One of the greatest advantages of leasing is that it offers fairly minimal up front costs. Unlike bank loans that may require a substantial down payment, all that is generally required at the beginning of a lease is two advance payments. With some programs, even less is required. In addition, leasing protects against equipment obsolescence because you set the lease terms according to the useful life of that equipment.
Leasing can also lessen the burden that taxes have on your company's wallet. Depending on how your lease is structured, you may be able to fully deduct lease payments as a business expense. This type of lease structure is known as a True Lease, or FMV-lease. Each monthly lease payment is treated as a "line-item deduction" for tax purposes.
Business owners and executives are facing ever-increasing demands. Growing competition and operational efficiencies can provoke challenges to the bottom line. Leasing new equipment could be your solution for your company. As a Chinese proverb states, "Be not afraid of growing slowly, be afraid only of standing still."
Brad Harmon is the President at a leading financing company, First Star Capital (www.firststarcapital.com). Brad is a frequent contributor to online publications and newsletters, and is the author of this blog on commercial financing topics.
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