Leasing VS. Purchasing ...

80% of businesses do it, shouldn't you?

Any business could use a little extra capital. However, borrowing money is not always the best solution when a company could free up money that is currently at its disposal. Freeing up cash flow allows for capital investment in your business. A business could expand, remodel, purchase more equipment, hire more employees or increase inventory levels all without borrowing money. Equipment leasing is an easy way to free up capital.

Equipment leasing makes it possible for businesses of all sizes to acquire equipment for a fraction of the initial cash outlay. The equipment leasing association reports that 80% of all business in the U.S. lease all or some of their equipment. Leasing represents an attractive option to businesses in need of modern or costly equipment. The recent boom in small business ownership has introduced a large need for equipment acquisitions with owners that have limited cash availability. One large equipment purchase could wipe out the operating capital a business could have on hand. Financing through the local bank is a good option, however new or small businesses often have little or no credit history that the banks are looking for to make a sound lending decision.

Some people say that leasing is prudent because it saves your money, credit, and it takes obsolescence out of the picture as you pay for the use of the equipment not the ownership. Still, others may argue that leasing cost more in the long run and the issues with obsolescence can be overcome with smart planning.

There is an adage used in explaining the benefits of leasing: Would you pay an employee three years in advance for his/her work? Of course not! Pay as you go and let the employee make money for you along the way. Let the equipment work for you during the lease period.

Leasing arrangements conserve working capital by eliminating large initial outlay of cash. Small businesses are particularly susceptible to capital depletion due to equipment expenditures. A business can keep that money and use it for short-term operating expenses instead of investing in a depreciating asset.

Leasing rather than financing will keep business credit lines open for expansion and future growth. Since you do not actually borrow any money, your entire credit line remains intact and available for any other business ventures.

.