John has some good points... Let me throw out some questions and answers we are currently hear and answer.
WHY WOULD LEASING BE SMARTER THAN USING CREDIT LINES OR LOANS FROM THE BANK TO FINANCE OUR BUSINESS EQUIPMENT?
Good Question… Typically, lines of credit or bank loans look like a good deal at first glance. However, if you take a closer look at a typical equipment purchase with bank financing you may reconsider your options…
Let's talk about a few things bankers may neglect to tell business owners about equipment financing:
ONE
Bank loan products, while flexible on soft costs (i.e. freight, labor, accessories, etc.), usually require cash down. In some cases 20% to 30% of the equipment cost may be required up front. This will eat away at your business's working capital.
TWO
No matter the size of the transaction, banks usually require updated financial information and tax returns for your business as well as all owners of your business. This can delay equipment acquisition and result in lost income from equipment that isn't on the job.
THREE
A banking "relationship" may yield a quick loan turnaround if the proper documentation is on file, however, this may limit your borrowing power for future needs. Multiple equipment loans or exposure with a bank can halt your business's borrowing power in times of need or crisis.
FOUR
Bank loans will increase a business owner's debt ratio. When banks report lines of credit or installment loans to the credit reporting agencies, it adds debt to the business owner's personal credit profile. This can affect your ability to make consumer purchases, such as a car, home or investment property.
FIVE
A banker may suggest that a small business owner or proprietor take a home equity loan out for an equipment purchase. While this may seem like an easy solution, most accountants and financial advisors will advise against co-mingling personal assets for business use. In addition, the equity in your home is not available if you need it for a personal or family emergency.
SIX
When banks provide a business with a line of credit or loan they will frequently make the business owner sign paperwork that will include their entire business as collateral (accounts, inventory, receivables, equipment, assets, etc.). This means that if for any reason that payment is not made the entire business is at risk.
SEVEN
Bankers will be the last to tell you the advantages of leasing and "off balance sheet" financing. With a true lease it is possible for a business to fully expense lease payments as rental expenses. This can provide significant tax deductions for your business.
EIGHT
While it is important for your business to have a banking relationship, and a resource to borrow money from in times of need, it is also important to diversify financial relationships. Diversifying funding sources allows your business to take advantage of a variety of financing options or programs. This minimizes exposure to one financial institution and allows you the freedom to select the option that best meets your needs.
If there are any specific questions let me know. Every program I put together is formatted in the best interest of the business I am working with. I listen to my customers and do my best to help them to succeed, repeat customer's are a good indicator that you are doing a good job and have gained trust.
For those that are opposed to leasing we can put a straight finance program together.
FG