Lease Information
It is estimated that over 80% of businesses in North America use leasing to secure capital equipment.

1. Credit Preservation. All businesses have access to credit lines at their bank. Many banks have their own leasing departments. Term loans, mortgages, operating lines, etc. must not exceed the bank's total exposure limit for that business.
   
   By using other leasing sources to secure financing for equipment acquisitions, you are essentially opening up new lines of credit. With two years of timely payments, don't be surprised if you get a call from your leasing agent informing you that your line of credit has doubled.
   
   
2. New Businesses. For new businesses leasing is sometimes the only way to access the capital equipment you need. You need a strong personal credit rating, and you may have to put a little more down or pay a little higher interest rate. Don't let the higher interest rate stop you.
   
   Figure out what the tradeoff is, paying a 5% or 10% higher interest rate Vs the increased revenue generated by the new equipment... Then make your decision.
   
3. Flexibility. In addition to tailored lengths and purchase options, leases can offer "no money down," have minimum payment periods or step-up leases to give you time to generate or save the revenue for the new equipment by using the new equipment.
   
   
4. More Accurate Budgeting. Interest rate fluctuations don't affect most leases, since most have a fixed rate. Skip-payment leases can be tailored match a business's seasonal revenues.
   
   
5. Financial Efficiency is Sound Business. Increased revenue generated or saved by implementing new equipment can be used to pay the lease payments.
   
   
6. Tax Deferall. Leasing may offer tax benefits to your business. Talk to your financial advisors for specific advice on this matter.
   
   
7. Capital Preservation. Leasing helps you grow without affecting your cash flow. If all your cash is tied up in fixed assets, it is not available to finance important growth areas such as R&D, inventory, marketing, production, etc. With traditional loans or purchases, the full sales tax is paid up front. With a lease, the sales tax is paid over the term.
   
   
8. Financing "Soft Costs." Shipping, installation, training, accessories, software, etc. can generally be financed along with the equipment.
   
   
9. More Purchasing Power. Leasing can actually add more purchasing power than other methods of acquisition. For instance: If you wanted to acquire equipment worth $25,000, a bank would most likely require the business put equity into the loan in the form of a down payment of 10-20%. You would also need to pay the full sales tax up front.
   
   Overall this would reduce your purchasing power by $6,750 (20% down + 7% sales tax). This means you could only purchase equipment worth $18,500. Leasing companies often offer "Now money down." And you pay the sales tax with each payment. On that 25K, a payment of $650 will only increase by the local sales tax rate.

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