Compare Traditional Lease Financing versus PNC Managed Service Solutions
Traditional Lease Financing
The lease transaction for the equipment is separate from the service contract and the service provider is obligated to the debt, regardless of any cancellations or breach of the service contract. The lessor would purchase the equipment and the service provider would be the lessee.
PNC Equipment Finance's Managed Service Solutions
The service provider and PNC enter into a financing arrangement. PNC will review the terms between the service provider and the customer and may request additional terms to be included. The service provider is not obligated to the credit risk in the contract, but may have an agreed upon level of obligation if the contract is terminated due to a breach in service.
In order to illustrate the value of PNC Equipment Finance's managed services, a comparison of traditional lease financing versus the MSS solution is provided below.
MSP Bundled Solution Scenario
- $9 million, 36-month MSA with the customer to provide a total outsourced solution
- Equipment cost required in the MSA to support the customer - $3.6 million
- Monthly service fees to the customer - $150,000
- Equipment payment included in the monthly fees to the customer - $100,000
- Total monthly solution fee to the customer - $250,000
Traditional Lease Financing
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PNC Managed Service Solutions
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| Service provider enters into least agreement |
Service provider enters into agreements with MSS |
| $150,000 service fee is recognized monthly |
$150,000 service fee is recognized monthly |
| Service provider is responsible for debt obligation |
Service provider is non-recourse on the debt obligation |
| $3.6MM of equipment sales is recognized over 3 years |
$3.6MM of equipment sales is recognized up-front |
| End-user defaults, service provider still pays the debt |
End-user defaults, service provider not obligated to debt |
| End-user defaults, service provider has pro-rata equipment sale |
End-user defaults, service provider still has 100% sale |
| Service provider breaches contract, service provider pays debt |
Service provider breaches contract, re-markets equipment or pays the debt |
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