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Preserves Cash. Pay only for the use of the asset, not for the ownership. This avoids tying up capital in assets. Your cash can then be used to support working capital requirements due to growth, or maintain liquidity for seasonal, cyclical, or investment needs. |
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100% Financing. Receive 100% financing, eliminating the need for a down payment. You can use the cash elsewhere in your company for expansion. |
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Cash Flow/Budgeting. Receive longer-term, fixed payments, and potentially lower payments if the lessor receives the tax benefits of ownership. |
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Alternate Source Of Capital. Existing bank lines of credit, which are limited, are not impacted. Also, leasing is a less restrictive form of financing. Quite often leases are completed without personal guaranties or restrictive covenants. |
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Off-Balance Sheet Source Of Funds. You can improve Return on Equity (ROE) and Return on Assets (ROA), and many other financial ratios by utilizing leasing instead of borrowing. |
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Tax Advantages. Avoid certain tax limitations. Operating lease payments are expensed and, unlike depreciation, do not contribute to alternative minimum tax exposure. Leasing may also allow you to avoid mid-quarter depreciation penalties. |
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Equipment Obsolescence. Avoid the risk of owning equipment that is no longer technologically useful or valuable. The lessor assumes this risk. |
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Avoids Capital Budgeting Constraints. Acquire needed equipment outside of the capital budget. Lease payments usually are paid out of the operating budget. |
