Equipment Leasing Cheat Sheet

Equipment Leasing Makes Economic Sense: Why Every Small Business Should Lease Equipment

Tens of thousands of businesses nationwide look to leasing for all types of equipment from cameras to computers and tractors to trucks. The primary reason: It makes great financial sense, especially in uncertain economic times whether a company is large or small, well-established or a start-up, has lots of cash on hand or less-than-stellar credit. With a lease, the equipment's value comes from its use, not its ownership. In today's highly competitive and technologically challenging marketplace, that's a concept widely embraced by businesses worldwide. Today equipment leasing is a nearly $300 billion industry and growing. In 2004 alone, approximately 20,000 leases were completed every day! That's according to the nonprofit Equipment Leasing and Finance, which tracks the industry.

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Leasing

Does NOT require big cash outlays up front. There's no down payment, minimal bank fees— usually less than $500—, and 100 percent financing that can include soft costs like installation and training that's often required with new equipment.

Does NOT require lengthy credit checks. Generally it takes a simple application with approval in just a few hours for leases with equipment valued at $100,000 or less. Leases of more than $100,000 require a slightly more involved, but still easy process.

Does NOT tie up a company's working capital. Does NOT affect a company's ability to borrow cash in the event of unforeseen business demands or financial problems.

DOES offer tremendous tax advantages. Depending on individual company circumstances, lease DOES offer flexible lease payment schedules that can be tailored to a company's specific cash flow. Payments can be monthly, quarterly, seasonally, or something else.

IS a hedge against inflation. Lease payments are locked in for a set length of time no matter the rate of inflation.

IS security against owning obsolete and inefficient equipment.

Leasing instead of buying needed equipment can easily mean the difference between a company’s success and failure