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REBATE FUNDING QUESTIONS

FREQUENTLY ASKED QUESTIONS ABOUT REBATE FUNDING

FAQ 1: HOW CAN RFS VENDORS SELL EQUIPMENT AT A HIGH ENOUGH PRICE TO PAY A 50% REBATE?


FAQ 1 ANSWER:  In the large photo at the top of the page you will see a search result for a last generation enterprise class server. This is for the same exact server with the same exact configurations or internal components. HPE (Hewlett Packard Enterprise) discontinued Generation 9 servers in the fall of 2017. Yet here are a bunch of major suppliers (vendors and distributors) still selling it openly on Google; and some for top retail price.

You will notice in the photo taken from Google that 2 prices are highlighted. There is one for over $44,000 and one for just over $15,000; which is almost 2/3 off of the top price. In between (above the lowest price) there are 2 other prices which are both about 1/3 less than the top price and almost double the bottom price. This is all for the exact same make and model  server with the exact same configurations/internal components.

What is very important for you to know (besides the possible price differences for the same exact piece of equipment), is that many leasing banks today would finance it for either $15,000 or for $44,000 (for the same piece of equipment). This is because most banks that provide credit lines for IT equipment will finance whatever amount a client is willing to pay for a specific piece of equipment, within reason. The main reason for that is because these banks know that if a business client were to default on the lease or finance agreement, that they would be hard pressed to get much of the value of that IT equipment at any auction. The demand  for such equipment is too low and the availability or supply is too high; thus making it difficult or close to impossible to recoup any substantial portion of the retail value, even 6 months after it is purchased.

The banks and leasing companies that finance IT equipment actually charge interest rates that are slightly higher than say banks that finance tractors. This is primarily because they are fully aware of their inability to recoup losses through equipment seizure in the event of client default.

It is this financing anomaly that makes rebate funding possible.


FAQ 2: IF THERE IS SUCH A PRICE DIFFERENCE FOR THE EXACT SAME EQUIPMENT HOW DO THE BANKS DECIDE WHAT A FAIR PRICE IS FOR FINANCING/EQUIPMENT VALUE?


FAQ 2 ANSWER: The banks will actually go by what is provided to them by the vendor. As long as the bank does a quick check of retail prices, they usually will have no problem with a vendor charging slightly above any top prices listed online. That means that the bank is not really deciding the equipment price at all. It is the vendor and the client purchasing or leasing the equipment that are actually deciding. The bank is simply financing those two third parties agreed upon price.

Obviously there are limitations. For example: If a server has a top (or highest) retail price of $60,000 then the vendor likely cannot sell it for $100,000; but may be able to go to $68,000. It does not matter if 2 other companies are selling it for $30,000. The leasing bank will offer a small business financing based upon the client's business credit, time in business and the agreed to price between the client and vendor. That is obviously contingent upon that  agreed upon price not far exceeding the top price for that particular piece of equipment in the retail market. Bottom prices are not a factor.


FAQ 3: DOES MY BUSINESS GET TO CHOOSE THE MAKE AND MODEL OF SERVER EQUIPMENT THAT IT FINANCES IN ORDER TO GET THE REBATE?


FAQ 3 ANSWER: Unfortunately no. It is by availability of equipment.  The vendors in our network can only sell you equipment based upon the availability of their own, or affiliated vendors overstocked equipment. If approved, your business would be receiving a usable, brand new in the box, last generation enterprise class server. That server will likely have been on  a shelf for at least a year. The only reason that you are getting a significant rebate back from the vendor (the seller), is because if they tried to sell it anyplace else they would get less than the amount they retain after paying your business it's rebate and paying out a referral fee if someone sent you to our network. 

As a courtesy our network vendors would install Windows server for you so the server could be easily used by your business as either a server or as an extra computer. What you will have to determine is whether or not the terms of rebate funding make sense for your business, more in regards to getting affordable working capital verses purchasing equipment.


FAQ 4: HOW LONG DOES THE PROCESS TAKE?


ANSWER 4: The rebate funding process usually takes 8 to 10 business days from application to receipt of equipment and rebate check. We have seen it happen in as fast as 7 business days and as long as 12 business days on rare occasion.


FAQ 5: CAN THIS BE DONE WITH OTHER TYPES OF EQUIPMENT?


ANSWER 5: Rebate funding cannot be done with any other type of equipment at this time, except IT equipment. We are unaware of any other type of equipment that depreciates so quickly and resells so poorly. It is the combination of being able to sell last generation IT equipment and the poor resale value  of that equipment which makes rebate funding possible.


FAQ 6: CAN I USE MY OWN VENDOR?


ANSWER 6: No you may not use your own vendor. Our network is a closed group of vendors and they only facilitate transactions for their own overstocked equipment, or for vendors that they have longstanding trusted relationships with. If you have your own vendor that is willing to rebate a significant enough portion of the sale price for a transaction to make sense for your business, then we suggest that you utilize their services.


FAQ 7: IS THERE ANY OUT OF POCKET COSTS?


ANSWER 7: With rebate funding there will not be any out of pocket costs. Our network charges no upfront fees. Post transaction fees are also not charged or allowed. Your business will always be able to keep the full rebate amount.


FAQ 8: WILL THIS AFFECT OTHER WORKING CAPITAL TRANSACTIONS?


ANSWER 8: Rebate funding will not negatively impact other transactions that your business may seek to engage in for funding. Here is why. The UCC lien filed would be for an equipment lease, and the funding is a rebate check from an IT equipment dealer (i.e., one of our network vendors). Any underwriter examining your business's banking statements will not find anything unusual or triggering; such as a direct deposit or bank wire. Rebate funding will not even interfere with an SBA loan process.


FAQ 9: IS THERE A PREPAYMENT PENALTY?


ANSWER 9: Your business would be paying back a 60 month, $1 buyout capital lease with factor rate interest. That means that if at any point you wanted to pay the transaction off early, then the interest should stop. At that point your business would owe only the remaining unpaid portions of principal and sales tax.


FAQ 10: WHAT WOULD PREVENT A BUSINESS FROM RECEIVING REBATE FUNDING?


ANSWER 10: In order to not qualify for rebate funding your business would have to:

A. Be filed with secretary of state for less than 5 years or not filed at all

B. Be a shelf corp and not a true operating business

C. Have a judgment open

D. Have a bankruptcy filed anytime

E. Not have established reporting credit with Dun & Bradstreet and Experian. Meaning a Paydex of 68-80 and considered low risk by both bureaus

No personal credit issues or current cash flow lows will impact an approval.


REAL, OPERATING BUSINESSES ONLY NEED APPLY!


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