Equipment Leasing from
Technology Leasing Services

The Many Reasons to Lease vs. Buying!
 

• Ownership only makes sense if there is potential appreciation, as with real estate, intellectual property or collectables. Ownership of today's obsolescence-prone technology does not offer such benefits. Most computers, for instance, are essentially worthless on the open market in about two years.
  
  
• Furthermore, equipment today becomes obsolete at a faster pace than ever before, so your capital equipment inventory becomes worth less and less, faster and faster. Ownership is, therefore, of even less value.
  
  
• Leasing allows you to write off the costs of your present equipment as you use it, and to trade up to new technology when the time comes.
  
  
• Leasing is an extremely flexible tool. It can be structured as anything from a rental (think "car rental") to a time purchase (think "lease to own"). For this reason, there are many different benefits of leasing and an equal number of motives as to why people lease.
  
  
• Business people are lulled into thinking that paying cash is a good way to acquire equipment because doing so avoids finance charges and interest expense and results in lower total cash outlay. In fact, paying cash can be the most expensive way to solve the problem.
  
  
• Liquidity Is Critical. You must have reserves. This can become an outright survival issue when slow paying customers, slow sales or unexpected expenses put pressure on cash reserves. On payday, your employees do not want to know how many people owe you money.
  
  
• Alternative Uses Of Funds. If all you are going to do with the cash you conserve by leasing is to put in the bank at 3% or so, there wouldn’t be much benefit. BUT, there are so many other ways you can deploy your cash that offer huge potential returns.
  
  
• Article 179 - Through a quirk in the tax laws, it is now possible to "get paid in advance" to add equipment. Small businesses can write off up to $100,000 of equipment the year they put it in service. It is not necessary to depreciate it over several years. By leasing that equipment, you can have the government pay it's share in front, essentially getting free use for over a year.
  
  
• Direct Tax Expensing – For companies not qualifying for or choosing the Article 179 alternative, lease payments are written off as made, eliminating the need for depreciation schedules and allowing faster write off. The result of this is more cash freed up for other uses than would be available in a purchase/depreciate environment.
  
  
• "100% Plus" Financing - Strada leases can cover everything you need to make your equipment work for you. This includes software, installation, related leasehold improvements, training and even some supply items. All of this reduces your initial costs to minimal levels, letting you earn profits from your new equipment faster.
  
  
• Variable Payments - Lease payments can be matched to project revenues; seasonal cash flow variations; budget limitations and other challenges. The need to divert cash, or add to loan balances is removed. Our leases can be structured with no payments for up to six months, longer amortizations, and PUTs, TRACs or other optional alternatives to lower payments even further.
  
  
• Proven Alternative – Leasing is a well accepted concept. Over 32% of all equipment acquired in the US is acquired under a lease contract. This makes leasing the single largest form of external corporate finance in the country. Over 80% of companies – from small start ups to "Fortune 500" giants – lease some or all of their equipment.
  
  
• Protecting Bank Lines - Banks are great for short term needs and you should use them in that way. An available line of credit is an extremely valuable tool to address unforeseen emergencies, therefore reducing those open lines by using them to finance equipment can be dangerous. Furthermore, bank terms, appetites and flexibility on equipment transactions range from "less than optimum" to "downright difficult". Let your bank do what it does best.
  
  
• Financial Reporting Advantages – We can structure leases to meet FASB requirements for "off balance sheet" accounting treatment. Since the total committed lease payments now show as a footnote rather than as a liability, the overall ratios are improved and there is less risk of lending covenant violations.
  
  
• Avoiding Bank Restrictions – Leases don’t include blanket liens, restrictive covenants, rate escalator clauses, "call anytime" provisions, compensating balance requirements (a five year 6% loan with a 20% compensating balance requirement actually yields about 15.7%) or any of those other nasty little surprises that tend to be part of traditional lending arrangements.
  
  
• Simple and Easy – Leases feature simplified documentation, easy one page applications, no financial statements in most cases, accelerated approval times and more. All designed to get you the equipment you need without delay.
  
  

   

• Why Lease Business Equipment

• One of the biggest reasons to lease business equipment is that it offers fairly minimal upfront costs. Unlike bank loans that may require a substantial down payment, two advance payments are generally all that are required at the beginning of a lease. This lets you keep your capital in the bank while making important investments in your business.
• In addition, some companies lease business equipment as a way to protect against obsolescence. When setting up the lease, take some time to evaluate the useful life of the equipment. Choose a term length that will let you upgrade to newer equipment before the old pieces are out-of-date.
• Finally, leasing can lessen the burden that taxes have on your company's wallet. Depending on how your lease is structured, you may be able to fully deduct lease payments as a business expense, as opposed to depreciating the value of the equipment as if it were a capital expenditure. Talk to a tax professional to understand the impact this can have on your business.
• What can you lease?
  
  There are few limits to the type of equipment that can be leased. From everyday business essentials (furniture and phone systems) to industrial equipment (forklifts and conveyor belts) to office technology (computers and LCD projectors), there is a wide range of products your business needs that you can consider leasing.
• There are a couple of common features of commonly leased items. The total purchase is typically quite expensive, either per item or because you need many of them. Generally you won't find leasing options for purchases under $5,000, and most leases are in the tens or hundreds of thousands of dollars. Second is that it's something physical: a hard asset, not a "soft" asset.