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Equipment Leasing

A practical way to acquire up-to-date equipment without spending money to buy and also maintain a solid cash position.

Equipment leasing is a method to acquire materials without significant cash outlay.

How does it work?

Individuals and businesses can lease equipments. When a business needs equipment, they usually acquire it in one of three ways: Buy it outright with company funds, borrow funds to buy it, or lease it.

In order to decide which option is best --to lease or to buy using your own money or a loan, you must examine the benefits, costs, advantages, and disadvantages.

Unlike leasing, when you buy equipment, you own it outright. Unfortunately, you also own all the risks of loss, damage, repair, and obsolescence as well. However, with leasing, you not only can transfer these risks, you will have greater flexibility to upgrade and be current with technology. When you purchase equipment outright, you may not have such protections and it could eventually cost you your business.

Leasing will allow you to maintain a stable cash position even as you acquire new equipments to enhance production capabilities. It will also allow you to conserve and build up lines of credit. There could even be enormous tax benefits as well. Surveys have shown that 8 out of 10 businesses lease all or some of their equipments. Leasing is one of the most widely used forms of asset-based financing. No industry is excluded from leasing, and it does not matter in what State you are located.

Here are some of the distinct comparisons between a lease and a loan:

LOAN Would finance balance amount less initial down payment required. Requires additional collateral pledges. Have very restrictive covenants and financial liquidity ratios that may limit your ability to secure funds elsewhere. You bear all risks of equipment devaluation and or obsolescence. Only interests and depreciated values may be tax deductible. Owned equipments must be listed on Balance Sheet as assets with corresponding liabilities. Payments are made in the present expensive monetary value.

LEASE 100% financing available, and usually does not require a down payment from you. Leased equipment is the only collateral required. Leasing will not restrict your ability to secure funds from somewhere else as long as your payments are current. You transfer all risks of obsolescence and there is no obligation to purchase equipment. Entire lease payments can be tax deductible. Leases are off Balance Sheet and may not have adverse effect on financial ratios. Inflation would make periodic payments less costly.

Here are 3 simple steps to get started on equipment lease or finance:

1. Select your equipment.
2. Submit an application.
3. Sign a lease or finance agreement.