feature
If your business is planning for growth,
you can enter into a master lease that will
allow you to acquire multiple pieces of
equipment under multiple schedules with
the same basic terms and conditions.
Protection against obsolescence is one
of the many benefits of equipment leasing,
since the lessor assumes the risk of
obsolescence. Certain lease financing programs
allow for technology upgrades and/
or replacements within the term of the
lease contract.
4. Is the equipment going to be used for
a specific contract or can it be used for
other projects?
Often, the business objective of equipment
is for it to be revenue producing. If a
piece of equipment has limited use within
a specific contract and won’t be used for
other projects, it’s not ideal for it to be idle
while you continue to make payments on
it. It makes sense to stop the equipment
expense when the income from it ceases,
which you can do with a lease.
5. How much cash would be required
upfront for a lease and for a loan?
Leasing can often provide 100 percent
financing of the cost of the equipment as
well as the costs for transportation, delivery,
installation set-up, testing and training
and other deferred costs (e.g., sales
tax). Loans usually require a down payment
and don’t include the other cost benefits.
Ask how much of a down payment
is needed and assess the availability and
desirability of allocating company capital
for that down payment.
6. Can the company use the depreciation
or would the company get a greater
benefit from expensing the lease payments?
The tax treatment of the financing
arrangement is an important consideration
in choosing between a lease and a
loan. A loan provides you with the depreciation
tax benefit; with a lease, the lessor
owns the equipment and realizes the
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