Today we have a guest blog from one of our partners. Gary Lentz at Vend Lease has worked with us to secure financing to purchase SP-1 for many of our customers. I asked Gary if he had some words to help clarify leasing. . .
From Gary Lentz – Vend Lease
First, let’s rid ourselves of the notion that leasing is a “dirty” word. Many of us are of the mind set that if we lease something that we made a bad decision, or that we were somehow mislead in the transaction and wound up making a bad deal.
Let’s set the record straight…Today, leasing is the preferred method by over 80% of U.S. corporations that purchase capital equipment. If you own a business that requires equipment, or technology, to produce revenue, or save time and labor, then leasing may represent the most cost-effective course of action. Leasing provides benefits that solve business problems and satisfy company needs. Often, leasing is the more efficient way to grow your business with less risk to capital.
A lease is normally structured in one of two ways – as a capital lease or as an operating lease. However, each is used for different purposes and treated differently from a business accounting perspective. What’s most important is that leasing, in general, affords businesses the opportunity to invest in the latest technology and stay ahead of the competition.
Below are some of the benefits of leasing that business owners may want to consider:
1. Lease payments may be 100% tax deductible (consult your tax advisor).
2. Leasing preserves other established lines of credit.
3. Fixed lease payments facilitate monthly budgeting of your expansion project.
4. Leasing improves cash flow, allowing you to pay for equipment as it generates income.
5. Keeps cash in your hands while you update to more technologically advanced equipment.
Growing and expanding any business requires equipment and technology. Leasing will clear the hurdles that typically confront the purchase of capital equipment, i.e., sticker shock, lofty down payments and shrinking lines of credit. Leasing is frequently less expensive and is one of the building blocks to building business success.
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