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Why people lease?
Companies lease
equipment because leasing represents the best use of their financial
resources. Businesses that do not lease operate at a competitive disadvantage.
They deny themselves the productivity-enhancing effect of better equipment,
which they could otherwise obtain. They operate with older equipment
than they could otherwise afford. Ultimately, they may lose the ability
to compete, having higher costs and lower productivity than better-run
operations. |
- CONSERVATION
OF CAPITAL
When leasing equipment conserves capital, it can be used
for other company uses (increasing inventories, expanding sales,
etc.). The average return on capital in business is 18% AFTER
taxes.
- CONSERVATION
OF CREDIT
A lease is not a loan. Borrowing reduces lines of credit.
Leasing is thus a NEW credit source that allows the customer increased
borrowing capacity.
- OFF
BALANCE SHEET FINANCING
An operating lease keeps the debt, and the corresponding
asset, off the company's balance sheet. Therefore, borrowing debt
covenants are circumvented, financial ratios are enhanced, borrowing
capacity is increased and the company appears healthier.
- ELIMINATES
OBSOLESCENCE
The latest technology is available which maintains competitive
edge. Structured leases can allow upgrade and trade-up options
to all of our customers.
- TAX
BENEFITS
True lease generally allows 100% of the monthly payment
to be expensed where as bank financing would only allow expensing
the interest costs (Accelerated Depreciation).
- FLEXIBLE
FINANCING
Leasing provides fixed rate financing with specially
structured terms to accommodate the specific need of each and
every company. These structured leases include step-up, step-down,
deferred, and seasonal payment plans.
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© 1999, Alliance Funding Group, Inc.
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