Lessees vary widely from small, one-person operations to Fortune 100 corporations. And the kinds of equipment being leased are just as diverse.

Transactions range from a few thousand dollars worth of equipment (such as fax machines) to multimillion-dollar cogeneration facilities, telecommunications systems, medical equipment (including CAT scanners and MRI imaging), office systems, computers, commercial aircraft, and transportation fleets. There is no end to the types of equipment companies lease.

Why Should I Lease Equipment Instead of Buy?

Leasing is flexible. Companies have different needs, different cash flow patterns, different sometime irregular - streams of income. For example, start-up companies typically are characterized by little cash and limited debt lines. Mature companies might have other needs: to keep debt lines free, to comply with debt covenants, and to avoid committing to equipment that may quickly become obsolete. Therefore, your business conditions - cash flow, specific equipment needs, and tax situation - may help define the terms of your lease.

Leasing is practical. By leasing, you transfer the uncertainties and risks of equipment ownership to the lessor, which allows you to concentrate on using that equipment as a productive part of your business.

Leasing is cost effective. Equipment is costly and some of the costs are unexpected. When you lease, your risk of getting caught with obsolete equipment is lower because you can upgrade or add equipment to best meet your needs.

Further, your equipment needs can change over time due to changes in your company, such as diversification. Leasing allows you to stay on the cutting edge of technology.

Leasing has tax advantages. Rather than deal with depreciation schedules and Alternative Minimum Tax (AMT) problems, you, the lessee, simply make the lease payment and deduct it as a business expense.

Leasing helps conserve your operating capital. Leasing keeps your lines of credit open. You don't tie up your cash in equity. Also, you avoid costly down payments. With other advantages such as offbalance sheet financing, leasing helps you better manage your balance sheet.

Borrower Advantage

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