Preserve Working Capital
Leasing your equipment conserves your working capital for use where it will produce the best return. This could mean more money for R & D, Marketing and Inventory, payroll – or for investment in other assets.
A lease can cover soft costs such as installation, freight and extended warranties in addition to the equipment itself. These soft costs are not usually covered by other types of financing.
Credit Line Maintenance
A lease does not impact your available credit line funds. It is like getting an additional line of credit. Also, in many instances, the lease can be structured as an off balance sheet transaction and thus not considered a liability for financial reporting purposes. This is important if your bank covenants mandate maintenance of certain financial ratios.
Low payments can make it possible to fit your equipment investment into the tightest budget constraints and can make the difference between being able to get the equipment you need now – or waiting years.
Leases incorporate easy to budget fixed monthly payments. Fluctuations in the prime rate and other economic fluctuations cannot alter your costs over the term of the lease. Payments can be adjusted to specific cash flow considerations such as seasonal fluctuations, the need for ramp up time on new systems and trade up considerations to protect against obsolescence.
End of Lease Options
Eagle Business Finance can structure your lease to include your preferred end of lease option. You can purchase the equipment at the “fair market value” or for a 10% option, and also a $1.00 buyout. You can also return the equipment or use it as a trade in to upgrade to newer and more sophisticated equipment, thus protecting against obsolescence.
Qualifying payments on a lease are 100% deductible as an expense as opposed to only being able to deduct depreciation and interest expense on a purchase, so your cost recovery is faster. In addition, certain tax law provisions may make it possible for you to expense the entire cost of the equipment now, even though you are paying for the equipment over time, consult a tax professional regarding latest rules and regulations.