Software financing is an agreement by a customer (installment payment agreement) to make a specific payment for a specific amount of time for use of a software license. The finance company does not own the software, but does take a security interest in the software. At the end of the term of the payment agreement, provided all payments have been made, the finance company releases its security interest.
Should I lease or buy?
For many businesses, the use of the equipment (not the ownership) provides the value.
What about financing through my bank?
Bank loans usually cover only the acquisition of tangible assets (i.e. hardware) and typically require a large down payment. Leasing generally does not affect bank lines of credit, which can be used for other business purposes.
What types of businesses can finance software?
All types of business entities can finance software including corporations, partnerships, proprietorships, profit and non-profit associations, along with state, county and city government agencies (subject to applicable procurement law).
What information is needed on a lease application?
There are key sections of data required on a lease application.
General information: information about the business (name, location, bank and trade references) are required. Lessors may obtain reports from credit reporting agencies (i.e. Dun & Bradstreet) as needed.
Personal information: this data may be necessary on the principal(s) of the company depending on how long the company has been in business. Personal information may also be required if the business is structured as a proprietorship, partnership, close corporation, limited partnership or limited liability partnership.
Financial statements: this information is likely to be requested with larger transactions or if there is insufficient credit report information to determine a company’s financial strength. All application and financial information is kept strictly confidential.
How are payments determined?
The monthly payment is typically based on:
Term of the financing
Cost of the software
Finance options
What is immediate billing?
Immediate billing occurs when the customer’s invoice is sent out the day the agreement starts and is due upon receipt.
Can the agreement be cancelled or paid off early?
The installment payment agreement is a full term agreement. It may not be cancelled. It may, however, be paid off at any time without a pre-payment penalty.
Can I add software to my existing contract?
Yes, provided we make a favorable determination of customer credit worthiness, once the customer has an active installment payment agreement and an approved credit line, software can be easily added. Payments are simply adjusted and can often be made co-terminus with the original finance term, of course, all transactions are subject to our approval.
Why is a personal guaranty sometimes required even though the lessee is a corporation?
Guaranties are sometimes required from closely held corporations and other privately owned companies because the company’s credit is based on the value the owners bring in the way of business expertise and personal credit strength. Since these businesses can manage their finances at their own discretion, without the financer’s knowledge or consent, the financing company protects its investment by obtaining the owner’s guaranty
Specie Capital | 5870 Merle Hay Road, PO Box 72, Johnston, IA 50131 | p (515) 276-0706 | f (515) 334-5023
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