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Benefits of Leasing

The following list of benefits for equipment leasing is presented by Business Funding Secrets.

1. Tax Advantages - companies may be able to fully claim their lease payments for tax purposes. Operating leases provide both financing and maintenance and the operating lease payments may be 100% deductible because equipment leasing is considered an operating expense (a pre-tax business expense). This can help maintain the company’s lines of credit with their banks. With loans, depreciation can only be taken over the length of the equipment's useful life.

2. Accounting Advantages - leasing eliminates the need for complicated depreciation schedules since lease payments are generally line item expenses on the company’s Profit & Loss statement

3. Flexibility - a.) Due to companies having different needs such as short term, or fixed periods, a lease can be structured to provide the most beneficial configuration to fit the needs. b.) At the end of the term the lease can be structured so the lessor can return the equipment, pay a fair market value for the equipment, or own the equipment outright at the end of the lease.

4. Risk - the ownership of equipment can be transferred to the leasing company.

5. Cash Flow - operating capital can be conserved due to: a.) Lease payments can be much less than other types of loan payments. b.) Leases have fixed for terms where some long-term loans may be structured with floating or variable rates. c.) Banks may require 10%-40% as a down payment while some lease programs can offer 100% financing. Most leases require only one or two payments in advance allowing the company to get immediate use of the equipment with minimal up-front cost.

6. Eliminates Obsolescence - technology changes rapidly. Leasing equipment allows a company to easily access new technology and latest equipments, and the company doesn’t have to worry about getting stuck with older obsolete equipment. Eliminating obsolescence helps the company maintain a competitive edge.

7. Fast Approval Process - with leasing, the approval process is much faster than with conventional loans. The leasing process usually takes 1 - 2 business days as compared to weeks or even months for a loan.

8. Cost-Effective - leasing is a very cost effective way to acquire equipment.

9. Meet short notice situations - equipment leasing allows companies to add more capacity or increase production at short notices to meet increase in demand. This allows companies to quickly accelerate profits.

10. Sources of leasing - when interested in equipment leasing a company can utilize a broker, a leasing company, or an Independent lessor. There are many sources for leasing equipment therefore a company seeking leasing will have the ability to shop and compare rates and terms.