There are a few important factors to consider when planning an equipment lease/financing arrangement. There are numerous payment structures available as well as different end of term options. Smog Equipment Finance (SEF) also offers custom payment plans, which we have deemed our "flexible finance" options.

Payment Plans:

• Seasonal payments
  This plan is especially beneficial for those customers who experience fluctuating time periods of higher and lower revenue production on an annual basis. To utilize this plan, the customer designates which 3 consecutive months they require off. The remaining 9 payments during each year will be calculated based upon the appropriate rate factor.
  
  
• Step down payments
  Step down leases begin with higher monthly lease rentals and then decline over the course of the term. This structure is beneficial for equipment that is subject to rapid depreciation or technological obsolescence. This also allows the lessee to accelerate their write off's for tax purposes.
  
  
• Step up payments
  Step up leases begin with lower monthly lease rentals that increase or "step up" over the lease term. The steps may be created at any point during the term but are most commonly done semi-annually or annually. This structure is beneficial for equipment that takes time to reach its full production capacity.
  
  
• Annual / semi-annual / quarterly
  For those customers that request annual, semi-annual or quarterly payments, SEF can accommodate those needs. These structures are beneficial for easy cost forecasting and managing expenditures.
  
  
• Master lease
  SEF offers a master lease line to make securing subsequent leases quick and easy for the customer. By utilizing SEF's plain English lease agreement on the initial funding, all the customer needs to sign for future transactions is our one page lease supplement.

End of term options:

• Fair market value
  This structure is typically considered an operating lease by the IRS. Each monthly lease rental is treated as a "line item deduction" for tax purposes. At the end of the lease term the customer can return the equipment, continue the lease or purchase the equipment outright for the fair market value.
  
  
• $1.00 buyout
  This option is essentially a finance agreement, similar to a bank loan. The customer depreciates the asset over a fixed period of time for tax purposes. There is no trade in option at the end of the lease and the customer owns the equipment for $1.00 (or $101 depending upon state laws).
  
  
• 10% PUT (Purchase Upon Termination)
  This structure provides lower monthly payments by affixing a 10% balloon payment to the end of the lease term. At the end of the lease the customer owns the equipment for 10% of the original cost.
  
  
• P.R.O. (Purchase, Renewal Option)
  PRO leases are treated as "true leases" for federal income tax purposes. SEF takes the depreciation and passes on the benefit to the lessee in the form of a lower rate. This structure is typically classified as an operating lease (as defined by FASB-13). At the end of the term the lessee has the option to either purchase the equipment or renew the lease based upon a percentage of the original equipment cost.

Flexible financing:

• 60-day deferral
  SEF offers a 60-day deferral program in which the lessee pays the standard security deposit (first & last monthly payments) with documentation and then is not invoiced until 60 days after funding. Since SEF bills in arrears, this is actually a 90-day deferred payment plan.
  
  
• 90-day deferral
  The 90-day deferral plan is extremely helpful for those customers acquiring equipment that does not generate income during the first 90 days of implementation. With this program, SEF has minimal contact payments of $25.00 for each of the first three months followed by the normal term at the determined rate factor.
  
  
• 7 x $100
  With this program, the customer pays a $100.00 security deposit and has their first six monthly payments at $100.00 each. The remaining 30, 42, or 54 payments are at the determined rate factor.
  
  
• 6 x $99
  With this program, the customer makes two payments as a security deposit totaling $198.00. The first six monthly payments are fixed at $99.00 each followed by 30, 42, or 54 payments at the determined rate factor.