An increasing number of industry leading companies are realizing the financial advantages of leasing their revenue-producing equipment. According to the Equipment Leasing and Finance Association (ELFA), 80% of US businesses lease all or some of their equipment. Of the nearly $700 billion spent by American businesses on productive assets last year, over 30% was acquired through leasing.
Equipment leasing allows companies to address…
Cash Flow Preservation
Leasing allows companies to enhance cash flow through 100% financing, lower monthly payments, and preservation of bank lines of credit needed for working capital, real estate, and future expansion.
Tax Planning Strategies
Companies can use leasing to provide the lowest economic Net Present Value (NPV) of ownership, minimize their Alternative Minimum Tax (AMT) position, and maximize pre-tax rental expense deductions. In addition, leasing can help address and manage Net Operating Loss (NOL) carry-forward situations. And, today’s Economic Stimulus Act tax and depreciation rules may be best utilized without actually owning the equipment.
Balance Sheet Management
Leased equipment can be structured to appear Off-Balance Sheet, thus aiding in controlling leverage, enhancing return on assets, and managing capital budget or Industrial Development Revenue Bond (IRDB) debt restrictions. Lease payments can be structured to appear on the Income Statement as a pre-tax rental expense.
Equipment Acquisition Needs
Leasing allows companies to gain timely access to the most efficient and cost saving equipment, at optimum terms, to compete in their industry.
