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Leasing Products

Leasing is a rapidly growing alternative to purchasing new and used equipment, vehicles and facilities. Virtually any type of agricultural equipment and many types of facilities may be leased.

Any customer eligible for a loan may also be eligible for leasing.

Features/Benefits

• Conserves working capital: Customers can acquire equipment without a large down payment or stock purchase. This allows customers to keep working capital available for more important uses. Periodic lease payments are often lower than debt service payments of purchased equipment.
• Improves cash flow: Lease payments can be matched to seasonal cash flow cycles. The lease payments can be matched to the use of the equipment.
• Provides tax benefits: In many cases, leasing can be structured so payments are 100% tax deductible. Leasing may reverse the negative effect of the mid-quarter depreciation convention, a penalty assessed if too much equipment is purchased in the last 3 months of the business year. Leasing also can eliminate or lessen the impact of the Alternative Minimum Tax (AMT).
• Converts value of owned equipment to cash: Customers can sell their equipment and lease it back. This allows some customers to draw equity from their equipment and reinvest the cash in more productive areas of their business.
• Provides alternative financing source: Leasing may be used to finance needed equipment when it is impractical to disturb existing loan agreements.
• Equipment Options: Equipment may be new or used; the customer may choose the equipment, dealer and negotiate the price.
• Fixed Rates: Lease rates are fixed for the entire term.
• Payment Options: Payments may be made monthly, quarterly, semi-annually or annually.
• Lease Terms: Lease terms range generally from 3-7 years.
• Purchase Options: At the end of the lease term, the customer has the option of purchasing the equipment, renewing the lease or returning the equipment. Fixed purchase options are also available.

Leasing Products and Options

Tax Oriented Lease

A "true" lease for income tax purposes. Lessor claims the depreciate benefits, Lessee entitled to deduct the rental payments.

Harvest Payment

Equipment may be acquired when needed and payments delayed until cash is available. The features that distinguish a Harvest Payment lease are:

• Payment delay period of 1-6 months
• A 10% advance rental is due at the time equipment is placed in service. Only annual or semiannual payment intervals are available.

Lease Purchase

This option is not a "true" lease and the lessee is the owner for federal income tax purposes. Lease Purchase offers advantages not available with other lease structures.

• Bargain purchase option
• Lease terms that are longer or shorter than those allowed under true lease programs.
• A trade-in or down-payment may be used to reduce the amount financed.

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