Leasing helps business make the right capital allocation choices by removing the pressures of cost from the decision-making process. When there’s no room in the capital budget to buy an asset with cash, lease payments from the operating budget are an attractive alternative.
Little Down Payment:
With leasing, your initial cash outlay is generally limited to a deposit of one to three months of your minimum lease payment. This leaves you with more cash for the other areas of your business. Leasing is an excellent choice for avoiding a large initial cash outlay.
Cash Preservation: Lease payments are lower than loan payments because leasing involves fixed installments payable only for the period of time you contracted to use the equipment. The amount of your actual monthly cash savings will depend upon the type of equipment/system being leased along with other key factors.
Leasing brings financial peach of mind because you’ll know at the outset exactly what your payments will be for the duration of your lease. Payments are determined at a fixed amount, payable monthly, quarterly, semi-annually or annually. Once established, they remain at that amount, no matter what.
Preserve your existing Credit Lines: Rather than drawing down on your existing credit lines, a lease can often be an extension of your available credit lines.
Planned replacement and Upgrade Schedules:
A lease often enables you to replace or upgrade equipment/systems prior to the end of a lease on an orderly, predictable timetable that fits your operating and financing needs. You’re assured of having the most up-to-date equipment/systems, which leads to higher operating efficiencies and added capacity for your operations.
Reduced Risk of Obsolescence:
By leasing rather than buying equipment/systems, especially technology and communications equipment, you’ll reduce the possible risk of technological obsolescence. When the lease term expires, you can decide for yourself to keep the equipment/systems you already have or create a replacement schedule to upgrade to the current or the then state of the art technology.
Improve Cash Flow Management:
By replacing and upgrading your equipment/systems on a regular basis, you reduce repair and maintenance costs. Productivity rises through better integration of new property and you’ll have less downtime with equipment/systems that operates more efficiently.
Off Balance Sheet Financing:
Whether or not a lease appears on the balance sheet depends upon its classification-capital or operating- from the perspective of the lessee and its accountants. If the lease is a capital lease, the lessee is treated as owner of the leased asset from an accounting standpoint. Owned assets will appear as an asset with a corresponding liability on the balance sheet. Leased assets are expensed when the lease is an operating lease.
Such leases do not appear on the balance sheet, but rather show up as an operating lease. Such leases do not appear on the balance sheet, but rather show up as an operating expense on the income statement. These assets do not appear on the balance sheet, which can improve financial ratios. Your financial advisor should be consulted to determine the proper accounting treatment of any specific lease transaction.
How does it work?
⦁ You select the vendor.
⦁ You select the equipment and equipment options.
⦁ You negotiate the best price from the vendor.
⦁ We purchase the equipment and have it shipped to your location.
⦁ Payments are typically made on a monthly or quarterly basis during the term of the lease.
What we need from you:
⦁ Year-end audited or reviewed financial statements covering a minimum of 2 years.
⦁ Most recent internal interim financial statements
⦁ Equipment quotes
⦁ If you are a startup or emerging growth company, we will need a Business Plan and a Capitalization Summary
Our typical terms:
⦁ 24 – 60 months
⦁ Master Equipment lease lines with 12 month availability
⦁ $50,000 to $5,000,000 and possibly greater amounts