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If it depreciates, lease it. |
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If it appreciates, buy it. |
| 1. |
No down payment required. |
1. |
20 – 30% down payment is usually the minimum. |
| 2. |
Equipment is the security for the lender. |
2. |
Additional collateral may be required. |
| 3. |
A lease can not be called if the payments are being made in a timely manner. |
3. |
Loans can be called by the lender at any time, and for any reason. |
| 4. |
Leases are not represented on your balance sheet, which can improve your financials.* |
4. |
Equipment the loan (liability) appear on the balance sheet and will affect your financials.* |
| 5. |
Leasing increases borrowing capacity and reduces capital outlay, keeping capital in the company. |
5. |
Financing equipment or paying cash reduces your companies capital for company use, growth, or emergencies. |
| 6. |
Tax benefits can improve, usually 100% of monthly payment can be expensed.* |
6. |
Bank financing only allows interest expense to be expensed.* |
| 7. |
Most leases give you the option to buy the equipment at the end of the lease or return it. This allows you to expand or take advantage of the latest technology without the worry of getting rid of the old equipment. |
7. |
You own the equipment. If you need to get newer equipment, you must trade or sell it at whatever the market place says its worth, usually at a loss for your company. |
| 8. |
Most lease decisions can be made within a day and funded within a week. |
8. |
A commercial bank loan usually takes 30 – 60 days to have a decision rendered and funded. |
| 9. |
Lease terms and payments are fixed. |
9. |
Most bank loans use a variable interest rate, meaning the payments can be adjusted. |
| 10. |
Leases do not require you to move your bank accounts to the company providing the lease. |
10. |
A bank will require as a condition of funding a loan, that your company move your banking business to their bank. |
| 11. |
Lease companies are more willing to work with Start-up’s, companies that are trying to restructure their business, and credit challenged businesses and/or owners. |
11. |
Banks will not work with most Start-up companies. They also have to stay within very strict guidelines concerning owners credit and the business financials. |
| 12. |
A typical lease application for leases less than $150,000 is one page and usually does not require financials. |
12. |
Bank loan applications are long and very detailed. They will also require a minimum of 2 years worth of business and personal tax returns, business financials past and current, and anything else they desire. |
| 13. |
Leases do not have multiple fees, usually a document fee of $100 – $200. |
13. |
Banks have closing costs, appraisal fees, SBA fees, and will even charge fees on Lines of credit, even if it is not used. |
| *It is important that you consult with you tax accountant or attorney. |