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Leasing Defined
A lease is a contractual arrangement in which a leasing company (known as the lessor) gives a customer (know as the lessee) the right to use its equipment for a specified length of time (lease term) for a specified monthly payment. Depending on how the lease is structured, the customer may either purchase, return, or continue to lease the equipment once this agreement expires.
Leasing provides excellent financing flexibility.
You can easily lease anything associated with the operation of your business,including all types of capital equipment, hardware, and software. What you may not know is that you can also lease such "soft costs" as training, installation, and consultation.
Stated simply, the benefits of leasing your equipment are almost limitless. Leasing has become the preferred equipment acquisition method for U.S. businesses. Leasing offers real advantages, including better value, reduced cash flow strain, and greater control.
Here are some key reasons why businesses lease rather than purchase:
*Conventional bank loans usually require more money upfront than leasing and often have restrictive covenants.
*Conventional debt financing may require a 10-20% downpayment.
*Leasing generally requires only one or two payments upfront, which are applied to your future payments.
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In most cases, the full amount of the equipment, as well as the service, shipping, installation costs, and maintenance can be included in the lease. This spreads the cost out evenly over the term of the lease, freeing up cash flow for your business now, when you need it most.
Significant Tax Savings
Monthly payments on equipment and operating leases are typically viewed as operating expenses. These expenses offer significant tax benefits. You should always consult with your financial advisor to determine the most tax-beneficial lease for your company.
Most applicants receive bids within two business days. This means you can acquire equipment right away, without having to consider loans or other more time-consuming financing vehicles. Leasing also enables you to completely tailor a solution that meets your company's requirements. The flexibility of leasing is unprecedented - the length and amount of your payments can be customized to fit your situation.
Cash Flow Forecasting Made Easy
Because a lease obligation is essentially fixed, you can avoid any uncertainty about the future value of your equipment. Planning and forecasting is very easy when leasing is your main equipment acquisition vehicle.
For a free consultation and more information on equipment leasing, please contact us today!
Central Coast Capital Business Funding (510) 645-9046
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