Reasons to Consider Equipment Leasing

Before spending six years working at two different leasing firms, I was skeptical about leasing. Banks and loans seems to be the less risky, standard approach to financing equipment. However, now that I understand the business of leasing, I am a huge proponent.

Equipment leasing can be an extremely beneficial way to get the equipment you need quickly for your business operations. With leasing, a lessor who owns or controls the equipment transfers possession and use of the equipment for a period of time to you, the lessee. In exchange, you pay the lessor rent. A loan, on the other hand, is when a borrower gives you a certain sum of money with the expectation of total repayment.

While you will always want to carefully consider the lease vs. loan proposition, be aware that leasing can offer your business some tremendous benefits such as:

• Quick Access to Equipment. Leases generally require less paperwork and processing. You’ll get your hands on the equipment sooner.
• Cash Savings. Rather than pay the full price for equipment, you can make smaller, monthly payments based on the portion of the equipment’s life cycle you use.
• Reduced Upfront Costs. Typically, lessors require only a minimal initial investment such as the first lease payment. Depending on your company’s financial health, a security deposit may be required, but it will still be less than the deposit required for a loan.
• 100 percent financing. You can finance 100 percent of the equipment, installation and set up cost.
• Flexible Lease Payments. Schedule your payments around your busiest times. Most lessors will work with you and offer monthly, quarterly or seasonal payment plans to match your cash and business flow.
• Tax Advantages. Structured correctly, your lease payments will be 100 percent tax deductible.
• Preserved credit lines. Because your leasing, your credit lines are not affected; those funds will remain available for operational, short-term loan or other purposes.
• Equipment Options. With a lease, you don’t have to keep the equipment. You can lease it only for the period you need it. At lease end, you can renew the lease or return or purchase the equipment. Additionally, you will have the opportunity throughout the lease to upgrade your equipment.

Equipment leasing offers other benefits as well but, again, review your financing decisions carefully. When leasing is the right answer, though, you will definitely see the advantages.