Top 10 Reasons for Financing Software or Technology

One of the keys to success in business is how well you leverage your capital to support and grow your company. The decisions you make related to the acquisition of resources can be crucial. This is especially true with software and technology, as they evolve rapidly and you need to stay current to stay competitive.

So, should you purchase resources outright? Get a bank loan? Or, is there a better way?

For many companies, financing is the right choice. Why? Leasing provides a number of advantages, including that it is a financial strategy that allows you to:

  • Ensure your technology is refreshed on a regular basis. Leasing makes it easy to stay current with the latest upgrades, which is important since software and technology have a much shorter lifecycle than things like equipment.
  • Use your assets to generate revenue and cost savings, and expedite your ROI while you manage payments over time. In other words, when you lease technology rather than buying it, you have less capital tied up in the asset.
  • Cover 100% of your equipment, software, and services with 0% down. Here again, the money that you don’t have to put down can be working for you in other ways.
  • Acquire more and better equipment than you could without financing. In a purchase scenario, you may feel compelled to purchase low-end technology or less of it so you can keep more capital in reserve.
  • Save cash for expansion, improvements, marketing, and R&D. Financing gives you the power to move from just “getting by” to “getting ahead.”
  • Bundle your equipment, installation, and maintenance from multiple vendors into a single payment. Running a business is complex. Leasing makes it simpler.
  • Choose payment terms customized to match your cash flow. For many businesses, cash flow varies seasonally or based on other factors. Leasing allows you to get on a schedule where you make payments when funds are most available.
  • Select fixed lease payments to protect against rising interest rates and inflation. There is great comfort in knowing that your lease payments will remain constant no matter where interest rates go.
  • Execute sale/leaseback transactions on recently acquired assets to generate needed working capital. Leasing offers tremendous flexibility as you craft your financial strategy.

The Sooner You Act, the Bigger the Benefits

Taking advantage of leasing for your software and technology acquisitions isn’t difficult or time-consuming. It just requires making the decision to move forward. And, of course, the sooner you get started, the more benefits you’ll see when you look back at your financials at the end of the year.


Optimize Your Equipment Budget Through Leasing

If you’ve ever wondered, “Why lease equipment and technology for my business?” our slideshow has the answer. Leasing provides many strategic advantages. Click through this clear, concise presentation to learn more.

Why Expected Interest Rate Hikes Make This a Great Time to Lease

In the wake of the financial crisis of 2007-08 and the Great Recession that followed, the Federal Reserve cut interest rates dramatically. Its near-zero interest rate policy—or ZIRP as those in finance have come to call it—was designed to help the economy recover more quickly, and most believe that strategy has been a positive factor in the steady improvement in recent years.

However, in order to maintain a stable economy and cap inflation at 2 percent, the Federal Reserve is expected to raise rates gradually in 2018. In fact, according to the Equipment Leasing & Finance Foundation, the benchmark interest rate will likely be increased three to four times this year. The fact that interest rates inched up in April may be a harbinger of things to come.

Leasing Now is to Your Advantage

The prevailing wisdom is that when interest rates are low, that is the time to grow your business since it is more cost-effective to do so. Consequently, when some companies hear news of impending interest rate hikes, they feel maybe it is time to hold off on acquiring more equipment and other business essentials.

However, there are many reasons why that strategy should not apply in the current situation. For example:

  • Versus a traditional bank loan rate, which may change as the benchmark lending rate changes, the payment on an equipment lease is fixed for the length of the agreement. So, by leasing now you are “locking in” your savings as rates climb.
  • The Fed is expected to push the benchmark lending rate up by only a quarter of a percentage point per quarter. So, while it is wise to get equipment leased soon, there is still time to carefully assess your needs and make effective leasing decisions.
  • The money saved by executing leases now can impact future business planning, cash flow, and profitability. In other words, there are both short-term and long-term benefits to leasing at the current rates.
  • While rates are expected to rise, the economy is still predicted to grow significantly for the foreseeable future. Choosing to delay leasing may mean your business fails to capitalize on that growth.

How a Leasing Partner is a Resource in Uncertain Times

A leasing company that is a true partner to your business does more than simply help you lease equipment and software. Especially in times when interest rates are expected to move, it can be crucial to collaborate with a provider that:

  • Keeps a close watch on what The Fed is up to in order to anticipate changes and ensure you are well positioned to take advantage of them
  • Is prepared to help you adjust your business strategy quickly as conditions warrant
  • Maintains an open line of communication with you so that you are comfortable reaching out as your needs or financial position change

At Dynamic Funding, Inc., we serve as a valuable resource for our clients, not only as we work with them to execute leases, but before and after they sign as well. If you have questions about how rate changes this year will affect the equipment leasing market, please contact us.

How the New Tax Law Affects Equipment Leasing for Small- and Medium-Sized Businesses

Most provisions of the new tax law that was passed in December 2017 went into effect on January 1, 2018. Tax law being a complicated subject, it’s not surprising that many small- and medium-sized businesses (SMBs) are still learning about the specifics of the legislation. In fact, according to an industry survey, 50 percent of small business owners are “not familiar” with the tax law and how it affects them. Among its wide-ranging effects is the impact it will have on business equipment leasing.

What You Need to Know About the New Tax Law and Equipment Leasing

It has been much publicized that the new tax law lowers the corporate tax rate from 35 percent to 21 percent. But, few small business owners actually pay corporate taxes. What does benefit LLCs, S corporations, and sole proprietorships in terms of how income is dealt with is a new 20 percent deduction for the taxable income that “passes through” and is taxed as personal income.

However, what may have an even bigger effect on small businesses is how the new tax law impacts the acquisition of assets. If your company is looking to lease computers, furniture, software, and the other assets you need to operate, we see the new tax law (in particular, Section 179) as having two primary provisions you should be aware of. The first is that at the time you acquire an asset, you can now expense up to 100 percent of the cost. And, the write-off for equipment has doubled from $500,000 to $1,000,000.

Previously, companies would spread out the expense of equipment over, say, five years. Now you are allowed to take that expense in the first year. If your business is profitable, this upfront “hit” can be very beneficial as the depreciation expense lowers your taxable income, allowing you to pay less tax and keep more of your money. What you are able to do in a leasing scenario is even better. You can still make your payments over time even if you take the expense and lower your tax obligation on Day 1.

The second key advantage of the new tax law is that the provision above applies to both new and used assets. In the past, you only received benefits for the acquisition of brand new equipment, software, etc. Now used assets are covered as well. In fact, while they don’t occur often in our business, even sale/leaseback transactions can be treated this way.

The Bottom Line for Your Business Leasing

The implementation of the new tax law puts us in the coveted position of being the bearers of this very positive news! And, we’re eager to spread the word to our clients.

Ultimately, the legislation is advantageous to SMBs when it comes to acquiring assets in general. And, it’s important to remember that if that acquisition is through a capital lease, you get the best of both worlds: taking the expense up front while spreading the cash flow over time. This can be especially beneficial if your business is like most and cash flow is actually more important to you than expense.

If you have questions about how the 2018 tax law can be used to your advantage on computer, furniture, software, or other leases, please contact us. We’re happy to talk specifics about your business leasing needs and how the new legislation will impact you financially.

DFI Attends Orion First’s Small Business Lending Forum

Our loan and leasing partner Orion First will be putting on a Small Business Lending Forum in Denver on August 13th and 14th at the Hilton Denver Inverness Hotel.

They are bringing together industry leaders to discuss trends and regulations shaping the future of the lending industry. This free event will be a great opportunity for lending and leasing professionals to get together for a keynote and 3 great breakout sessions:

  •  How Outsourcing Supports Your Goals and Strategy
  •  The Innovative Lending Platform Association & Healthy Business Lending
  •  The Present and Future of Scoring in Equipment and Small Business Finance

Register for the free event here.



Contact: Aimee Miller
Aimee Miller Marketing & Communications


Englewood, CO (February 1, 2017) –Dynamic Funding, a Colorado-based equipment leasing company, added Steve West as director of business development. West has nearly 40 years of experience in IT equipment and large-scale data storage sales.

“We are excited to welcome Steve to Dynamic Funding and are excited for him to bring his vast experience in the IT equipment market to the team,” said Brad Bayless, vice president of Dynamic Funding.

West joins DFI from United Reprographics Supply in Centennial, CO, where he was vice president of sales. Prior to his position with URS, West was the senior account executive at K12 and SLG.

Founded in 1996, DFI is a full service lessor that provides equipment financing for technology assets, software and services and additional operating equipment.

Originally published by Monitor Daily.

Why Companies with High Cash Reserves Still Choose to Lease

The affordability of equipment, technology and other hard assets can make or break a company’s growth. This is why leasing is so appealing to many businesses – acquiring these necessary items with a manageable monthly payment. But why then do established businesses with large cash reserves choose to lease, when they could just pay off the asset and avoid the interest? It turns out that there are quite a few benefits to financing for all types of organizations, from start-ups to Fortune 100s alike.

Tax Benefits
Leasing allows your customers to deduct monthly lease payments on a true lease as an operating expense. Depending on the lease structure and the accounting treatment, this means their lease may qualify for off-balance sheet treatment, which may assist them in acquiring the equipment they need while maintaining compliance with bank and loan covenants, staying within capital budget constraints, improving their financial position.

Another set of tax benefits many organizations take advantages of are Section 179, bonus depreciation and qualified leasehold improvements. With Section 179, the IRS allows for the project cost to be fully deductible if your business uses the leased equipment and lease payments pay the cost over time. Interest as part of the payments is also deductible.

Bonus depreciation is the provision that allows businesses to expense off a portion of an asset in the year it is added. This has proven to be very helpful for businesses with large amounts of qualifying equipment, as they are able to save large amounts of tax in the year of purchase. With a gradual depreciation phase-down in place, production equipment and improvement purchases with less than 20 year lives will be able to be expensed at 50% of the asset price in the year of purchase through 2017, 40% in 2018, and 30% in 2019.

Qualified leasehold improvements allow depreciation lives to be reduced to 15 years, instead of the 39 year schedules normally applied. This means that after Section 179 and bonus depreciation deductions, a business will be able to accelerate remaining tax value of improvements over 15 years instead of 39 years. This rapidly reduces the timeframe in which a business can depreciate an asset and enjoy the tax benefits more quickly.

Cash on Hand
It is hard to think of a scenario in which a business having a solid cash reserve would be a bad thing. As any business owner will attest to, having liquid capital to fall back on is always a good idea, especially when one considers the multitude of issues that may arise in a given day. While many businesses have the ability to pay for the equipment and other hard assets up-front, they would rather not deplete their cash or working capital capabilities. And with the ability to put little to no money down in order to acquire an asset, businesses are able to continue their workflow without disruption from an extended waiting period.

Fixed Monthly Payment
Knowing that a fixed cost is on the horizon can actually be a relief to a business. One of the most difficult things about expense accounting month-to-month is factoring in the new, surprise costs that pop-up. That is why even when they are able to pay the full cost up-front, many businesses opt for monthly payments since they are expected costs that allow them to better manage their budgeting cycle.

Hedge of Technology
In an age when the next best thing may be available a month after you purchase the latest and greatest, there can be a fine line behind staying up to date and lagging far behind. This is one benefit that leasing can provide better than paying for assets outright. Depending on the structure of the financing agreement, many companies lease assets as a way to stay current with advancement, updates and new features on a regular basis. This usually proves easier than trying to sell the asset themselves at a loss, only have to turn around and buy something new at full-price.

Since leasing is a hedge against technology, many businesses choose operating leases wherein at the end of the lease term, they have the option to return the asset. If the then fair market value of the asset is less than the residual that the business assumed, they bear the loss but are protected from fair market value fluctuations. Also, if the lessee chooses to swap the asset for one of newer technology, then the existing lease can typically be terminated and a new lease initiated.

Recent Transactions with DFI

At Dynamic Funding, Inc., we help business owners acquire the hard assets they need to expand and grow their business without tying up capital. Most recently, we have helped businesses in manufacturing, brewing and IT with expansion projects and final touches before opening. Read more about each below:

Office Furniture Refresh
Fair Market Value/Operating Lease – $70,000 over 36 months
The customer was at a point where using their capital wasn’t appealing, so they pursued a financing option instead.

Kitchen Equipment
$1 Out/ Capital Lease – $25,000 over 48 months
The customer was a startup brewery at the end of their build-out, and realized that they didn’t have the capital for the last piece of the restaurant equipment. They found DFI at the right time, and they were able to open their doors for business.

Office Expansion and IT Acquisition
Fair Market Value/Operating Lease – $109,000 over 60 months
The customer was doing a large office expansion, and didn’t have the capital reserves to put toward their new furniture and IT equipment. They opted to go with leasing, and liked that DFI would put half of the amount down to get the order started.