What is the difference between Leasing Equipment and a Bank Loan?

While many business's finance the equipment they need by going to a bank for a loan their are many benefits to leasing the equipment instead. Getting a bank loan will most likely require good credit, Discount Capital Corp. works with "A+" Credit to the financially challenged. The other benefits to leasing include: Low Initial Cost, Substantial Tax benefits, Easy Upgrading of Equipment, and Off Balance Sheet Financing. Equipment Leasing is true 100% financing, because you are not buying the equipment rather paying for the use of the equipment.

Low Initial Costs

Instead of putting up between 10% and 50% up to get a loan to purchase equipment most leasing agreements have no down payment, usually just requiring first and last month's payment. Discount Capital Even has a deferred payment option in which you can use the equipment for a specified amount of time before you have to make any payments. We will help make sure you get the equipment your business needs as soon as possible while allowing you to keep capital in your business for other needs.

Substantial Tax benefits

Most equipment leases can be written off entirely as a business expense, because you are actually paying to use the equipment instead of paying to own the equipment. If you have a loan with a bank or other lending source you can only write off the interest of the loan amount as an expense. You should check with your tax advisor to see how leasing could benefit your business and provide you with more working capital.

Easy Upgrading of Equipment

When you purchase equipment the first time you use it the value goes down, just like automobile's equipment value depreciates. This is why many companies are choosing Equipment Leasing as their source for the equipment they need. Not only does leasing save your capital it makes upgrading to better equipment easier, because you are not stuck with the ownership of a piece of equipment you need to sell at a depreciated value you can choose to upgrade to newer and more advanced equipment at the end of your lease.

Off Balance Sheet Financing

Any accountant will tell you that debt on the balance sheet is not a good thing. When you purchase equipment the depreciation of value goes on your balance sheet and can will make borrowing money for other needs harder in the future. Instead of showing up as a debt on your balance sheet new equipment will help bring in profits, also most large business's don't want to be responsible for millions of dollars of depreciating equipment and many Corporations require a Board of Directors to approve any new loans, and since a lease in not a loan but an expense it can help the business right when its needed.