Finance Large Purchases With An Equipment Lease And Preserve Cash & Credit
A Business Equipment Lease is a type of financing in which a lender purchases a piece of equipment on behalf of a business and then "rents" it back to the business at a pre-determined monthly rate for a set period of time. At the end of the lease term, there are generally options that will allow the business to purchase the equipment for fair market value or some pre-determined amount, or turn the equipment back into the leasing company.
Because a lease is not a business loan, no collateral is required and there is no debt on the books which leave the business' credit lines clean to pursue other forms of financing.
In addition to an Equipment Sale Leaseback which is a type of equipment lease that allows a business to unlock the value of equipment it already owns, there are three type of leases that allow for the acquisition of new business equipment including:
An operating lease is best when only short term use of the equipment is planned. The operating lease allows the business to pay to use a piece of equipment for a short term and then, at the end of the lease term, the equipment is turned back in to the leasing company. An operating lease is a good solution if the business plans to replace the equipment at the end of the lease period or sooner.
A true tax lease is best for equipment the business plans to utilize for the entire lease term. The true tax lease will have an option at the end of the lease term for the business to either return the equipment to the lessor or purchase the equipment for its fair market value. While this typically costs more than if the equipment was purchased outright, it allows the business to both preserve cash and credit, and delay the purchase decision until the end of the lease term.
A finance lease is best for equipment the business plans on using for an extended period of time and does not become obsolete or outdated very quickly. A finance lease will have the equipment fully paid for by the end of the lease term, at which point the business assumes full ownership of the asset from the leasing company.
CyoGate offers numerous business equipment leasing options and can help you determine which are best for your situation.
Preserve Cash & Credit Lines With Flexible Buy-Out Options
A Business Equipment Lease is an effective strategy to purchase large assets and has numerous benefits including:
For more information on CyoGate's Business Equipment Leasing options, please contact us today!
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