Why Lease your equipment? Equipment leasing is basically a loan in which the lender buys and owns equipment and then "rents" it to a business at a flat monthly rate for a specified number of months. At the end of the lease, the business may purchase the equipment for its fair market value (or a fixed or predetermined amount), continue leasing, lease new equipment or return it.
Appropriate for: Any business at any stage of development.
Best Use: Financing equipment purchases. Leasing can also finance the soft costs often associated with equipment purchases, such as installation and training services.
Ease of Acquisition: Easy for leases below $150,000. An application for a small-ticket lease is generally no more than one page.
Principles of Equipment Leasing
1. Leasing may result in Off-Balance Sheet (operating lease) financial reporting, based on underlying assumptions. Leasing may enhance earnings per share and return on assets results, important benefits to public corporations.
2. Leasing may provide a cost advantage over conventional financing by transferring tax incentives (accelerated depreciation) associated with the equipment ownership from the Lessor (the owner) to the Lessee (the user) in the form of lower lease payments.
3. Leasing may minimize Alternative Minimum Tax and Mid-Quarter Convention implications. Lease payments are not "preference items" for purposes of determining amount.
4. Leasing provides 100% financing, conserving cash and preserving lines of credit for working capital purposes.
5. Leasing provides a close matching of the lease term and payments to the revenue produced from employing the equipment.
Equipment Leasing Programs Available
Type of equipment