Tag Archives: lease financing

Weigh the pros and cons of an equipment lease before you sign…

Any business that is considering capital equipment leasing will need to weigh the pros and cons of obtaining a lease as opposed to making an outright purchase.

Any business that is considering capital equipment leasing will need to weigh the pros and cons of obtaining a lease as opposed to making an outright purchase. Many companies are discovering that there are a number of major benefits associated with leasing expensive machinery and other business needs. When seeking a bank loan to pay for equipment, most companies will need to come up with a hefty down payment. Lease agreements usually offer one hundred percent financing and require no down payment whatsoever. The budgeting process is made easier as well. Loan payments can fluctuate over the life of the loan depending on interest rates and other concerns. A lease payment will generally stay the same throughout the terms of the original agreement. Whenever a large loan is taken out, the debtor will see a dramatic decrease in their line of credit that is available. With leasing, this is not a problem. Lines of credit are generally not impacted in any way by a lease agreement. Leased machinery will work as well as machinery
that is owned. So why take on the extra debt when the same benefits to a particular business venture can be achieved through a lease? In some cases, a lease agreement may offer tax benefits that are not available when items are purchased. Many business owners feel that offering up large amounts of money to purchase machinery does not make sense and can be detrimental to a company’s bottom line. For this reason, capital equipment leasing can be a better choice.

Since income and available funds can fluctuate greatly throughout the year, pouring large amounts of money into paying for machinery can be a huge and costly mistake. Choosing capital equipment leasing rather than assuming huge debts can mean the difference between business success and failure. Most vendors and financing companies can work out a lease agreement that best meets the needs of a specific business. The length of a lease can vary and may last between one and five years. Larger equipment will generally have a longer life expectancy and may carry a longer lease as well. With a lease agreement expenses such as installation, freight costs, maintenance, and software can be rolled into the cost of the lease. If obsolescence is a concern, upgrades can usually be factored in to a lease agreement that will address such concerns. There are several different types of capital equipment leasing agreements that are generally available. These agreements could include a capital lease, an operating lease, a master lease, and a deferred payment lease. Capital and operating leases are basic, full pay out agreements. The main difference between these two agreements is that an operating lease allows the expense to be deducted on taxes. A master lease allows for additional items to be leased under the same terms at a future date. A deferred payment agreement allows new businesses to postpone full monthly payments for a brief time.

A variety of organizations can benefit from selecting capital equipment leasing.  In addition to businesses, governments, municipalities, and other associations might choose this option as
long as their credit scores qualify them. Credit worthiness is determined by a number of factors including the overall financial condition of the organization, the length of time that the venture has been around, scores from standard credit rating services, payment histories, and references from banks. While no down payment is generally required when signing a capital equipment
leasing agreement, some vendors may require that clients come up with one or two advance monthly payments at the beginning of a lease. Purchase options are usually outlined in the original terms of the lease and should be clearly explained to a client by a representative of the leasing company. Most leases will commence after machinery and equipment has been delivered and installed. Leased machinery is generally regarded as the property of the vendor and not the
lessee. For this reason, the lessee will not need to pay property taxes on the equipment. Lessees are, however, usually expected to cover the costs of insuring any leased items. These policies can be attained separately, or can be included by the vendor in the original contract. Most vendors will also allow clients to request a buyout quote at any time during the life of the lease if they so desire. Leasing companies will generally allow clients certain add on and upgrade options. Cancelling a lease agreement usually is not an option.

Before choosing a provider of capital equipment leasing, there are a few questions that a potential client may want to ask. The questions could include an explanation of all costs and what kinds of additional options are included in the agreement. Asking the right questions can help to ensure that the vendor that is chosen will be a good fit for a particular business.

Once a decision to go with capital equipment leasing has been made, a reputable vendor will need to be selected. Choosing how to finance the lease is another important decision. The CLFA, or Canadian Leasing and Finance Association can help a potential lessee make these crucial decisions. Including accountants and tax consultants in on these decisions can be a good idea. Whatever choices a business might make, the option of leasing needed machinery can be a cost
effective way to move forward.

Equipment Lease Tips for a Restaurant Business. If you are planning to get into a restaurant business….


Equipment Lease Tips for a Restaurant Business

If you are planning to get into a restaurant business, one of the biggest challenges you will face is equipment financing. Setting up your own restaurant demands a considerable amount of cash. For one, you need to invest on restaurant equipment such as stoves, grills, gas range, freezers, tables, seats, cash register, credit card machines, computer, etc. Think about how much start-up capital you will need to be able to buy all the necessary equipment and furnishing.

True, you can apply for a business loan, but if you spend all money on equipment alone, there may not be much left for other expenses such as marketing, supplies, and hiring workers. Is there an alternative financing option for aspiring restaurateurs? Rather than purchasing all the equipment and furnishing your business needs, why not consider business equipment lease financing?

Here are equipment lease tips that are especially for restaurant business owners:

Make Sure It’s

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How to Choose Your Business Equipment Lease Partner. Do you know the factors that should you should consider before making a choice? Here are some recommendations:

Having decided to get equipment lease financing, do you think you’re ready to find a lease partner for your business? Do you know the factors that should you should consider before making a choice? Here are some recommendations:

Reliable Service. Finding a lease company that you can rely on is a crucial aspect when doing your search. Your equipment lease partner should be ready to help you not only during the processing of your lease application, but even beyond that.

Pick a lease provider who can get you the devices you need and give you complete support as well such as with the installation and maintenance of your leased equipment. Interview other businesses that belongs to the same industry as you do and know what they have to say about different leasing firms. From their experiences, you can discover which leasing company has the best reputation?

Smooth Lease Processing. An equipment lease company that has been giving excellent service for a long time will certainly process l

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Operating ( 10% or fmv purchase option ) VS Capital lease ( $10.00 purchase option ). What is best for your company?

Many companies will need to decide whether it wishes to lease the equipment in the form of a capital lease ( $10.00 buyout), or use an operating lease (10% or fmv buyout); they also should know the difference between these two forms of financing. There are a number of differences involved when considering either form, particularly how the leased asset is accounted for. One must consider the company’s credit rating, how long the equipment is going to last, and when it will become obsolete. Taking into consideration all of these factors should help in deciding the better option for each company.

While accounting with an operating lease, it will be treated as an out and out expense and will find mention in the income statement and it will not impact the ratio of debt to worth, or any other balance sheet ratios that will have any significant impact on the creditworthiness of your company or business. As a long term option, your business may end up paying more for this form of lease rat

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Chosing the right lease partner part 2

Finding an equipment-leasing company is easy. Almost any equipment a business could conceivably need offers a lease option. Thought it’s not apparent at first glance, the company offering the lease financing is not the same one that is selling the equipment. The company selling the equipment simply makes a direct referral to a leasing company with which it does business.

It’s a good idea to get a quote from the leasing firm referred by the company that wants to sell you the equipment. The quote should be competitive. After all, the company selling products wants to sell as many as possible, and it surely doesn’t win any points by referring a leasing company that gouges its customers. But it also pays to get another quote. Usually, the company selling the equipment works with more than one leasing company. Or ask a friend or a business associate for a referral.

As a final point, when looking for a leasing company you should understand whether you are talking to a broker-the person

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