11 Benefits of Leasing

Leasing offers numerous advantages over other financing methods. The leasing industry’s major trade association, the Equipment Leasing and Finance Association (ELFA) recently surveyed the Small Business Administration’s (SBA) State Small Business Contest winners. This survey found that 73 percent of small businesses lease equipment, citing the top three reasons to lease as the ability to manage company growth, take advantage of the latest technology, and improve asset management.

  1. 100 percent financing. With leasing, there is very little money down – perhaps only the first and last month’s payment are due at the time of the lease. Since a lease does not require a down payment, it is equivalent to 100 percent financing. That means that you will have more money to invest in revenue-generating activities.
  2. Low monthly payments. Low monthly payments allow you to overcome budget constraints that you may face and match payments to reimbursements. Fixed monthly payments also improve your budgeting and forecasting capabilities, improving your control over cash flow.
  3. Expenses Match Benefits. With a lease your cash outlays are matched by the incremental benefits you receive from using new equipment, making the equipment easier to cost justify.
  4. Avoids Risks of Ownership. It’s use, not ownership, of equipment that provides benefits. Barlovento Group programs allow you to reap the benefits of the latest equipment without taking the risks associated with ownership, such as obsolescence and debt burdens. A lease from Barlovento Group may be structured to allow you to upgrade equipment, taking advantage of unforeseen technological advancements as they occur.
  5. Conserves Capital. By requiring no cash upfront, you can use the cash for investments, other needs such as payroll and inventory, or emergencies. Barlovento Group also helps you conserve capital by not requiring compensating account balances, as banks often do.
  6. Provides Additional Source of Capital at Competitive Rates. Barlovento Group doesn’t replace or restrict your ability to use cash or bank loans for other purchases but rather diversifies your funding sources, providing maximum flexibility and protection from unforeseen circumstances.
  7. Tax Accounting Benefits. Certain leasing programs allow you to keep leased assets off your company’s balance sheet and you treat the rental payments as tax-deductible operating expenses rather than capital expenditures. This may help you overcome restrictive covenants imposed by your lenders and can improve your return on investment. Unlike obtaining equipment through an outright purchase, off balance sheet financing doesn’t increase your debt/equity ratio, which can decrease your borrowing capacity.
  8. Customized solutions. A variety of leasing products are available, allowing you to tailor a program to fit your month-to-month or year-to-year cash flow needs. You are able to customize a program to address your needs and requirements – cash flow, budget, transaction structure, cyclical fluctuations, etc. Some leases allow you, for example, to miss one or more payment without a penalty, an important feature for seasonal businesses.
  9. Speed. Leasing can allow you to respond quickly to new opportunities with minimal documentation and red tape. Barlovento Group can approve your application within one or two days and you can have your equipment very quickly.
  10. Improved cash forecasting. By leasing equipment you know the amount and number of lease payments over the life of the leasing period, so you can accurately forecast cash requirements for your equipment.
  11. Flexible end of term options. There are several options for disposing of equipment after the lease term ends including returning the equipment, renewing the lease or purchasing the equipment.