Lease to Own: Leasing and Financing Information
It is the use of capital equipment that generates savings and profits. Use can be obtained by outright purchase or by structuring small payments over time. Whether a "true lease" or "financing arrangement" is best for you should be determined with your accountant. Financing equipment provides profit and savings today with tomorrow’s dollars. To see if you qualify start by requesting a lease application and completing a credit information authorization form (PDF) and faxing both where instructed.
Some of the advantages of structured payments are:
- Working Capital – Financing conserves working capital for use where it will produce the best return. Example: Inventory, Business Development, Accounts Receivable, and Personnel.
- Credit Lines – Leasing equipment leaves your existing credit lines available for short term needs. Example: Inventory Peaks, Trade Discounts, and Accounts Payable.
- Hedge Against Inflation – Through financing you acquire use of equipment at today's cost while meeting rentals with tomorrow's inflated dollars. If you purchase for cash, you are investing today's dollars to cover tomorrow's expenses. As price levels continue upward, financing offers a very clear advantage.
- Equity – Financing removes the need to sell equity to obtain capital. It permits your business to acquire the use of an asset without making a down payment. It gives you the freedom to grow while avoiding dilution of ownership.
- Tax Position – Lease payments are 100% tax deductible as a business expense, as opposed to only depreciation and interest deductions for financed equipment. A full write-off over the lease term reduces your after-tax cost substantially. Ownership with financing isn't bad either with rapid depreciation write-offs and interest deductions. The decision whether leasing or financing is best should be made with your accountant.
- Budget Restrictions – Minimum cash outlay plus modest payments enable you to fit the lease into the tightest of budgets. When your spending schedule is severely limited, financing makes it possible to obtain equipment you need when you need it.
- Obsolescence – Provides regular equipment replacement, which increases productivity. Worn or inefficient machines are replaced as required through an established monthly lease.