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Wednesday, December 10, 2008

Leasing Equipment For Small Business

One area a small business should not overlook is equipment and tech leasing/financing .... both for startups (although they are more difficult to do) and for established businesses.

One of the reasons why this is so important to the startup or growing business is that there are many expenses that come up (rent, payroll) where cash is the only solution to the problem. So to use some of that precious cash to buy equipment, when it can be leased instead ..... is a double hit of using cash when its unnecessary AND having it unavailable for other cash expenses.

There's only two big downsides for startups: 1) they are tougher to do since there's no operating history of the business involved and 2) its more expensive than a similar business profile at least 2 years in business.

Think of it like this, if you are a widget maker and you need a widget making machine, it doesn't matter if you own the machine or not. Its the use of it that you have to have in order to make your widgets to sell. Use without ownership of essential use equipment is the essence of leasing.

For information on this option for running your business AND a valuable rersource to put this approach into action check out: Southern Lending Solutions

1 comment:

Mary said...

Leasing can cost a company big time if they do not know what they are signing. The total cost of a lease can make loan shark rates look like a bargain.

Most leases are negotiable but usually companies just sign the contract and hope for the best. Even though the gut says "don't do it"

Leasing can be one financing tool to help a business acquire needed equipment.

Three primary end of lease problem areas exist.
1. Automatic Renewals: All lease contracts allow for automatic renewals that can increase the total lease term by a full year of extra payments. Ouch to cash flow.

2. End of Lease Purchase: If the widget maker wants to purchase the equipment at lease end, the purchase price may be excessive! The sales person told the customer they could purchase it for Fair Market Value. The customer finds that the price is neither fair nor market priced.

3. Return equipment: Return penalties abound. These include restocking fees, remarketing fees, storage fees, added rent while the leasing company inspects the equipment for damage.

These are only a few of the concerns that business should have before signing a lease. The key is to know what the lease says and what it really means. For more help go to www.shop.leasespeak.com and ask for the free list of the 10 Biggest Gotchas in a Lease.
Good luck.
Mary Redmond, Creator of the LeaseSpeak System