Equipment Leasing

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Discover The Benefits of All Types of Equipment or Vehicle Leasing

It's a fact in the business world - Almost every type of organization in the world currently uses some form of equipment leasing, including sole proprietorships, partnerships, government agencies and non-profit organizations. According to a recent survey, over 80% of US businesses lease at least one of their large equipment acquisitions and of those, nearly 95% say they would lease again. Currently, over 35% of all business equipment is leased.

A lease is a contractual arrangement in which a leasing company (known as the lessor) gives a customer (know as the lessee) the right to use its equipment for a specified length of time (lease term) for a specified monthly payment. Depending how the lease is structured, the customer may purchase, return, or continue to lease the equipment once this agreement expires.

With Success By Design Capital, you can easily lease anything associated with the operation of your business. All types of capital equipment, including software. What you may not know is that you can also lease "soft costs" such as installation, freight, maintenance, and even franchise fees.

Why Lease?

100% Financing – Including Soft Costs…
In addition to financing 100% of the equipment, you may be able to include in the lease "soft" costs such as sales tax, shipping, software, training, maintenance and installation. This leaves you with more money to invest in revenue-generating activities.

Potential Tax Advantages...

Unlike borrowed funds, certain lease payments can be treated as an

operating expense (tax deductible overhead expense). Therefore,

the equipment does not have to be depreciated over a long term,

resulting in a rapid write off. Monthly lease payments are paid with

your pre-tax income instead of your after-tax profits. Leasing may

also help your business avoid the Alternative Minimum Tax

(AMT).

Reduced Paperwork and Approval Time…

Leasing is simple and easy. Leasing can allow you to respond

quickly to new opportunities with minimal documentation and red

tape.

Easier Financing Than Bank Loans…
Avoid typical "bank requirements" such as compensating balances, large down payments, client list reviews, cash flow projections and the like.

Credit Preservation...
Since leasing represents an entirely separate source of credit, it enables you to preserve your established lines of credit with banks and other financial institutions. Banks are great for short term needs and should be kept open and available for opportunities, inventory, marketing, personnel or emergencies. This not only enhances your borrowing capacity, but may improve your balance sheet by reducing long-term debt.

Avoid Bank Restrictions…
Leases don't require blanket liens, restrictive covenants, rate escalator clauses, "call anytime" provisions, compensating balance requirements or any of those other encumbrances often required by traditional lenders.

Minimize Obsolescence...
Leasing gets more mileage out of your money simply because your monthly lease payment is a very small portion of the total cost of the equipment. So, rather than trying to "make do" with obsolete equipment (due to heavy capital investment in its ownership) leasing gives you the freedom to react quickly and cost-efficiently to changes in the marketplace

Improved Balance sheet Ratios...
Because an operating lease is not considered a long-term debt or liability, it does not appear as debt on your financial statement, thus improving the balance sheet and making you more attractive to traditional lenders when you need them.

Flexible End Of Lease Options...
At the end of the lease term you may choose to purchase your equipment, upgrade it, or continue to lease it. Or if you're done with the equipment, return it.

Types and Options

End of Lease Options

$1.00 Out: This option allows you full ownership of the equipment at the end of the lease term.
10% PUT: This structure offers a slightly lower monthly payment in exchange for a fixed purchase option. At the end of the lease term you purchase the equipment at 10% of its original cost.
Fair Market Value (FMV): Offers the lowest monthly payment. At the end of the lease term, you can purchase the equipment at the then fair market value of the equipment.

Types of Equipment Leases

TRUE LEASES
Referred to as a "tax" or "FMV" lease, these are designed to meet IRS tax guideline definitions of a lease and may offer you the fastest way to "write-off" the use of new equipment. A true lease can be treated as an operating expense for tax purposes and either, as a capital expense or possibly an operating expense for accounting purposes.

CAPITAL OR FINANCE LEASE
This type of lease transfers ownership for a token sum at the end of the lease. Consider this lease choice if you intend to own the equipment at the end of the lease, or if the asset has an expected long-use-life. A capital/finance lease provides the benefits of ownership with the lessee taking depreciation and interest expenses related to the equipment. At the end of the term, full ownership of the equipment transfers to the lessee at a cost of typically $1.00

OPERATING LEASES
This type of lease can be designed to meet accounting standards for off-balance sheet financing according to FASB (Financial Accounting Standards Board) rules, (to be determined by lessee's accountant).

SALE/LEASE BACKS
In this type of lease, a business that has already purchased equipment sells it to the leasing company, which takes ownership of the equipment and then leases it back to the business. It's an effective way to free up working capital which may be tied up in fixed assets.

More On Equipment Leasing

Equipment leasing is the most creative alternative to financing! Companies can better use working capital by leasing equipment; everything from a single office copier, fax machine or computer to millions of dollars worth of large medical scanners, construction equipment and specialized industrial hardware.

More on the advantages of leasing

For most companies, the most attractive benefit of leasing is its low

cost. However, there are many other reasons companies choose to

lease rather than purchase equipment via conventional financing.

Since each company's situation is unique, we've listed several

reasons below, any one of which may be significant enough to

cause leasing to be the most attractive financing alternative.

Lease rental payments are made from pre-tax rather than after-tax

earnings.

A lessee may be able to amortize the cost of equipment faster

through tax-deductible rentals than through depreciation and

after-tax cash flow.

Loan covenants

Depending upon the language and intent of covenants in existing

loan and note agreements, a lease may provide financing not

otherwise permitted by them.

Fixed rate lease payments

A predetermined rent payment schedule permits a lessee to more

accurately predict its future equipment costs and cash needs. In

addition, by leasing major equipment items, a lessee knows the

exact amount of future payments and avoids the risk of

fluctuations in the cost of funds.

Payments coordinated with cash flow.

Within certain limits, payment schedules can be designed to

coincide with earnings generated from the equipment use.

Seasonal activity patterns or projected business growth can be

taken into consideration. Because the timing of lease payments

can be arranged to follow normal business cycles, leasing offers a

flexibility that may not be available to a lessee with other

financing methods.

Convenience

Leasing is often more convenient than alternate means of

financing. Documentation is usually simple and more flexible

than other sources of capital, such as debt and equity.

Capital Conservation

Leasing allows an additional opportunity to put valuable capital to

work for corporate expansion, research, inventory purchases and

other profitable uses.

Obsolescence Protection

Leasing can make in time equipment replacement

easier to achieve. This can be achieved by

structuring a lease term equal to an equipment's

economic rather than depreciable life, eliminating

ownership's natural tendency to "make do" and

postpone replacement until depreciation has run its course.

Overcome Budget Limitations

Leasing can provide a prudent method of dealing with budget

ceilings that preclude the acquisition of needed equipment. It is

frequently possible to provide a lease to match available

budgeted dollars and at the same time allow for the procurement

of far more equipment than possible under other purchase plans.

Success By Design Capital can facilitate equipment leases

designed to handle your company's specific leasing needs. Our

application is simple and most transactions under $75,000 can

typically be approved within 24 hours upon receiving a

completed application.

Contact Us Today!

Success By Design Capital

Telephone: 813-661-2201; Toll Free: 877-813-5578

Facsimile: 813-684-1463; Email: ASuccessbydesign@verizon.net
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