True Lease or Operating
Lease
Best For: Equipment that will
rapidly depreciate or become obsolete in a short period of
time - i.e. some forms of computer equipment.
How It Works: In a true or operating lease, the
leasing company retains ownership of the equipment during
the lease. True or operating leases typically have no
predetermined buyouts - these payments are often classified
as an operating expense.
Benefits:
Lower payments and typically the most tax-friendly form of
leasing, Additionally, true or operating leases offer three
choices at the end of your lease:
· return the equipment to the leasing company,
· purchase the equipment at its fair market value or
option amount
· extend your lease term.
Finance Lease or Capital Lease
Best For:
If you would prefer to own the equipment when the lease
agreement ends.
How It Works: The full purchase price, plus interest,
is spread over the length of the lease agreement.
Benefits: At the end of the lease, you own the
equipment for a minimal payment, usually $1.00 or a small
percentage of the original purchase price.
Sale-Leaseback
Best For: Customers who have
purchased their equipment, but now have decided that leasing
would be more beneficial. Sale-leaseback also allows
companies to raise cash for other investments or cash flow
purposes.
How It Works: The business that has already purchased
equipment sells it to a leasing company, which then takes
ownership of the equipment and leases it back to the
business. Access Equipment Leasing requires that the
equipment be purchased within 90 days.
Benefits: The sale-leaseback allows you to put money
back into your business or into investments that appreciate
rather than depreciate.
Skip Lease
Best For:
Seasonal businesses, agricultural companies, recreational
services firms, and other organizations which might require
a more flexible payment schedule due to seasonal business
conditions.
How It Works: You specify the months when you would
prefer not to make payments.
Benefits: Flexible, in that it can be adjusted to
irregular cash flow.
Master Lease
Best For:
If leasing requirements will likely be expanding over time.
How It Works: Separate lease schedules are created to
accommodate the addition of equipment over a period of time
of your specification. The master lease governs the basic
terms and conditions. Each schedule may include different
end of term options and different lease lengths but all will
come under one Master Lease.
Benefits: Acquiring additional equipment is made more
convenient.
Municipal Lease
Best For:
Local and state government organizations that wish to
acquire equipment.
How It Works: The tax structures and details of
municipal leases will vary considerably from standard
business leases. Seek the advice of your financial advisor
to better understand your municipal lease options.
Benefits: Municipal leases are designed specifically
for local and state government organizations.
60 or 90-Day Deferred Lease
Best For:
Businesses that need equipment for operation and development
that will not immediately generate revenue.
How It Works: A 60 or 90-day deferred lease can be
structured as a finance lease or a true lease. With this
form of lease, there is usually no advance payment required,
and the first payment is not due for 60 or 90 days after the
lease begins.
Benefits: The equipment you need can be acquired with
little to no money up front and no payments for 2-3 months.
Step Up Lease
Best For:
Businesses whose financed equipment will allow more
profitability over a period of time.
How It Works:Payments increase according to a regular
schedule over the life of the lease.
Benefits: Payments can be structured to match current
cash flow.
