Who Leases?

A recent Gallup Survey found that 80% of US Businesses lease a portion of their depreciable assets. The businesses range from one-person operations to Fortune 100 companies.

In 2003, it is estimated that leasing volume is approximately $208 billion and that number will rise to $218 billion in 2004.

In a recent survey of the Small Business Administration's (SBA) State Small Business Contest winners, found that 73 percent of small businesses lease equipment.

Why Lease?

Would you pay your office staff their salaries five years in advance? Of course not, and that is the same reason you should lease depreciating equipment for your business.

Leasing pays for itself. Your profits come from the use of the equipment, not the ownership of it. When you lease, it earns its worth because you pay for it as you use it.

Leasing can help your financial picture by matching the terms of the lease with the useful life of the equipment, and also by providing 100+% financing which in turn enhances your company's financial position.

To decide if leasing is the best option, you need to first ask yourself:

• How does this equipment make your business more competitive?
• How important is conserving your cash or bank credit lines?
• What will your equipment or technology needs be in the future?
• What is the most efficient way to pay for equipment or technology?
• Do my company profits come from owing equipment, or using it?

Benefits of Leasing:

• 100%+ Financing - You can also lease delivery, installation, extended warranties, sales tax, software . Giving you more money to invest in revenue-generating activities.
• Tax Advantages – When structured to meet the IRS guidelines, a lease can be 100% tax deductible.
• Immediate write-off of the dollars spent. Leasing payments are treated as expenses on a company's balance sheet, therefore, equipment does not have to be depreciated over five to seven years.
• Simplified Cash Flow Management – you will be able to match the monthly cash out flow of the equipment expense vs. the revenue created or expenses reduced by purchasing the equipment.
• Flexible Terms - Graduated or step-up, deferred, skip-payment or seasonal plans
• Asset Management – You do not own the equipment, therefore it is not on your books. At the end of the lease, the lessor is responsible for the disposition of the asset.
• Eliminate Obsolescence Concerns – If the nature of your industry demands that you have the latest technology, a short-term operating lease can help you get the equipment and keep your cash. Your risk of getting caught with obsolete equipment is lower because you have the option of ownership at the end of the term.
• Hedge Inflation – Have your payments set to today’s dollars.
• Speed and Simplicity – Leasing can allow you to respond quickly to new opportunities with minimal documentation and red tape. Leases can be approved within hours.
• Conserve Capital - Use your internal company capital for more profitable purposes than buying depreciating assets.
• Fixed Payments – Your payments are consistent for the term of the lease.
• Take Care of Hidden Costs – Everything is paid up front, your monthly lease payment will not change.
  

More Information on Leasing:

Compare Leasing to paying Cash, utilizing a bank loan or line of credit.

Have Questions? Give us a call at 1-800-485-5759 or check out our Frequently Asked Questions section.

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Confused? Check out our Glossary of leasing terms.