From the Author
We often get this question with our new (and sometimes returning) clients. In the following article, we break down the structures of a PUT Financing Agreement, talk about their value to you (the client), and even give some real-life examples of how we use them to help our clients.
PUT or “Payment upon Termination” refers to a periodic mechanism that reduces monthly payments and interest rates. At its core, it is a set payment that you finalize at the end of the term. On average, you can get the terms of 10%, 15%, or 20% on PUT financing.
Understand the Essence of PUT Financing
Under the PUT financing agreement, the owner gets the newfound freedom to finance one or more projects with ease. Opting for PUT financing in our competitive world makes more sense because you want to ensure stable business operations at all times.
Besides, don’t think of PUT financing as a contingency plan for your business. In fact, it is crucial to understand that PUT financing can serve as a regular financing option to ensure the continuation of complex projects and as well as save money.
PUT Financing: How Does it Work?
When it comes to the PUT financing, it boils down to the amount of the project minus the PUT percentage. So, if your project costs $100,000 and you intend to select a 10% PUT (Payment upon Termination), then you will just need to pay $90,000 with monthly payments (i.e., 10,000 (10% of 100,000).
In fact, the math checks out for the PUT financing. For example, assume that the price of your project is $100,000 with monthly payments of $3,125. It means the calculation for the 10%, 15%, and 20% PUT on monthly payments will look like:
- 10% PUT: $2,815/mo
- 15% PUT: $2,650/mo
- 20% PUT: $2,500/mo
What Makes the PUT Financing Structure So Ideal?
In layman’s terms, the PUT financing structure allows you to pay less each month and keep more cash in hand. PUT financing is a more practical choice for businesses that receive regular payments from their clients each month.
Business Equipment Profitability and PUT Financing
You make money by using your equipment! Just like most businesses, you want your equipment to perform exceptionally to ensure optimal business operations and ensure high profitability. With PUT financing in the picture, your business will get time to make money before you have to pay back the total cost of the equipment.
The Flexibility of PUT Financing
Apart from the practicality and compatibility of PUT financing, it is a highly flexible option for businesses to mitigate various issues in complex situations. Of course, you can roll into a small or large PUT as per your business needs. You can resource the expertise of a reputable finance company to get a suitable PUT financing option that caters to your business needs.
PUT financing can help you save enough to purchase more urgent items for the business. On the surface, the saved amount might not seem a lot on, say, $100,000. But the more PUT financing you opt for on other projects, the more you will be able to save over time. Therefore, it would be fair to state that a PUT financing agreement can help you position yourself better in the market and establish your business’s financial position with stability.
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