Equipment Leasing

Conserve cash by leasing instead of buying.
2 min read
Opinions expressed by Entrepreneur contributors are their own.

Definition Or Explanation: Equipment leasing is basically a loan in which the lender buys and owns equipment and then rents it to a business at a flat monthly rate for a specified number of months. At the end of the lease, the business may purchase the equipment for its fair market value (or a fixed or predetermined amount), continue leasing, lease new equipment or return it.

Appropriate For: Any business at any stage of development. For start-up businesses with no revenues, small ticket leases, those of $150,000 or less, are feasible on the personal credit of the founders or owners if they are willing to make the monthly payments.

Supply: Abundant. Of the billions of dollars individual and institutional investors pour into the capital markets each month, a good hunk finds its way to leasing companies that use these funds to purchase equipment on behalf of small businesses. With more and more money flowing into the markets, leasing companies are flush with capital, eager to do business and responsive to competition with lower monthly rates.

Best Use: Financing equipment purchases. Leasing can also finance the soft costs often associated with equipment purchases, such as installation and training services.

Cost: Lease financing is generally more expensive than bank financing, but in most instances, it is more easily obtained.

Ease Of Acquisition: Easy for leases of less than $150,000. An application for a small-ticket lease is generally no more complex than a credit card application. Leases for more than $150,000 require detailed financial information from the business, and the leasing company conducts the same credit analysis a conventional bank would.

Range Of Funds Available: Unlimited

From Where's the Money? Sure-Fire Financing Solutions for Your Small Business, by Art Beroff and Dwayne Moyers. (c) Entrepreneur Press, 1999.

More from Entrepreneur
Our Franchise Advisors will guide you through the entire franchising process, for FREE!
  1. Book a one-on-one session with a Franchise Advisor
  2. Take a survey about your needs & goals
  3. Find your ideal franchise
  4. Learn about that franchise
  5. Meet the franchisor
  6. Receive the best business resources
Make sure you’re covered if an employee gets injured at work by
  • Providing us with basic information about your business
  • Verifying details about your business with one of our specialists
  • Speaking with an agent who is specifically suited to insure your business
Try a risk-free trial of Entrepreneur’s BIZ PLANNING PLUS powered by LivePlan for 60 days:
  • Get step-by-step guidance for writing your plan
  • Gain inspiration from 500+ sample plans
  • Utilize business and legal templates
  • And much more

Latest on Entrepreneur