Title: Leasing Equipment Versus Buying Word Count: 957 Summary: Short on cash, but need equipment?

Consider leasing what you need. Leasing equip ment may be a better alternative to buying, depending on your situation and need s. Keywords: equipment leasing, lease equipment, Lease Equipment, Equipment Leasing Article Body: Short on cash, but need equipment? Consider leasing what you need. Leasing equip ment may be a better alternative to buying, depending on your situation and need s. Today, leasing is common practice in business. Over the past two years, equipmen t leasing has risen approximately 20 percent, according to recent research by th e U.S. Small Business Administration (SBA). And 8 out of 10 U.S. businesses leas e all or part of their equipment, reports the Equipment Leasing Association. Leasing is appropriate for just about any business at any stage of development. For start-up businesses with no revenues, smaller leases those of $100,000 or less m ay be better managed on the personal credit of the owners if they are willing to m ake the monthly payments. Comparing Leasing to Buying When you buy a piece of equipment or vehicle, you us ually have to pay for it in full either by using cash or by financing the balanc e. After you finish paying for it, you own it. Equipment leasing, on the other hand, is essentially a loan. The lender buys and owns the equipment and then "rents" it to a business at a flat monthly rate for a set number of months. At the end of the lease, the business has several optio ns. It can purchase the equipment for its fair market value (or a fixed or prede termined amount), continue leasing, return it or lease new equipment. With a lease, you actually only pay for using the equipment. But at he lease period, you could end up owning nothing. So why lease? The mple: By leasing equipment, you leave money in the bank that can be er purchases. Since lease payments are usually smaller than regular s, you don't have to pay out as much each month. the end of t answer is si used for oth loan payment

However, keep in mind that a lease is not cancelable like a bank loan or other d ebt. If you need to get out a standard loan you can sell the equipment and pay o ff the loan, or even refinance it. With a lease, you generally have to pay off t he lease in full. So you have to be sure you make the payments when you enter in to a lease. So what kinds of equipment make the most sense for a small business to lease? Ac cording to research by the SBA, the most common items leased are office equipmen t, computers, and trucks and vehicles. Benefits of Leasing Leasing equipment offers a wide range of benefits, from cons istency with expenses to increased cash flow. But perhaps the most significant a dvantage of leasing is the ability to maintain up-to-date equipment. Leasing all

ows you to easily and affordably add equipment or upgrade to a complete new piec e of machinery to meet future needs. This lets you transfer the risk of being ca ught with obsolete equipment to the leasing company. Here are some other benefits of leasing: Alternative to financing - Leasing is essentially an alternative to traditional financing and can be great for companies not able to obtain business loans. 100-percent financing In many cases, leasing requires no down payment. This allows you to finance an entire purchase, including software, hardware, consulting, main tenance, freight, installation, and training costs. Ease and convenience - Applying for a lease is easy, and lease arrangements can be structured to meet your individual requirements. Equipment leases can range f rom $ 2,000 to $ 2 million. For smaller amounts, you can complete a brief applic ation and receive a final decision within days often with no financial reports or tax returns needed. Leases for more than $100,000 generally require detailed fin ancial information from the business, and the leasing company conducts a more th orough credit analysis than it would for a smaller Flexibility - Lease terms range from 12 to 60 months, depending on the equipment type. Most leases can be structured so that payments are made with operating ra ther than capital funds. This can eliminate or reduce capital budget delays. Lea sed equipment can be purchased later if capital becomes available. Plus, a perce ntage of the lease payments can be credited toward the purchase of the equipment . Fixed, predictable payments - Having fixed lease payments enables you to accurat ely predict the impact of equipment expenses on your cash flow. Conserves working capital - Leasing conserves your working capital by requiring only a minimum initial outlay of cash. Tax Advantages - Operating leases are generally treated as a 100-percent, tax-de ductible business expense paid from pre-tax earnings instead of after-tax profit s. Protection against inflation - Lease payments are based on the dollar's current value. And unlike bank lines of credit with fluctuating rates, your payments are fixed regardless of what happens to the market tomorrow, making it easier to bu dget, forecast and grow. Working with a Leasing Companies When leasing equipment, keep in mind that the c ompany selling the equipment simply makes a direct referral to a leasing company with which it does business. And, usually, the company selling the equipment wo rks with more than one leasing company. So be sure to get quotes from a number o f leasing firms. It s also a good idea to ask for referrals from friends and busin ess associates. Additionally, make sure you understand with whom you re dealing. Are you talking t o a broker the person who simply structures deals, then gets them financed through any of the leasing companies he or she works with. Or are you dealing with a le asing company that is actually putting its own funds on the line? Brokers can be beneficial because they have valuable insight about the leasing m arket and can help you find the best leasing solution for your needs. But as whe n dealing with any type of salesperson, you are responsible for handling the due diligence. Do your own homework to ensure you negotiate the most favorable leas e agreement for your company.