| Why Business Lease? Operating profits come from the use of equipment not ownership. Leasing allows you to acquire the equipment you need today; your lease payments are made from revenue generated by the leased equipment. Does your business depend on staying on the leading edge?
If your competitive advantage relies on the latest, most sophisticated equipment, leasing should definitely be considered. No matter how fast the leading edge is moving, leasing helps you keep pace. Do you need financial flexibility? Is your business seasonal?
Would skip-payments relieve some of the financial burden you experience during your slower months? Leasing allows you that financial flexibility.
You may also be able to expense your monthly rental payments rather than depreciating the equipment cost. This allows you to order new equipment as you need it (consult you tax accountant). What does a lease vs. purchase analysis tell you?
A "lease vs. buy" analysis compares the costs of leasing and buying based on the assumptions used for residual value, cost of funds, tax rates, and so on. | | Cash | Loan | Lease | Can I avoid a large cash outlay?
| 100% of cost | Down Payment, often 25% | 100% Financing | Effects my bank credit line?
| Balance sheet impact | Decreases credit line | No money is borrowed | Effects operating capital?
| High up front costs | Down Payment required | Low front-end costs | Payments
| 100% now | Payments vary with interest | Fixed payments, possible tax benefits* | Can I upgrade/add on easily?
| No | Re-application often required | Yes | Can I schedule payments to match my cash flow?
| No | No | Yes | Consult your tax and legal advisors for specific advice on the potential tax benefits of leasing for your situation. |
