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Who Leases?
Leasing is corporate America�s largest external source of financing equipment acquisitions. It is the fastest growing form of business investment. Seventy five billion dollars of equipment was leased in 1984, which grew to over $220 billion of equipment leased in 2004.
Companies lease everything from printing presses to power plants, hay balers to helicopters and office copiers to offshore drilling rigs. Eight out of ten companies, from mom and pop proprietorships to the Fortune 100, have turned to leasing.
What is a Lease:
Leasing dates back at lease 4000 years ago. Clay tablets have actually been found with evidence of leases on them. The leases were for land, agricultural tools, water rights, Oxen and other animals.
The basic difference between a lease and a purchase is title. When you lease equipment the Lessor holds title and rents it to you. Businesses often use this to their advantage.
"You purchase assets that appreciate; you lease things that depreciate."
industrialist J. Paul Getty
Our Leasing process:
Step 1: Give us a call at (970) 556-0521, and let's talk about what you need, and how we might be able to help. Or you can simply fax an application to us at 1-866-201-5668, and we will contact you at you convience.
Step 2: Once we understand how we might be able to help you, we will ask that you complete a one page lease application. You can do this by printing one off this website (link), or the one your vendor gave you and fax it to 1-866-201-5668.
Step 3: Our credit department will evaluate the application to see which program best fits your situation. This evaluation may include a further conversations to try and better understand your business needs and gather additional information. You will be notified of the approval results often on the same day.
Step 4: We will then present you with your different options. Once you have chosen and accepted the best lease terms for your business, we will arrange the best method to deliver the Lease documentation to you. We can do so by fax, email, or overnight. Once you have returned the properly executed Lease documents, we place the order with your vendor for your equipment.
Step 5: Your vendor then delivers your equipment in accordance with your agreement with the vendor, and we are notified either by you or the vendor that you have received your equipment.
Step 6: An independent telephone audit is performed to verify your satisfaction, acceptance of lease terms, and equipment. Once that has been completed satisfactory, payment is issued to your vendor.
Leasing vs. Loan
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LEASING
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Bank Loans
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PARTNERSHIP LEASING offers fixed rate financing. Payment remains the same for full term of lease. Rates are low when compared with banks Terms and Conditions.
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Banks usually require floating rates for loans. Rates are low now but will change as prime changes. Banks may require compensating balances and/or charge substantial fees.
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PARTNERSHIP LEASING offers 100% financing and may finance the soft costs associated with the equipment.
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Banks often require down payments of 20% to 30% or more and may limit terms to 36 months or less with floating rates.
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With PARTNERSHIP LEASING you expand your credit lines beyond your bank�s line of credit, building more resources for your growth.
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An equipment loan is a portion of your total credit exposure, and may limit your access to working capital or other required funding.
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PARTNERSHIP LEASING has flexible terms and programs to meet your cash flow needs.
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Banks, in general, are not set up for step payments, delayed start of payments, or other unique structures.
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The leased equipment is usually all that is needed to secure a lease transaction.
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A loan usually requires the borrower to pledge other assets for collateral.
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More of the cash flow, especially the option to purchase the equipment, occurs later in the lease term when inflation makes dollars cheaper.
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A larger portion of the financial obligation is paid in today�s more expensive dollars.
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If structured properly, you can make your lease payments with pre-tax dollars and treat them as a business expense.
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You must capitalize the bank loan for tax and accounting purposes.
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The end user transfers all risk of obsolescence to the lessors, as there is no obligation to own equipment at the end of the lease.
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The end user bears all the risk of equipment devaluation because of new technology.
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When leases are structured as true leases, the end user may claim the entire lease payment as a tax deduction. The equipment write-off is tied to the lease term, which can be shorter than IRS depreciation schedules, resulting in larger tax deductions each year. The deduction is also the same each year, which simplifies budgeting (equipment financed as a conditional sale lease is treated the same as owned equipment).
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End users may claim a tax deduction for a portion of the loan payment as interest and for depreciation, which is tied to IRS depreciation schedules
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The Benefits of Leasing
Leasing offers numerous advantages over other financing methods:
- Tax treatment. The IRS does not consider an operating lease to be a purchase, but rather a tax-deductible overhead expense. Therefore, you can deduct the lease payments from your corporate income.
- Balance sheet management. Because an operating lease is not considered a long-term debt or liability, it does not appear as debt on your financial statement, thus making you more attractive to traditional lenders when you need them.
- 100 percent financing. With leasing, there is very little money down - perhaps only the first and last month's payment are due at the time of the lease. Since a lease does not require a down payment, it is equivalent to 100 percent financing. That means that you will have more money to invest in revenue-generating activities.
- Immediate write-off of the dollars spent. Leasing payments are treated as expenses on a company's balance sheet, therefore, equipment does not have to be depreciated over five to seven years.
- Flexibility. As your business grows and your needs change, you can add or upgrade at any point during the lease term through add-on or master leases. If you anticipate growth, be sure to negotiate that option when you structure your lease program. You also have the option to include installation, maintenance and other services, if needed.
- Customized solutions. A variety of leasing products is available, allowing you to tailor a program to fit your month-to-month or year-to-year cash flow needs. You are able to customize a program to address your needs and requirements - cash flow, budget, transaction structure, cyclical fluctuations, etc. Some leases allow you, for example, to miss one or more payment without a penalty, an important feature for seasonal businesses.
- Asset management. A lease provides the use of equipment for specific periods of time at fixed payments. The lessor assumes and manages the risk of equipment ownership. At the end of the lease, the lessor is responsible for the disposition of the asset.
- Upgraded technology. If the nature of your industry demands that you have the latest technology, a short-term operating lease can help you get the equipment and keep your cash. Lease equipment that you expect to depreciate quickly. Your risk of getting caught with obsolete equipment is lower because you can upgrade or add equipment to meet your ever-changing needs.
- Speed. Leasing can allow you to respond quickly to new opportunities with minimal documentation and red tape. Many leasing companies can approve your application within one or two days and you can have your equipment very quickly.
- Improved cash forecasting. By leasing equipment you know the amount and number of lease payments over the life of the leasing period, so you can accurately forecast cash requirements for your equipment.
- Flexible end of term options. There are several options for disposing of equipment after the lease term ends including returning the equipment, renewing the lease or purchasing the equipment.
- Tax benefits. Lessors often pass the tax benefits of ownership on to the lessee in the form of lower monthly payments.
- Improved earnings. Operating lease accounting provides a lower cost than a capital lease in the early years of a lease.
What can be leased?
n be Leas
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