Top 7 Reasons To Lease Business Equipment
By David G Brown III
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Sometime during the life of every business, more equipment will be needed. The question of how to pay for the new equipment is always a major consideration for the business. Should you pay cash for the new equipment? Should you get a bank loan? Or should you lease the equipment? A strategy used by J. Paul Getty suggests that “If it appreciates in value buy it. If it depreciates in value lease it”. This is as sound of business advice today as it was during Getty’s lifetime.
- Save Cash – By leasing your next equipment acquisition you can save your cash on hand to take advantage of other business opportunities. Also you can have a contingency fund for any emergencies that just come up
- 100% Financing – With leasing you do not have to make large cash down payment in most cases. Only the first and last month’s payments are required. With leasing you can finance the entire cost of the new equipment including taxes, shipping and equipment setup. With bank financing, you would have to pay for these fees separately most of the time.
- Leasing Is Simpler Than Bank Financing – The leasing process requires less paperwork than bank financing. Leasing companies usually have lower credit requirements than banks. And the application process takes less time. A lease can be approved in as little as several hours verses weeks or more for some banks. Most leases are approved in 24 to 48 hours.
- Saves The Business’ Line Of Credit – By equipment leasing the business line of credit can remain free for buying supplies, hiring more personnel or for marketing for more business.
- Your Business Can Have Up To Date Equipment – Rapid advances in technology can make equipment obsolete quickly. Most leases can be designed so that you can get the latest equipment when you need it and not have to worry about what to do with the old equipment. Also, once approved for equipment leasing, you will not have to go through the application process each time you want to get new equipment.
- Pay For The Equipment As You Use It – When you lease equipment you are paying for it as you get to use it. You don’t have a large cash outlay before you get to receive any benefits from the new equipment.
- Tax Advantages – Leasing payments are 100% tax deductible. If purchase the equipment, your tax benefits will usually not be as much because of depreciation rules.
David G. Brown III is President of DB Capital Solutions. He is a business-financing consultant who specializes in Equipment Leasing and Factoring of Accounts Receivables.
More information can be found on his website: http://www.dbcapitalsolutions.com
Article Submitted On: February 21, 2006