Frequently Asked Questions

Leasing

1)  What is an equipment lease?  How is it different from equipment loans?

     Leasing is an agreement where BDO Leasing (as the lessor) grants the use of an asset to you (as the client or lessee), for a fee      (rental payment), for a specified period of time.  Loan, on the other hand, is the acquisition of asset through mortgage of a      collateral or the same asset. 

     In short, a lease is used to finance the use of an equipment while availing of a loan is to finance the purchase of the same.The      ownership of the leased equipment remains with the lessor, but at the end of the term, the lessee may purchase the same from      the lessor. A loan on the other hand, gives the client the ownership of the asset which he amortizes for the entire amount financed.

 

2) How can leasing benefit your business?

     Leasing gives you the alternative to grow your business that guarantees minimal capital outlay.
     Among its benefits include:

          a) Conserves your working capital

          b) Preserves your existing credit lines

          c) There are no chattel mortgage fees

          d) Low cash out and higher amount financed

          e) Tax-timing benefits

 

3)  How long do I have to be in business before I can lease?  Can I get a lease even if my company is a start-up?

     A three-year operation of the business is usually required when availing of a lease.  But for start-ups, it will be depending on the      merits of the business venture and owners.

 

4)  What are the types of asset that I can lease?

     Any kind of equipment can be leased for your business needs such as the following:

          a) Transportation equipment (such as auto vehicles, trucks, airplanes, vessels, barges, etc.)
          b) Rice milling equipment
          c) Manufacturing and plant machineries
          d) Computers
          e) Printing equipment
           f) Generator sets
          g) Construction heavy equipment
          h) Telecommunications equipment
          i) Powerplant equipment
          j) Port Handling equipment
          k) Power systems
          l) Medical equipment
         m) Real Estate Properties

 

5)  How long does a lease last?

     Depending on the useful life of the equipment or asset, a lease term usually ranges from 24 to 60 months. Assets which have      long useful life usually have longer lease terms.

6) Is a lease always for a fixed term? Do I have the option to pay it off early?

     A lease is not always a fixed term as some may be repriced annually. It varies depending on the type and use of the leased asset.
      It can be preterminated any time during the term subject to pre-agreed terms and conditions.

7) Will I be required to give a down payment?

     Yes, under a leasing agreement, a client will be required to give a Guaranty Deposit, the amount of which ranges from 10 to 30%      of the equipment cost.

Factoring

1) What is Factoring of Receivables?

     Factoring of Receivables is a financial product which involves the selling of your receivables to BDO Leasing at a discount to
     obtain immediate cash that you can use for your business needs.

2) How can my business benefit from it?

     With this facility, your need for immediate working capital can be met, which you can use to:
          a) Purchase new stock, meet new orders
          b) Negotiate for better discounts for cash purchases
          c) Increase marketing & promotional activities
          d) Take advantage of new business opportunities

 

3) Is Factoring applicable for sole proprietorship business or for large corporations only?

     Yes, Factoring is applicable to any type of business whether it be sole proprietorship, partnership or large corporations.

     Similar to leasing, a three-year operation of the business is the usual standard requirement when availing of Factoring.

 

4) What documents do I need to submit if I will apply for Factoring facility?

     You will be required to submit the following minimum requirements:

          a. Standard business papers such as DTI Certificate of Registration, Cert. of Filing of Articles of Incorporation, General                           Information Sheet, Certificate of VAT Registration, Articles of Incorporation & By-Laws

          b. Three (3) yrs. audited/in-house financial statement with ITR
          c. Company profile

 

5) Is there a fee that I need to pay when I avail of Factoring?

     Yes, a one-time registration fee will be required from you once the application for Factoring is already approved, plus the regular      doc stamp charges and service fee which vary depending on the amount.