REBATE FUNDING WILL NOT INTERFERE WITH THE SBA PROCESS
Rebate funding will not interfere with the SBA process in any way for the following reasons.
1. When the business client received rebate funding it is in the form of a rebate check from one of the certified IT equipment vendors in our network. That means that any underwriter scanning an SBA applicants business banking statement will not see any direct deposit or incoming wire; which are the usual forms of receipt of a business loan or merchant cash advance funding.
2. The UCC lien filed against the business will say “equipment lease”. The SBA is perfectly ok with any applicant leasing equipment during the process as long as the lease is not so large that it drastically changes the cash flow or profitability of the applying business.
REBATE FUNDING IS THE ONLY TYPE OF INTERIM FUNDING AVAILABLE FOR SBA CLIENTS
As you are aware, your business clients applying for SBA loans are not allowed to take any type of short term funding during the SBA loan process, nor can they apply for bank lines of credit or business credit cards. Because this transaction is technically a capital lease with a $1 buyout (with a rebate back from the seller of the equipment) it stands outside of the parameters of SBA funding guidelines. It does not count as funding per say. To get technical on the rebate itself: the IRS does not consider rebates to be taxable income for a business or individual. This is because rebates are a part of the sale price. The customer has already paid for that cash back.
REBATE FUNDING HAS MANY ADVANTAGES
Here are just some of the advantages of rebate funding:
1. There is a 5 year term
2. The payments are made monthly
3. The entire transaction is tax deductible under IRS Code 179
4. After the tax deduction costs is around 20% per year
5. There is no personal guarantee required
6. There are no restrictions on use of funds
7. It does not interfere with any other type of funding (It stands alone)
HOW REBATE FUNDING WORKS
It would be best for you to really take the time to read the entire homepage of the website and then the FAQ page on rebate funding as well.
There is a lot of information provided.
To sum it up:
1. Banks will finance last generation IT equipment at full retail price (as long as seller and buyer agree upon pricing).
2. Vendors have few options to sell last overstocked generation equipment (especially if it was custom configured and part of a cancelled or modified order).
3. Vendors typically cannot get more than pennies on the dollar for custom IT equipment once it sits on a shelf (with warranty time running) for more than two years.
4. These factors make it make sense for vendors to pay buyers incentives of up to 50% of the sale price, if those buyers are willing to take that last generation equipment off of their shelves at full retail price.
5. Add to that the fact that rebates are perfectly legal, and that there are no caps or legal limits on rebate amounts in private B2B or consumer transactions, and this is why you have rebate funding.
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