Free Up Cash
Leasing provides 100% financing - including items such as shipping, installation, software, and training.
There is no need to tie up valuable working capital, making it available for more profitable opportunities
such as adding sales personnel, increasing marketing or taking advantage of quantity discounts. A good
general rule is to invest Cash and Working Capital on things that Appreciate (i.e. sales people, real estate)
and to Lease items that Depreciate (i.e. equipment). Just as you would never pay an employee their full annual
salary in advance, leasing allows you to pay-as-you-earn.
Take Advantage of Better Terms
Unlike bank loans,
leases do not require substantial down payments or compensating balances, do not have floating interest rates or
restrictive covenants, and can usually be structured for lower payments. Bank loans will typically allow for the
note to be arbitrarily called and/or require a cross collateralization of business and personal assets.
Bank lines are designed for short term cash needs and should be preserved for that purpose. Leasing is
an additional line of credit, expanding your financial resources for acquiring long-term assets.
Save on Taxes
simply, lease payments can be set up as a direct operating expense, being paid from pre-tax dollars vs. after-tax profits.