Why Lease

"It is the use of equipment, not ownership, that produces profits."
This quote is the essential idea behind leasing. Leasing affords most of the benefits of ownership without the commitment of substantial amounts of capital to equipment or technologies.

The Benefits

Conserves Working Capital

Leasing normally provides 100% financing without large cash outlay for deposits or down payments. This allows you to use your working capital to conduct that part of your business that returns measures profits.

Offers an Additional Credit Source

Provides a new source of funds, often enlarging the pool of capital available to your company, which can be particularly attractive during periods of expansion or when "tight" money conditions exist.

Hedge Against Inflation

Leasing costs remain the same over the life of the agreement no matter how much prices rise.

Level Payments

Level payments permit rental expense to match cash generated from revenue producing equipment.

Cost of Acquisition can be Amortized

Most costs incurred in acquiring equipment can be structured into the lease and amortized over the life of the lease. These costs include shipping charges, interest charges on advance payments, sales or use tax and installation costs. Such charges are usually not financed under alternative methods of equipment financing.

Obsolescence

Leasing allows you to "Trade-Up" to new equipment and take advantage of new technology.

Simplifies Expanding and Replacing Equipment

When future needs arrive, because of growth or expansion, the lease can be designed to just add these requirements on another schedule.

Save on Taxes

Lease Payments may come out of current income or before-tax dollars, not from after-tax profits. Rental payments may be treated as tax deductible expenses.

Flexibility

Provides flexibility with regards to amounts financed, payment structures and other terms that meet your specific funding needs.

Preserves Credit Lines

Avoids use of bank credit lines, conserving borrowing capacity for financing inventory, accounts receivable and other short term needs.

Budget Limitations

Acquisition of equipment not contemplated by a capital expenditure budget can sometimes be accomplished through use of a lease, with lease payments structured to be classified as an operating expense.

Covenants

Avoids working capital, new worth, divided and other restrictions, common to most other types of intermediate and long-term financing.

Industrial Revenue Bond Limits

Where costs of plant and equipment expected to be financed by industrial revenue bonds exceed statutory limits, equipment can often be acquired through a lease to keep the project within bond limits.

Convenience

Leasing is often more convenient than alternative means of financing. Documentation is usually simpler and more flexible than other sources of capital, such as debt and equity.