To Lease Or Not To Lease?

Anything And Everything

Think your equipment needs go beyond the scope of most leasing companies? Think again. Today, you can lease just about anything, from construction cranes and office security systems to computer software. Credential Leasing Corp. in Harrisburg, Pennsylvania, leases medical, printing and production equipment, as well as construction, communications and office equipment to businesses in all 50 states, equipment that would range in purchase price from $1,000 to $400,000.

As more and more business owners realize the vast options available, many are turning to leasing. John Pantalone, owner of J.P. Southern Industries in Barrington, New Jersey, started his commercial horse-racing photography business in 1972, but it was 10 years before he realized the advantages of leasing.

"If I'd known about leasing before I opened my business, I could have saved myself lots of financial headaches and needless worry," says Pantalone, 54. "When I opened my business, I spent agonizing weeks arguing with banks for loans because I had no company financial statements to show them. I had nowhere near the $4,000 worth of photo equipment I needed. I finally managed to find some used equipment I could afford, but it wasn't my first choice. After I discovered by trial and error that leasing was an option, I never looked back. After 15 years, I still lease-purchase photo processors and computers for myself and six employees. Technology advances so quickly, I need the latest equipment to remain competitive."

When one of Pantalone's photo-processing units was almost at the end of its lease, he opted for a buyout, which gave him ownership; then he turned around and sold it for $2,000. "I made $1,500 on the deal after buying out my lease for $500," says Pantalone.

Pantalone leases through Advanta Corp., a financing company that services nearly 6 million customers. "We're big, but small-ticket leases are [also] a very important part of our business," says Jacqueline Kohler of Advanta, which is based in Voorhees, New Jersey. "We work directly with businesses and through manufacturer/dealer financing programs."

That's good news for small businesses, which are getting into the leasing act more than ever before. The ELA reports small business is one of the biggest markets turning to leasing. "Companies that lease now tend to be smaller, growth-oriented, focused on productivity, and more technology-oriented," says Suzanne Jackson of the ELA. "These are the companies long on ideas, short on capital, and in need of flexibility as they grow and change. They lease for efficiency and convenience."

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This article was originally published in the February 1998 print edition of Entrepreneur with the headline: To Lease Or Not To Lease?.

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