Deferred rental payments, seasonal payments, quarterly payments, payments that begin low and increase through the lease term ("step-up" payments) and payments that begin high and decrease through the lease term ("step-down" payments) are several of the options available when structuring your lease.
Equipment leases generally do not
require a down payment as is the case with most loans. The cash
which is required at inception of an equipment lease is generally
applied to the rental payments.
Provided the lease is structured properly you may
deduct the entire rental payment as a current operating expense
for financial reporting and for income tax purposes.
Although the lessor is the owner of the
asset you retain the full benefit of all manufacturer's/seller's
warranties and guaranties.
Provided the lease is structured
properly, the 'lease
debt' will not be listed as a liability on your financial statements and consequently
may allow you to preserve your borrowing availability with your bank and other
creditors. This will also result in improved debt-to-equity and earnings-to-fixed
Many loan and
credit line agreements significantly restrict additional borrowing
or financing. In some instances, a borrower must obtain the permission
of an existing lender to do business with another. Equipment leasing,
as a rule, does not have these types of restrictions.
An equipment lease is generally easier
to obtain than an equipment loan. It's not uncommon for leasing
companies to provide up to $75,000 in financing with only an application.
Some leasing companies will go as high as $150,000 on the same
basis. Most banks and commercial lenders require a complete financial
package consisting of several years of financial reports and tax
returns on the business and the principals.