Skipping the loan application: How leasing equipment is better than debt financing

Business operations rely heavily on equipment, software and hardware, and manpower to function effectively and deliver results. In terms of sustainability and positive cash flow, certain businesses benefit more when equipment are leased than purchased new. Leasing from a financial institution or taking a loan from the bank to acquire equipment are two different methods of equipment financing.

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Leasing offers better advantages

Equipment like computers are packaged with software which run the risk of being obsolete within a few years, therefore requiring consistent upgrade. Leasing agreements can include technology upgrades and add-ons as well as replacement to avoid obsolescence and keep the business competitive. Leasing also either doesn’t require or keeps low down payment, which protects the business’ cash flow intended for growth. Finally, monthly lease payments could be 100 percent tax deductible when viewed as operating expenses. That represents big tax breaks.

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Bank loans pose greater risks

Conventional bank loans usually require 10 to 50 percent down payment, which is a punitive sum for small and medium businesses. The ownership of the equipment is also fixed after the end of the loan regardless if the equipment has passed its lifespan. Moreover, loans immediately clip the line of credit. As for hope of tax write offs, the only advantage is depreciation and the loan’s interest.

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Leases and loans can come with similar terms but from the cash flow perspective, lease payments are still more practical compared to loan payments.

Need leasing capital for your business equipment? CG Commercial Funding offers flexible financing options so you could channel your investment toward your core business. Know more about equipment leasing through this website.

From iPads to airplanes: Tools and equipment that are better off leased

Equipment leasing is not only for small businesses. Even established companies know they should not buy everything they need. Confronted with an economic climate that remains shaky, entrepreneurs could—and have relied on—leasing as a wise, cost-effective measure.

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Companies usually lease capital equipment such as desks, computer units, and machinery. Even iPads, cars, and aircraft can be rented. This article demonstrates the advantages of leasing by explaining why the said tools and equipment are better off not purchased.

Tablets If installed with the right apps, the iPad can make for a business powerhouse. Transactions such as cash register, credit card processing, and real-time inventory can be done with just a tap or swipe in it.

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But enterprises are advised to lease them: A tablet only runs at its best for two years, and tech companies release up-to-date models faster than expected. A short-term lease allows businesses access to state-of-the-art technology at the end of every lease.

Company vehicles Provided it can be deducted as a business expense, a leased car presents savings and less hassle. Since lease agreements for company vehicles run for only a few years, businesses can get a new model every so often to fit their business needs, with no cash upfront and without the stresses of bringing it to machine shops often for upkeep.

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Aircraft In 2011, billionaire Steven Udvar-Hazy took advantage of the challenging economic environment, which took a toll on big aircraft manufacturers and lessors, and opened Air Lease, an airplane-leasing venture that targets companies looking for cost-effective transport of employees and cargoes whenever needed. Air Lease’s success lies in taking advantage of the need for companies to streamline their operations without having to sacrifice the required processes to run the business.

CG Commercial Funding offers equipment lease structures and schemes for your company’s needs. Visit this website for more information on its services.

Equipment leasing 101: When, where, and how to get it

In today’s tap-and-swipe generation, iPads and other tablets have become an invaluable tool in doing business.

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Some businesses have forgone computers for this sleeker yet equally (or even more) efficient powerhouse for use of their employees to do everything from taking orders to recording checkouts to monitoring inventory. Schools, banks, and stores have also joined the big shift, replacing bulky computer terminals with iPad 3s or similar devices.

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Tempted to buy tablets for business? Think again. A tablet’s lifespan is two years at the minimum. Upkeep should definitely be in place by then to ensure optimal efficiency.

Expert advice has it that the way to go, then, is leasing instead of buying tablets and other equipment. Simply put, equipment leasing is a loan that allows business to “rent” capital equipment from tablets to heavy machinery to even corporate aircraft, owning the equipment at a certain period of time at a fixed amount that is usually paid monthly. Banks and specialty finance companies offer structured financing schemes for companies that wish to avail of such.

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Big and even small businesses and startups are encouraged to lease instead of buy, for many reasons aside from reduced capital outlay. Leasing keeps entrepreneurs at pace with state-of-the-art technology without the hassles of replacing purchased equipment and asking for credit line extension from time to time. It allows for an abundant supply of tools out for rent any time and with minimum or no cash upfront. Also, maintenance and repairs are sometimes included in the lease, saving more on costs.

While leasing sounds a good idea, consider factors such as tax benefits and financing options beforehand. This checklist of questions will help in arriving at the smartest possible decision.

CG Commercial Finance specializes in financing capital equipment software leasing, structured project, and debt financing for medium and large-scale businesses. Visit this website for more information on its services.