equipment leasing

Equipment lease is a favored option mainly due to the ease of access to lease contracts at competitive monthly rentals from reputed leasing companies. The other reasons that contribute to the popularity of this mode of equipment finance are:

• Equipment lease is available for a wide variety of business needs ranging from: software, furniture, industrial equipment, office technology, professional equipment, telecom equipment, security equipment and others.
• Monthly rentals are considered as an expense while a loan for purchasing business equipment is recorded as a debt; this is an important consideration for companies’ balance sheet.
• Tax deductible monthly rentals on leased equipment imply savings as compared to purchasing and owning equipment wherein only the interest paid for purchasing the equipment is eligible for a tax deduction.
• Investments in assets lock capital for small businesses leaving less capital to take advantage of new opportunities or market changes; leasing prevents locking of capital. Money saved from investing in expensive machinery by leasing can be utilized for other important business expenditures.
• Leasing equipment helps safeguard interests of businesses with constant change in technology or obsolescence. Investment in obsolete technology can turn into a liability while leasing can protect business interests as companies only have to abide to the lease contract for the specified period.
• Flexible payment options are offered by both banks as well as leasing companies. Some such options include: fixed payments, level payments and annual payments.
• Leasing companies may also finance deals for used equipments with small or no upfront costs.

It is important to note that leasing equipment may not necessarily cover “soft costs”. Soft costs in equipment leasing parlance are all costs associated with setting up the equipment such as: installation, maintenance, service, training, shipping, software etc.

A business must evaluate the importance of such services and the additional costs the business may need to shell out for such services.