Preserve Working Capital , this can’t be emphasized enough as most business fail due to poor liquidity, tying it up in capital expenditures (equipment) that are immediately depreciating and will take 1-3 years just to repay that initial outlay, let alone other expenses. Generally these companies are already under capitalized, then further their demise by putting their cash reserved for slow seasons, slow payers, unexpected incidentals into equipment. Lease financing allows the business to match revenues with expenses so that the equipment pays for itself and more.
Protection of future borrowing capacity by establishing an additional line of credit for the business rather than tying up existing credit lines or using up operating capital. True leases are a means of “off balance sheet financing” and frequently noted only in their footnotes. By not showing as a liability on your financials, or on your personal credit report, a lease will not hinder your future borrowing power with the banks.
Provides 100% financing or little or no down payment. Typically leases require one or two months payment in advance and is secured with the equipment listed on the lease. Whereby a typical loan will require at least 10%-30% down payment and is collateralized with all your personal assets including the equipment. Also you may include freight, installation charges, training, maintenance/service contracts, and software in a lease.
Tax benefits include deducting monthly lease payments an operating expense (rental) Leasing helps prevent the company from being forced into lengthy depreciation schedules allowing them to expense the equipment faster, thus saving more on their taxes. Also special consideration by the government under IRS Section 179 has quadrupled the amount of qualified property that can be expensed from $24,000 to$100,000 for the tax years 2003, 2004, 2005. Please consult your tax advisor regarding the IRS Section 179, the accelerated depreciation opportunity and all accounting procedures.
Lease terms to suit your needs helps fit a monthly payment into your budget, which can be flexible to meet your business needs. More on flexible programs in Other Financial Solutions page.
Leasing provides a hedge against inflation when new, up-to-date equipment is acquired today but paid with tomorrow’s dollars. Your lease payments you’ve selected are fixed for the term , which allows you to budget and manage equipment dollars for months or years ahead.
Several purchase options are available that allow you the choice to own the equipment at the completion of the lease or not.
Equipment leasing is so popular an estimated 80% of US companies lease, and that percentage covers the widest spectrum of all industries, from start-up companies to publicly traded corporations to old established organizations As companies grow their need for a variety of financial services also grows.
Please consult your tax advisor regarding the IRS Section 179, the accelerated depreciation opportunity and all accounting procedures on any or all of the above.
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