Commercial leasing is when one entity takes property or equipment that it owns and gives it to another entity, the lessee, to use for a certain period of time. The entity that originally owned the property collects payments from the lessee while the lessee is in possession of the property. The lessee does not technically own the property or equipment but they can use it as if they own it. More and more businesses are choosing to lease their equipment through non-bank sources, and here is why commercial leasing is a more attractive option:
• Fixed payments. Lease payments are typically fixed for the entire term of the agreement. There are no surprises as with conventional bank loans, which are generally tied to the movement of the Prime Rate. This also allows you to budget with confidence.
• Payments tailored to your cash flow patterns. With step-up, step-down, seasonally adjusted, skip payment, and other payment stream options, leasing can meet your company’s unique needs.
• No cross collateralization. Banks often require that you pledge other collateral. They do this by filing blanket liens that effectively tie up all of your equipment and assets, not just the equipment you are acquiring.
• No obsolescence concerns. At lease end, you have the option to return the equipment if you no longer need it or want to upgrade. This leaves you free to update and reevaluate where your monthly dollars may be best spent.
• Longer term and lower payments. Equipment can often be leased for a considerably longer period of time than conventional bank financing, affording a lower monthly payment. New equipment can typically be leased for five years.
For further information on commercial leasing options browse our free business capital search engine today. Simply tell us a little bit about your business, and get matched with a list of lenders that can help you find the best commercial leasing options available. Also gain access to more potential financing sources.