Section 179 season? Get the equipment funded first

Two separate things, often used together

Section 179 is part of the federal tax code. Equipment financing is a way to pay for a machine over time. One is a tax question. The other is a cash question. Owners mix them up because they tend to come up in the same conversation, usually in the last few months of the year.

We help with the cash side. Funding is provided through our partner Merchant Fund Express, from $25,000 to $5,000,000 for qualified businesses. The tax side belongs with your CPA or tax advisor. We do not give tax advice.

Section 179 in plain words

Normally, when a business buys equipment, it writes off the cost slowly through depreciation over several years. Section 179 lets eligible businesses elect to deduct some or all of the cost of qualifying property in the year it is placed in service instead.

There are annual dollar limits and phase-out rules, and they change. We are not going to quote numbers here. Check the current limits on irs.gov or with your tax advisor before you plan a purchase around them.

• The property generally has to be used in your business
• Timing matters: placed in service, not just ordered
• Your own tax situation decides how much the election helps

Why financing comes into it

Here is the angle owners care about. If a financed machine qualifies, the deduction question and the payment question are handled separately. You may be able to put the equipment to work now and pay for it over time, while your advisor sorts out how the purchase is treated on your return. Whether that works for you is a question for your advisor, not us.

What we can tell you is how equipment financing works: the funder pays the vendor, you get the equipment, and you make scheduled payments. The equipment itself typically secures the deal.

A quick example, for illustration

For illustration only: a regional bakery doing about $140,000 a month needs a second deck oven before the holidays. Their bank said no because of a 590 FICO from a rough year. They finance the oven, keep their cash for flour and payroll, and hand the invoice to their CPA to decide how it is treated for tax purposes. The numbers on the tax side are the CPA's call. The financing decision was based mainly on their deposits.

What we look at

Bank turned you down? That is who we built this for. Established businesses doing $60K or more a month, with credit that is not perfect, are our core fit.

• FICO 500+ considered
• About three months of business bank statements
• No tax returns required
• Soft credit pull to start
• Sole proprietors can apply

The application takes about 5 minutes. Have the equipment quote handy.

Do this before year end

1. Get a written quote from the vendor
2. Ask your tax advisor whether the item qualifies and what the current limits are
3. Pull your last three months of statements
4. Apply here and get a fast answer

Funding can arrive in as little as 24 hours for qualified businesses, but give yourself room. Delivery and installation take time too, and the placed-in-service date is what your advisor will ask about.