Did you know that over $100 billion dollars’ worth of equipment is leased by businesses each year? is your company a candidate for lease financing? 360 Equipment Finance leases all types of equipment to many types of businesses and would love the opportunity to discuss how lease financing might benefit your company.
What is Equipment Leasing?
An Equipment Lease is an agreement under which one party buys and owns the equipment then rents the equipment to another party at a fixed monthly rate for a specific number of months. At the end of the lease, the lessee may purchase the equipment for is fair market value or a fixed or predetermined amount, continue leasing it, lease new equipment or return the equipment.
Leasing preserves cash flow and offers tax advantages for your business. In addition, it helps businesses maintain up-to-date equipment and good business credit. Approximately eight out of ten businesses in the United States use lease financing to acquire the equipment they need.
How is a lease different from a loan?
It is important to point out that equipment leases are not loans.
The small business loan application process with a bank is very involved and requires a lot of information
Why lease equipment?
Equipment Financing enables you to acquire equipment and technology your business needs without using up your working capital or business credit line. We at 360 Equipment Finance believe that that equipping your business with the right equipment can help increase sales, improve efficiency and make a dramatic improvement in your bottom line.
Leasing advantages include:
- Lower monthly payments
- Fixed financing rates instead of a floating rate
- Tax advantages
- Conserve working capital
- More liquid balance sheet
What are the things I should keep in mind when considering an equipment lease?
- How long do you want to use the equipment?
- What do you intend to do with the equipment at the end of your lease
- What is your tax situation?
- Will your cash flow support the cost of leasing this equipment?
- What cash flow will this equipment add to your business?
- What are your company’s specific needs as they relate to future growth?
What if my business is a start-up?
Because start-ups tend to have little or no credit history, it is often difficult or even impossible to lease equipment. However, at 360 Equipment Finance we will consider your personal credit line, cash flow and overall financial situation before making a credit decision.
A lease is simply another form of financing for businesses:
- Terminal Rental Adjustment Clause (TRAC) Lease – Specialized lease for titled assets. Designed for the business owner or commercial fleet who drives more than the average 15,000 miles per year. This lease is structured with no excess mileage/no wear & tear penalties.
- Fixed Puchase Option (FPO) Lease – Permits purchase of the leased asset at the end of the original lease term for a fixed percentage of the original cost (usually 10%).
- Fair Market Value (FMV) Lease – Permits purchase of the leased asset at the end of the original lease term for the assets’ then determined fair market value. FMV is determined by appraisals, trade journals, and experts opinions in that specific equipment category.
- Dollar Buyout Lease – This lease is tailored to customers who want to own specific pieces of equipment at the end of the lease term. Instead of going through the hassle of getting a bank
- Equipment Finance Agreement (EFA) Lease – No residual purchase upon lease termination. Once the lease is paid off in full the title/ownership is passed off to the borrower.
- Purchase or Renew Only Lease (PRO) – This structure of lease allows flexibility upon lease termination. The lessee has the option to purchase the equipment for a predetermined price or renew the lease on a month to month or short term basis.