Leasefunders.com Articles

Equipment Leasing – Five Leasing Methods That Improves Cash Flow

leasefun — Thu, 12 Apr 2012 06:15:48 +0000

Many entrepreneurs have to juggle with cash shortages while setting up and growing a business. However, you can spend less by leasing equipment instead of buying. Business owners all over the world operate in an aggressive and highly competitive environment. Conserving working capital can give you an edge over competitors. It is not wise to buy expensive equipment which will be obsolete within a short time. This is true for businesses operating in the high-tech sector where technological advances happen at a breakneck speed. The average time for a lease will run for about 2 to 5 years after which you can update to better equipment. The following are some of the ways you can improve business cash flow by leasing.

Conserving Working Capital

According to statistics from the Small Business Administration (SBA), 80 percent of small businesses and startups fail within the first three years. There are several factors which can lead to such a situation. Chief among them is insufficient capital, unexpected growth, and poor credit arrangements. If you decide to take the leasing option, the facilitation is easier than applying for equipment loans.

Tax Advantage

Leasing is generally reflected as a business operating cost that is deductible from taxable profits. It is advisable to consult your accountant to ensure that the equipment lease being considered is eligible for tax deductions. You might also be lucky because some leasing companies claim capital allowances on behalf of clients.

Avoid Negative Equity

If you acquire business equipment on loan, depreciation will be much faster than equity build up. It is important to note that equipment lease has two facets. These are the cost of money and depreciation. You can look at depreciation as the difference between capital cost and residual value. You will be saddled with lower payments if the leased equipment has high residual value. The downside to such an arrangement will be paying more if you choose to buy the equipment after the lease period ends.

Leasing Does Not Affect Bank Credit

Using leasing as a form of business financing still leaves you with access to traditional credit lines. This can be crucial to the survival of your fledgling business. A study carried out by the small business administration (SBA) revealed that businesses with more than $50,000 in working capital have low closure rates.

Leasing Is Easy To Finance

In most cases, equipment leasing does not involve large outlays of capital. This means that you can easily finance up to 100 percent of the equipment cost. In addition, leasing companies do not require long credit history records in order to approve your lease. On the other hand, a bank will require credit history spanning 2 to 3 years. This might be an unrealistic demand for young businesses to fulfill. Equipment leasing gives you room to maneuver and expand a business without worrying about finances.

About the author:

Lai Castillo is an equipment leasing broker that specializes in getting start up equipment leasing and providing articles in finding solutions for Leasefunders.com. For equipment lease application visit leasefunders.com.

Why You Should Consider Equipment Leasing and Financing

leasefun — Mon, 12 Mar 2012 07:49:22 +0000

Running a business is a capital-intensive process, and figuring out how to maximize profit is important. In most businesses, you need some kind of equipment in order to get started. If you do not feel like investing thousands of dollars in buying equipment, another option to consider is equipment leasing. This strategy can provide you with a number of benefits compared to buying equipment outright.

How it Works

The basic idea behind equipment financing and leasing is simple. You pay monthly for the use of your business equipment. The equipment leasing company still technically owns the equipment and you are just renting it from them. You keep the equipment for a specific amount of time and then turn it back over to the leasing company at the end of the lease. [Related Article: Equipment Leasing – A Practical Method of Business Financing]

Improving Cash Flow

One of the biggest advantages of using a financial lease arrangement with your business equipment is that it allows you to improve your cash flow. If you were to buy the equipment outright, you may have to come up with many thousands of dollars all at once to make a purchase. Instead of making this large capital investment, you can simply pay a small amount of money every month. In many cases, there is no big down payment and you can start using the equipment right away. This allows you to keep more of your money for other purposes instead of spending everything on equipment.

Using New Equipment

Another advantage of equipment leasing is that it allows you to continually have access to new and state-of-the-art equipment. If you lease equipment regularly, you will always have access to the newest equipment in the industry. Every few years, you will be able to return your old equipment to the leasing company and get the latest models. You will not have to manage the depreciating equipment or deal with equipment that is becoming obsolete over time. Instead, you will always have access to the best equipment that is available in the industry.

Tax Benefits

When you lease equipment from an equipment leasing company, you also get certain tax benefits. Since you are renting equipment instead of buying it, you get to write off the entire amount of your monthly payment for the lease. If you were to buy the equipment with a loan, you would only be able to write off the interest that you pay. You would also have to keep track of depreciation on equipment and take deductions slowly over time. With leasing, you just keep track of how much you pay and then take a deduction in that amount at the end of the year.

About the author:

Practical Tips for Businesses Leasing for the First Time

leasefun — Mon, 09 Jan 2012 09:03:48 +0000

Leasing can be a great option for a business that needs to acquire equipment but have a limited budget. Ready to use leasing to help finance your business? If yes, consider the following tips to make your leasing experience a success and hassle-free:

1. Check your business credit. Some leasing companies only accept customers with solid business credit history. Some businesses that have been in operations for quite a few years do not have credit history and have yet to start building credit.

Thus, whether you are an established business or a start-up business, it’s a good idea to check the prospective lessor’s requirements.

An impressive business credit rating will work to your advantage. Many leasing companies will be willing to work with you and offer you their best deals. On the other hand, if you have no credit or bad credit, you should look for leasing companies that offer special lease programs and thus, avoid rejection.

2. Do your own research. The rates, fees and terms will vary from one lease provider to the next. You should spend some time exploring the market to make sure that you choose the best business equipment leasing partner.

However, do not submit lease applications to multiple leasing companies just to compare deals as this will be bad for your credit. Take note that each credit inquiry can deduct a few points from your credit score. Furthermore, a lessor might be inclined to decline your application upon seeing too many inquiries in your report. You should only submit a lease application to the company that you think is your best choice.

3. Organize your financial information. Most leasing companies will require the submission of financial documents. You will also need to provide business tax returns for the last two years so make sure that you have all these documents at hand. Aside from business finance sheets, you should be prepared to submit personal finance documents and personal income tax returns as well.

4. Improve your chances of approval. If you have bad credit, remember to find a lessor who will be willing to work with you. Nevertheless, if you have a record of bankruptcy, bear in mind that some leasing companies will only consider your application if you have been discharged for at least three years.

You can improve your chances of getting financed by submitting a letter of explanation along with your lease application, even though it is not explicitly required by the lessor. What are the circumstances that lead you to have bad credit and what steps have you already taken to rebuild your credit? Providing these details in your letter will ensure a prospective lessor that all your credit problems are in the past and that you are now capable to keep up with your lease payments.

5. Inform the lessor how leasing can help your business. If your financial statements are not impressive, enclose a letter with your lease application and discuss how acquiring new or additional equipment will open up more opportunities and enhance your business. This step will strengthen your chance of getting approved more quickly.

About the author:

How A Startup Business Can Obtain Financing Using Equipment Leasing

leasefun — Mon, 02 Jan 2012 02:34:06 +0000

The biggest challenge about starting a business is financing. Many businesses have to work with a very small budget and if your business needs to have equipment, purchasing costs can be a major challenge.

Leasing business equipment is a great source of funds for many businesses. Both new business and established business can benefit from utilizing equipment leasing.

Leasing requires a very minimal investment since most leasing companies only require one month or two months down payment. Through leasing, a business can preserve available credit lines for working capital or for emergencies.

Indeed, many successful businesses today have started from scratch and were able to grow their companies through the help of their equipment lease partners. If you own a start-up business, what are the things you should know about this financing option? Below are some facts about business equipment leasing.

Can you acquire a lease if you don’t have credit history? The answer is yes. Of course, some leasing companies only accept established businesses but you can also find lessors who are willing to work with new and start-up businesses. Yes, there are leasing firms that offer special lease programs – even for businesses with no credit history.

It would be extremely difficult to get approved by a bank if you do not have a solid business credit history to back you up. On the contrary, acquiring an equipment lease is much easier and takes much less time than obtaining a bank loan.

In fact, you can establish business credit history and build credit by promptly submitting your monthly lease payments, and making sure that your payments are reported to a major business credit bureaus such as Dun & Bradstreet and Experian. After establishing your business credit, you will be in a much better position to apply for a bank loan.

A lot of leasing companies offer various lease packages. The terms of repayment may also vary and a business can choose a program that complements its particular needs. Flexibility is one of the many benefits of leasing equipment since business owners can choose a program that’s most favorable for them.

Therefore, before signing up for a lease, you should be well aware of the lessor’s terms and understand the demands of your own business. And as with any kind of agreement, it’s very important to read the exact terms and conditions stipulated in the contract.

Be prepared to submit paperwork when you apply for a lease. See to it that all the details you enter on your lease application are correct. Providing false details to make your business look good will only get you into trouble. Aside from your lease application, prepare to submit personal finance documents, your personal income tax returns for the past two years, a business summary and a lease proposal.

Avoid submitting lease requests to different business equipment leasing firms as each inquiry on your credit report can pull down your score. Be sure to check the prerequisites as well as the lease program offered. Conduct research and submit a lease application only once you have found the perfect lease partner.

About the author:

Should You Lease Business Equipment in 2012?

leasefun — Thu, 29 Dec 2011 03:27:57 +0000

Another year is about to end and as the year 2012 comes in, many business owners will need to make important decisions for their companies. If you own a business, one question that you might need to consider is, “Should I lease business equipment?”

Leasing equipment presents many benefits but you should also be aware of some drawbacks. Listed below are some of the most important advantages leasing business equipment. Take a closer look at each and see how it applies to your own business.

Equipment Leasing Benefits

Get access to the latest equipment. Having a small budget may limit your options if you’re going to purchase equipment. State-of-the-art or the newest models of equipment will obviously cost more than older versions. When you lease, you only need to make small monthly payments and you will have access to the latest and the best in the market.

Preserve your cash flow. Equipment leasing involves very minimal investment. Most leasing companies only require advance payment of one to two months and that’s all you need to pay when you apply for a lease. Thus, you can preserve your working capital for other expenses and keep your credit lines open for emergencies.

Keep up or stay ahead from competitors. It doesn’t matter if you are a small business or a new business. Through the help of your leasing partner, you can use technology to your advantage to make sure that you can keep up with the competition or even stay ahead of your competitors.

The process is easy and quick. Applying for a loan can be a real challenge especially if you own a new business or if you have credit problems. Most banks will not grant financing if you do not have credit history or if you have bad credit. Compared to loans, it is much easier to get approved for a lease and the process is quicker. For businesses with bad credit or no credit, they can seek out leasing firms that offer special lease programs that match the particular needs of their business.

Be safe from the threat of depreciation and obsolescence. Some types of equipment depreciate in value over time. There are also types of equipment that becomes outdated or obsolete after only a few years. Investing on these types of equipment by purchasing is a waste of financial resources – money that you can spend on other projects to enhance your business. On the contrary, leasing business equipment keeps you safe from the risk of depreciation and obsolescence because it will be easier for you to replace or upgrade equipment at a less cost.

Enjoy special tax privileges. Business owners who lease business equipment enjoy many tax benefits depending the type of lease acquired. To be sure that you are enjoying all tax benefits you are entitled to, consult a professional business accountant about your privileges as a lessee.

About the author:

Equipment Lease Tips for A First Time Lessee

leasefun — Mon, 19 Dec 2011 09:20:25 +0000

According to the National Association of Equipment Leasing Brokers (http://www.naelb.org/), eight out of ten companies in the US lease some or all their equipment. There are definite advantages in leasing business equipment and with the right leasing partner, a business owner will surely enjoy the benefits.

Are you ready to acquire a lease? If yes, consider the following tips on how you can make the most out of leasing:

1. Start with the right leasing partner. There are many companies in the market that offer different types of lease services. The quality of service may not be the same for all so it’s important to do some research, and check the lessor’s background and reputation. It’s best to choose a company with proven experience in the leasing trade.

2. Choose a program that fits your business. Before signing up for a lease, it’s important to choose a program that’s right for your business. Business equipment lease financing can be categorized in two basic programs: finance and operating leases.

A finance lease or a capital lease gives the lessee the option to own the equipment when the lease term ends. This type of lease is recommended for equipment that does not become obsolete and will be used for a long term.

On the other hand, an operating lease or service lease are ideal for types of equipment that needs to be replaced or upgraded after a short term period. When the lease term ends, the lessee can simply return the equipment to the leasing company without further obligations.

3. Check the prerequisites. The specific requirements may vary from one leasing company to another. The list of requirements may also depend on the business you own and the lease program you are applying for. For example, if you own a new or start-up business, you should look for a program especially created for your business type and see if you meet the lessor’s criteria of eligibility.

4. Start with a short term lease. A short term lease is recommended because it gives the lessee the opportunity to decide the next course action, depending on the business’s demands. A short term lease period is especially advisable for a first-time lessee. At the end of your lease term, you may choose to return the equipment, or renew another term with the same company.

5. Ensure business credit reporting. Does the leasing company report to a business credit bureau like Dun & Bradstreet? Acquiring an equipment lease is also a good way to build up your business credit history and credit score but if your lessor does not report to the bureaus, D&B will not be able to monitor your payments. Of course, you should strictly submit your monthly lease payments on time to build and maintain a solid business credit standing.

6. Read the fine print. Spend time reading each and every statement of your equipment lease contract. You should be aware of the exact fees you will be subjected to, particularly with regards to possible penalty charges such as late fees and lease termination penalty. Understand the lessor’s terms with specific situations. You should be well aware of your options when the lease term expires.

About the author:

Starting a Business Through Equipment Leasing

leasefun — Mon, 12 Dec 2011 07:33:49 +0000

Financing can be considered as one of the toughest challenges in starting a business. Many successful business owners had to work on a limited budget. Through careful planning and preparation, they were able to grow their businesses from scratch.

One way to minimize the start-up costs and begin the business operations at the soonest possible time is to lease equipment. Purchasing business equipment can eat up a large percentage of your capital and might leave you with very little cash to sustain the operations. Through leasing, you can reserve your available cash for managing the business and obtain all the equipment necessary to operate.

Aside from preserving the business budget, leasing equipment offers other advantages. For one, acquiring a business equipment lease is much easier than acquiring a loan. Due to the greater risks involved in extending business loans, banks and lending companies typically impose strict requirements making it difficult for a start-up business to get an approval.

In fact, even a business that has been in operations for more than 2 years can still find it difficult to get a loan without an impressive business credit history. Most business loan providers will decline your application if you do not have a solid business credit history to back you up.

On the contrary, the application process in acquiring a lease is so much less-complicated. True, some leasing companies require businesses to be at least 2 years in operations but there are special lease programs for start-up and new businesses from zero days to 2 years old. The specific requirements may vary from one lessor to another but you should expect to be asked to submit a business summary, equipment invoice, personal financial statements, and personal income tax returns for the last 2 years.

Leasing equipment is also a good way to establish and build business credit history. Of course, you should make sure that your leasing company reports to a major business credit bureau like Dun & Bradstreet. Register for your D&B number online as soon as your business has officially launched. If your leasing company doesn’t report to D&B it’s a very simple process for you to take the steps and have your lease reported yourself.

Tips For Faster Start-Up Lease Approval

Look for the right leasing company. Keep in mind that not all equipment lease providers offer leasing services for new and start-up businesses. Check the lessor’s requirements before taking any action.

Do not submit multiple applications. Refrain from submitting multiple lease applications to different companies just to see which one will grant approval. Instead, do your research first and submit an application once you are certain that you’ve found the right partner.

Do submit supporting documents. It’s a good idea to provide an executive summary and a well-prepared business plan along with your equipment lease application. Doing so can significantly improve your chance of getting a quick approval.

Do check your personal credit report. As the owner of the business, your personal financial background will be evaluated. Prepare to submit your personal financial documents and income tax returns for the last 2 years. Check your credit report to make sure that there are no errors which could be pulling down your score. If you have credit problems, make sure the leasing company you choose to work with not only have programs for new businesses, but also people with credit problems.

About the author:

Leasing Business Equipment with Bad Credit

leasefun — Mon, 05 Dec 2011 05:23:48 +0000

Having bad credit history can prove to be a handicap not just for consumers but for businesses as well. Applying for a business loan is not easy as most banks and lending companies strictly require good or excellent credit. If you have a problem with bad credit, your loan application can be rejected if you submit it to the wrong lender.

One financing option is equipment leasing. If you’re in need of equipment, you can preserve your cash flow through leasing instead of purchasing. The good news is that there are leasing companies that offer special lease programs for customers with bad credit. By searching for these specific leasing companies, you can acquire an equipment lease more easily.

Typically, leasing companies that offer programs for bad credit require that all credit problems are in the past. It’s important to make sure you have no past due charges in any of your business accounts. Your report or credit history should also be free from tax liens and judgments. However, for businesses with a record of bankruptcy, they may need to wait for at least 3 years after being discharged before they can apply for an equipment lease.

What can you do to ensure the approval of your lease application? Consider these tips:

Be ready with an explanation. Upon submitting your lease application, provide a written explanation regarding the negative item in your business credit report. What are the circumstances behind your bad credit? If you have been through bankruptcy, what lead you to that situation? This extra step will allow a prospective lessor to consider the circumstances behind the poor score. It can significantly help you in getting a lease.

Prepare the paperwork. Most lenders will want to see a financial statement , and up to two years of your personal and / or business tax returns. A prospective lessor will closely evaluate your financial information to make sure that you will be able to submit your monthly lease payments with any problems. Remember, because of your bad credit history, you need to prove that you will be able to make the monthly payment.

Approach the right lessor. Take note that not all leasing companies offer programs to businesses with bad credit history. Submitting a lease application to the wrong lessor will of course, lead to a negative response. Hence, it’s important to do your research carefully and approach the right lessor.

Do not submit multiple applications. Be careful about shopping around for lease quotes. Do not submit lease applications to different companies just to see which lessor will give the quickest response or which one will grant approval. You should be aware that your credit score drops each time a lessor pulls your credit. In addition, too many inquiries at such a short span time will only give rise to doubts and it could turn a yes into a no.

Be consistent with your monthly lease payments. See to it that you will be able to submit your monthly lease payments according to your lessor’s terms. Remember, a business equipment lease can help you create a good credit profile for your business.

About the author:

Pointers About Small Business Equipment Leasing

leasefun — Mon, 24 Oct 2011 06:34:44 +0000

Small business equipment leasing programs provide businesses with an option to finance costs and save the company’s budget. Instead of investing a large sum of money on purchasing equipment, funds can be reserved for other important expenses that require payment in cash.

There are other advantages with leasing. These include quicker and easier process; the risk of obsolescence eliminated, and tax benefits. Lease payments or rental fees are considered as operating costs, thus, greatly reducing tax fees.

When you lease equipment, you have the option to return it to your leasing company at the end of your contract. You may also choose to keep the equipment through the “buy out” option at a low price.

If you purchase, replacing your old equipment will not be a practical choice because it will be expensive. Through leasing, the risk of the item being obsolete does not need to be a problem. You can replace your equipment with the latest model without having to spend a fortune. Yes, businesses can take advantage of the advancements in technology to enhance their marketing performance

What about the process of leasing? Compared to bank loans, applying for an equipment lease is much simpler. A bank loan can take a few months to complete, depending on your qualifications. Meanwhile, you can get an approval for business equipment lease within a day or up to 72 hours at the most. The leasing process can be completed fairly quickly mainly depending on how quickly, you the business owner submit the required paperwork.

Who Qualifies for Business Equipment Lease?

What types of businesses can apply for an equipment lease? Generally, any type of business in any field or industry has the opportunity to acquire this form of business financing.

To avoid having your equipment lease request denied, you must check out the leasing company’s policies and requirements first before submitting your lease application. Some leasing companies only offer service to established businesses and businesses with good credit history. On the other hand, some lease providers have more relaxed policies and do offer special programs for new and start-up business and for business with bad credit or below average credit.

Keep in mind that submitting application to the wrong leasing company could result in a credit denial. Aside from being a waste of time, getting declined can also cause your credit score to drop.

Lease programs also vary depending on the need of your business. It’s a good idea to evaluate each program offered by a potential leasing company so you can choose the program that meets the demands of your company.

About the author:

How to Choose the Right Equipment Lease Company

leasefun — Wed, 05 Oct 2011 09:00:24 +0000

Choosing an equipment leasing company may not be so easy when you are confronted with a lot of choices. In response to the great demand for business equipment leasing, an increasing number of finance companies today are offering lease financing services to many businesses.

Would you like to apply for a business equipment lease? If yes, then it is crucial that you find the right leasing partner. In this article, let’s talk about characteristics that you should look for from a business equipment lease provider:

Find a lessor that caters to the niche where your business belongs. Some leasing firms exclusively offer lease financing to established businesses while others do offer equipment lease programs for new and start-up businesses.

Some companies only deal with large corporations so if you own a small business, then you should make sure that your chosen lease provider is right for you. There are leasing firms that only offer industrial equipment or heavy equipment. But there are also one-stop shop companies that offer all kinds of lease financing services to all types of businesses, for all types of equipment.

Check the lessor’s credit requirement. If you have bad credit, see to it that your preferred leasing company does accept customers who are credit challenged. Some lessors are very strict when it comes to evaluating the customer’s credit standing. Your lease application can easily be rejected just because you did not check the lessor’s credit requirement. If they do accept bad credit, make sure you submit a letter of explanation and any documentation to prove your point.

Compare at least three potential leasing companies. You can search for possible leasing partners from the internet and you can also ask your business contacts for recommendations. It is very important to take the time to do further investigation and compare lease financing packages offered by different companies. Don’t forget to check the firm’s background and reputation. This way, you can be certain that you will be making a wise choice.

Do not submit multiple lease applications. You should not try your luck by submitting multiple lease applications to different companies at one time. Doing so can badly hurt your credit score since each inquiry made by a potential creditor can cause your score to drop. Having too many inquiries in your file can also send a negative impression to a potential lessor and instead of giving you an approval, a lessor may choose to decline your application.

Understand the equipment lease program. Different equipment leasing firms may offer numerous lease programs. The specific conditions and the repayment terms may vary from one lessor to another. It is essential therefore, that you understand the exact terms and conditions of a certain lessor before submitting your lease application. Thus, once approved, you can be sure that you will not be subjected to unreasonable terms, hidden fees, or unpleasant surprises during your lease term.

Choose a lease program that meets the needs of your business. As mentioned, equipment leasing companies offer different programs. Therefore, it is your duty to understand these available programs and find out which specific program is most suited for the current needs of your business.

About the author: