Golden Gate Equipment Finance develops financing solutions for small and middle market companies for the sales and acquisition of equipment and value-added services. You wil recieve tailored equipment financing and leasing programs for manufacturers, distributors, resellers, dealers & systems integrators that are designed to help you increase your top and bottom line performance. We operate as your in-house finance company.

1. Positions you as a full service provider
     • Promotes you from an order taker to solution provider

2.Your customer needs financing but doesn’t think to ask
     • 2/3 of all equipment sold is financed

3. Financing puts focus on the payment
     • Customer thinks of affordable monthly payments

4. Financing builds bigger deals
     • Customer can bundle more things into the purchase package

5. Promotions can fuel more sales
     • A 90 day deferral on the first payment can be used for promotions

BONUS ITEM: Financing helps you sell more equipment!!!!
(Think of Ally (formerly GMAC) and Ford Motor Credit)

The terminology used within the equipment finance industry can be a little daunting and confusing because many of the terms are not used in everyday language and many times they are used incorrectly. Understanding these terms will help you know exactly what is going on.

An accounting term for leases that have the characteristics of a purchase agreement. A lease is considered a Capital Lease if it has any one of the following characteristics:

1. Title to the property passes automatically to the lessee at the end of the term.
2. The lease contains a bargain purchase option.
3. The lease term is greater than 75% of the estimated useful life of the leased equipment.
4. The present value of the payments is equal to, or greater than, 90% of the value of the equipment.

An accounting term for leases that have none of characteristics of a Capital Lease.

Term for leases that have the characteristics of a purchase agreement.

1. Financing the purchase of property, for which title will pass only on the condition the buyer has met certain obligations.
2. An agreement for the purchase of personal property which treats the lessee as the owner of the property for federal income tax purposes, but clouds the title by a lien until all of the terms and condition of the sale have been met.

A lease, which for tax purposes, fails to meet all of the tests for a conditional sale contract as defined by the IRS. Lessor would qualify for tax benefits of ownership and lessee would claim the lease payments as a tax deduction.
** Definitions are from the Certified Lease Professionals’ Handbook. Please check with your tax and legal experts for advice.

A Capital Lease using “GAAP” terms & Conditional Sale using “tax” terms, whereby the lessee can purchase the equipment at the end of the term for $1.

Where the lessee has the option at the end of the lease to either return, renew or purchase the equipment at fair market value. In “GAAP” terms, this could be a Capital or Operating lease. In “tax” terms, it would be a True Lease.

The lessee guaranties the residual value on a vehicle lease yet the lessor books a True Lease for tax purposes.

From an end-user’s perspective an EFA is very similar to a loan. Title will vest with the end user from the financing’s inception. An EFA only uses the equipment as collateral for the financing where a loan from a bank will often have a lien on all assets.

Have you ever wondered how with some airlines the price of the ticket sounded so good until you saw the final price, after being charged for everything from luggage, to seat reservation (even the middle seat for this writer), to even a carry on bag. Heaven forbid you need to make a reservation change (except Southwest). Equipment leasing unfortunately can have some of the same traits. As in airline ticketing, beware of the lowest price because there could me more charges coming. The overall value is what you should be looking at, not just the monthly payment. Charges that can unexpectedly come up later in a lease that you can ask about up front are:

1. Will there be interim rent?
2. What is the late payment grace period?
3. What are the end of lease return requirements?
4. Is there an end of lease notice period and what is it?
5. How are property tax and insurance handled?
6. Are there any documentation or miscellaneous fees?
7. Can the lease automatically renew?
   
   

While each item on their own might not be significant, for a leasing company that priced the deal low at the beginning that needs to make up that shortfall later, aggressively enforcing these items can help them make up their shortfall, hence the relation to airline ticket pricing.

As all airlines are not alike, neither are all equipment leasing companies.