The Many Advantages of Equipment Leasing

In all industries that depend on expensive equipment for revenue, business equipment leasing has become preferable to purchasing. Most small businesses cannot afford to own expensive equipment such as Telecom systems or CATScan machines, even through financing, so equipment leasing becomes the only way they can stay competitive.

Leasing equipment is advantageous for many reasons. When a company decides to begin equipment leasing instead of purchasing it through financing, they avoid the initial cost of the large down payment that most large loans require. In avoiding the down payment, the company is free to put its capital to use elsewhere.

A company can also conserve credit if it chooses equipment leasing over purchasing. When companies borrow money they reduce their credit limit, and since leasing is not a loan, it does not reduce their credit limit. Furthermore, if said company has already reached their credit limit, leasing is still open to them as a new source of untapped credit.

Additionally, if the company does not borrow money for expensive machinery, the company's debt will be less. Businesses who lease equipment will appear to be in better financial condition when leasing because their income to debt ratio will be healthier than if they borrow money to make expensive purchases.

Another advantageous reason to lease new equipment is that it offers tax advantages to a business. When a company finances large expensive purchases, only the interest on the loan is tax deductible, whereas with equipment leasing 100% of the cost of the lease is tax deductible. This reduces the taxable income of the business so that they pay less in taxes.

Visit BarklayCap.com to learn more about equipment leasing options available to your business.