Financial Solutions

Equipment Leasing: Part 1 Ownership and Keeping Current with Technology

by

Walker Wild

Leasing provides an alternative to equipment purchase. Almost any type of equipment can be leased; electronic equipment like computers, fax and photocopy machines, manufacturing machinery, vehicles, healthcare equipment and heavy equipment including bulldozers, excavators and paving machines.

According to an article in the Business Owner’s Toolkit the following are some of the advantages of equipment leasing. Reduced initial cash outlay. The main advantage of leasing is that you can generally gain the use of an asset with less of an initial cash expenditure than would be required if you purchased it. Equipment leases rarely require down payments. Easier credit terms. You’ll likely have an easier time finding someone willing to lease you equipment than finding someone willing to extend you credit to purchase the equipment. One reason is that with a lease, title to the property remains with the lessor so if you miss some payments, the lessor can quickly get the equipment back. Furthermore, under a lease you may be able to negotiate a longer payment period (resulting in reduced payment amounts) and/or a more flexible payment schedule (resulting in a better matching of your payment obligations with your cash flow) than you would be able to negotiate under a loan. Avoidance of financial restrictions. An equipment lease rarely includes any provisions that restrict your future financial operations. In contrast, it is not uncommon for a loan agreement to include restrictions on your ability to acquire additional equipment or to borrow additional funds without the lender’s permission. Flexibility in addressing obsolescence. Leasing may enable you to better keep pace with improving technology. For computers, communications devices, and other equipment that is subject to rapid technological improvement, you’ll have an easier time convincing yourself to invest in updated equipment if you acquired your existing equipment under a short-term lease or a lease that includes an equipment substitution provision. Flexibility in addressing need and suitability. If you’re not sure whether you really need a particular item of equipment, leasing an item on a short-term basis will provide you the opportunity to evaluate the item’s utility to your business without committing to a substantial investment. You can also use short-term leases as a way to test and compare different brands and models. Maintenance support. Under some leases the lessor may agree to be responsible for maintaining and repairing the leased equipment. Although the cost of this service will usually be factored into your rental payments, you’ll at least avoid the problems of having to find qualified repair persons and of being burdened with unplanned repair costs. Furthermore, a responsive lessor who is familiar with the equipment being leased can significantly reduce your equipment’s downtime when repairs are necessary. Current deductibility of rent. Assuming that the IRS doesn’t recharacterize your lease as a purchase for tax purposes, leasing provides a potential tax advantage in that your lease or rental payments are fully deductible if you use the leased asset in your business. In considering whether leasing will provide an actual tax advantage, however, you need to weigh the corresponding disadvantage of being denied any depreciation deductions with respect to the leased property. Some additional considerations for leasing equipment include: Sales/Use Tax Deferral. The purchase of equipment may require the payment of sales tax at the time of purchase. In most cases with equipment leasing sales/use tax is paid over time as the equipment is used resulting in a potentially significant cash savings the first year of the lease. Preserving Lines of Credit. A lease preserves bank lines of credit for use as working capital, meeting fluctuating sales or seasonal sales cycles or emergencies. Inflation Hedge: Cash outlays are deferred with equipment leasing as compared to a purchase. Inflation lessens the cost of future lease payments because the payments are made with cheaper dollars which reduces the cost of financing in real dollars. Equipment Disposal: At the end of a lease, equipment can be returned to the leasing company and the cost of disposal or recycling is avoided. Leasing is an alternative to purchasing equipment and has many advantages. It is recommended that a company consult with their accountant and tax advisor to understand the financial impacts of leasing and have a lawyer review the leasing contract to ensure the terms and conditions meet the company’s needs.

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Submitted by: Wardell Brooks

There are countless business and personal scenarios where financing can help open up the doors to unforeseen opportunity. Financing can make seemingly impossible goals affordable and realistic. When seeking financing, lender selection is one of the most important considerations for the potential consumer. The availability of a financial lending options today is unsurpassed—virtually every type of financial solution is now available for creditworthy customers. However, not each type of lender offers each solution. Most lenders specialize in only a certain type of loan. In addition to this, lenders vary greatly in their rates, loan procedures, and even the financial options that they offer. A consumer must take all of these factors into account when seeking a financing lender.

The financing lender offers a mortgage, personal or business loan at rates and terms variant with the customer. Interest rates will vary upon each applicants individual credit situation and the amount of money being requested. Rate shopping is a very important aspect when selecting a lender. A mistake many customers will make, however, is looking at rates alone. Several other costs can be incorporated into a loan which must also be calculated. Closing costs, application fees, and pre payment penalties are all important considerations. A reputable financing lending firm will never ask for any kind of upfront fee. It important to make sure that your lender will not charge you unless your loan request is both approved and funded.

With the possibilities of proper financing, a great business idea can quickly be transformed into reality; a unsecured small business can expand into a booming success; larger companies can get the tools they need to innovate and expand into a new realm of ideas and technology. Business lending is the key to all successful business ideas. Very few successful companies today could stand where they are without the opportunities presented by business lending.

Sometimes obtaining business lending can be a daunting process. Many companies require the loan to be secured. This means that a potential business owner must scramble to find collateral. Business lending offers small companies the catapult they need to get started. Someone starting a new business will not yet have any business assets to provide as collateral. They may then have to yield their personal home or other hard earned assets as security on the loan. Pre existing business owners can offer their business assets if they own them. But this produces a great risk. Owners may choose not to take the chances of starting a new business or expanding a current one because they are afraid of losing their hard earned collateral in the event that something goes wrong.

Even when a potential consumer finds a great unsecured business lending plan, often the application process can be much more than he or she bargained for. Banks and other finance companies require business plans of varying complication. Some can be as extremely long and detailed. Many business owners may not even have much of the information needed to complete the paperwork. The business plan can also limit the ways in which the consumer may utilize their loan proceeds. Other requirements, such as tax forms or other documentation, can also hinder the loan process.

Some money lending programs are more common than others. Some basic popular programs include unsecured personal loans, small business loans, start up loans, and lines of credit. Mortgages, and car payments are well known products that almost everyone has first hand experience with. Personal loans are generally unsecured loans. This means that they do not require collateral a house, car or other item of value to be associated with them. These loans are generally approved on the basis of credit. Business loans can be essentially the same. Some companies, however, require business plans and other criteria for approval.

Business start-up loans are loans that are obtained for the purpose of starting a new business. If an individual has a business idea, and would like to put it into action but does not have the needed capital, a start up loan is generally the first step. These loans can be unsecured as well, but this depends on the specific lender. Its hard lending money to people with no collateral and bad credit at the same time. Money lending applies to credit cards also, although many people do not realize this since it is all done electronically. However, every time an item is purchased on credit, it is like money is being lent for that purchase.

Mortgages, car loans, and home equity lines are all forms of money lending. These are all large loans that are used for large purchases. When a person makes a car or mortgage payment, he or she is essentially making a payment on the loan for that item.

When choosing a loan lender, there are several considerations to take into account. A reputable firm will never ask for upfront charges. Generally, a good company will not have any fees unless your loan request is approved and funded. Shopping for interest rates is a vital part of the loan shopping process. Typically, the interest rate gets lower as you borrow higher amounts of money. Remember to keep all of your credit options in mind. Be open minded about new products. You may think you need a personal loan, but find that a line of credit is far better suited to your needs. Find a company that simplifies the system. This will minimize chances of error, misunderstandings, or other misconceptions about your financing. Lastly, read the fine print. Details about loans are important.

About the Author: America Unsecured Funding is a useful source to assist with your financing needs. To find unsecured small business loan financing, unsecured start up loan financing, unsecured personal loan financing, business line of credit financing that best suits your need visit

venturecapital.20m.com

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