to fund your business.
- Improve cash management with a steady monthly lease payment.
- Replace/upgrade equipment on a more predictable timetable that fits your operating needs and budget.
- Reduce equipment downtime and maintenance costs.
- Potentially gain tax advantages with off-balance-sheet financing. Depending on the type of lease (capital versus operating), payments may qualify as a rental expense on the P&L.
OCF offers leasing products for mission-critical equipment to businesses through our 80%-owned joint venture ("VFSOX"), VFS, LLC.
OCF (VFSOX) General Leasing Terms
- Loan Product:
It may be documented as a lease or as an installment agreement but has a standard term loan structure of various types.
Types include Term Loan, $1 Out Purchase Option, Capital Lease, Equipment Financing Agreement (EFA), Promissory Note, Installment Payment Agreement (IPA), Note and Security Agreement or Non-Recourse debt discounting.
- Fair Market Value Lease:
The lease is booked with a residual and the lessee has an end-of-lease option to purchase the equipment at its then fair market value, renew or extend the lease on a fixed term basis, extend the lease on a month-to-month basis, or return the equipment to OCF.
- We will look at businesses less than 2 years old, including start-ups.
- Our credit criteria may be more flexible than traditional Banks on cash flow coverage.
$100,000 - $2,000,000
Up to 100% of product cost or net present value of future payment streams (soft costs eligible to be included are limited to 20% of the total amount financed).
24 – 60 months (typically limited to no more than 80% of the equipment’s useful life).
Mission critical equipment that will generate revenue or provide cost savings that are more than sufficient to cover the lease payment.
Leased assets may be new or used equipment.
Technology or IT-related assets, manufacturing equipment, transportation equipment (excluding titled vehicles), construction equipment, renewable energy equipment, medical or lab equipment. No furniture or fixtures and no leasehold improvements.
Creditworthiness of the obligor and cash flow analysis will be the first and foremost consideration while collateral values and use will be secondary.
Competitive with prevalent market rates. Pricing depends on the size & complexity of the facility and strength of Borrower. Pricing on all leases will be described as a “lease rate factor” and will be fixed for the term of the lease.
Manufacturing, Distribution, Transportation, Staffing, Oil & Gas, Service Providers, Technology, Alternative Energy, Life Sciences, plus more.