|Leases & Leasing Information|
The Leverage of the Lease
In today's rapidly changing business environment it makes sense to consider all the options before paying for your business equipment ? whether it's a photocopier, computer system, computer hardware or software, telephone system, security equipment, office furniture or anything else. Many business people will give great consideration to the actual purchase, getting quotes from different suppliers and considering different choices. When it comes to paying, however, they simply pay cash or use bank finance without fully exploring the available options.
Most businesses will think of leasing for cars, yet don't consider this option for equipment. Either managements don't realise that leasing companies will lease items with little or no second-hand value; or they don't know which way to turn to get expert help or advice. Again they don't realise that the leasing broker ? a concept pioneered by Technology Leasing ? came into being precisely to meet that need.
The leasing broker gives customers a single point of contact, providing access to many leasing companies (all with different lending criteria) and picking the lender best suited to the client's individual needs. For example, some leasing companies dislike computer equipment. Others will not lease to businesses with less that five year's trading to show. Some will lease on software on its own, though, while others will lease to brand-new start-ups. The broker must match the client to the leasing company, which means not only the one with the best rate, but also one which will finance the type of equipment and consider the client's credit rating on the merits of the case.
Using leasing allows a business valuable leverage. You pay for the equipment as you use and profit from it. There's and analogy with paying your staff; you wouldn't hand over three or five years' salary in one lump sum , so why pay for your equipment that way? Leasing enables businesses to get the equipment they need now. Those on limited budgets can acquire what they really want, rather than what the budget dictates. In the case of one firm of consulting engineers in Glasgow, leasing the equipment enabled them to upgrade their computer software and put them in a position to handle larger jobs at lower cost.
Leasing is also 100% tax-allowable. As the user you don't own the equipment ? the finance company does. This arrangement allows the lease payments to be written off the profit and loss account rather than the balance sheet (where a depreciating item is a liability). The tax saving of up to 40% of the cost of the lease payments goes to the lessor. A large firm of solicitors in London was able with our assistance to lease £40,000 of furniture, renovating the office and improving its professional image, while making the above 40% tax saving.
Another benefit is that you don't need to contact your bank when leasing, so there is no need to impress or persuade the bank manager. You need not meet the broker, either. We arrange leases all over the UK for all kinds of different businesses and organisations, with equipment values from £1000 to £500,000 ? in most cases without ever meeting anyone from the client. Everything can be done by e-mail, telephone and post, with the cheque going direct to the suppliers of the equipment.
Why increase your exposure to the bank when there is an alternative? The image of the friendly bank manager belongs to the past. Today the old gibe applies too often ? that banks are happy to lend you the umbrella when the sun is shining, only to snatch it back at the first sign of rain. They will quote variable rates at so much over base (all the leasing we arrange is at fixed rates) and hide their profit by charging large 'arrangement fees'. Most bank overdrafts are repayable on demand at a time to suit the bank ? hence cases of loans being called in, without the borrower's prior knowledge, after a large cheque has been paid in.
If you have a cash pile and want to pay for your equipment from that hoard, always consider one thing before parting with the money. Is there a better use for the cash than being tied up in rapidly depreciating equipment? Remember that, if you do use cash to pay for such equipment, you can't later, in case of cash need, refinance and get the money back. It may well make more sense to invest the cash in marketing or staff training ? or purchasing inventory at discounted rates. Simply holding the cash in case of unforeseen circumstances may also be a wise financial strategy.
When you lease equipment for up to five years, bear in mind that you are not tied to that equipment for the whole term. Clients have the option to upgrade and change some or all of the equipment at any time during the term ? although this is more cost-effective if done half-way or later in that term. You simply select the new equipment. A new agreement will then replace the existing one, including cost of the equipment and the outstanding payments on the old contract, which will be discounted. This option allows many companies to keep up with new technology by replacing their equipment every two or three years, often with little or no increase in their monthly payments.
In all, leasing via a broker gives the client more choice. It saves the time and money that would otherwise be spent on shopping around to get the best or right deal. And it provides the best independent advice to suit individual circumstances.
Brian Burns - Technology Leasing Ltd - http://www.technologyleasing.co.uk
Ten Ways Start-ups Use Venture Leases And Loans To Generate Millions
The rise of venture leasing and lending has created an opportunity for sophisticated entrepreneurs to gain a competitive advantage. Savvy entrepreneurs are using venture leases and loans to generate millions of dollars for shareholders by leveraging existing venture capital. They have discovered ways to use this flexible financing as a tool to build enterprise value between equity rounds and to leapfrog less sophisticated competitors.
So You Want to be a Landlord?
The residual income from owning rental properties may bring more money into your life than the fast flip in the long term. If nothing else, the stress is reduced because a well-chosen investment will pay for itself until you the market is ready for you to sell. In order to make this idea work, you must plan carefully. Choose your property, choose your management approach, and choose your tenants carefully to make the most of your investment.
Ten Equipment Leasing Tips - Save a Bundle on Your Next Lease
According to the Equipment Leasing Association ("ELA"), U.S. businesses lease every thing from laptop computers to commercial airplanes, racking up more than $ 200 billion in equipment leased each year. Although four out of five U.S. companies use leasing to acquire equipment, many don't know the ins and outs of leasing well enough to negotiate a good deal. By focusing on a few key aspects of the lease transaction, you can save a bundle on your next lease and eliminate potential aggravation.
With a Lease, The Devil Is In The Details
In the last article we looked at a few of the things you should consider before leasing that first office or storefront for your business. To recap, you should not only consider the old standard "location, location, location," but also consider things like sufficient parking, the number of employees who will be working onsite, and future growth projections. I stressed that it was important not to get caught up in the moment. You should take your time to find the space best suited for your business for the long haul, not just for today.
Pricing Your Apartments
How do you fix a price point for an apartment? Take a guess? Figure it based on your carrying costs? Check comps and do a market analysis? Charge whatever the market will bear? If you're looking to place quality tenants, less is sometimes more.
Dodging Leasings Grim Reaper: Navigating a Payment Default
In her third Harry Potter novel, ?The Prisoner of Azkaban?, J.K. Rowling introduces a silent mysterious clan of spiny, cloaked creatures capable of siphoning off happiness and all good thoughts from anyone in their presence. Extended exposure to these scabby grim reapers, called Dementors, resulted in madness or death for even the most joyful individuals. In the world of equipment leasing, the closest things to Dementors are lessors who lose confidence in defaulting lessees. If your firm faces imminent payment default, there are several actions you can take to improve your chances of navigating this unfortunate situation.
What Happens When the Anchor Tenant Moves and You Are On a Ten-year Lease?
Recently there was an article in the Houston Business Journal of the anchor store in many shopping centers through out Houston pulling out. Kmart, took out some stores, so did three other big box stores and a few consumer electronics places and larger furniture stores, now Albertson's has left. Who gets hurt? The franchise stores who pay a high price and lease to be in those centers along side a big anchor tenant. Think about it, Albertson's with their large super stores with Banks in side, Starbucks coffee, bakery, mini eating area, film developing and pharmacy. Soon in Western States where property and land permit, on site carwashes too and also some already have fuel for your car, when you are a club card member. What if you had an MBE, Quiznos, Subway, Dry Cleaning, Travel Agency (as if things are not bad enough already), GNC, Hobby Town, Cost Cutters, etc.
Warning - This Lease Might Explode Any Minute
Mike Caringi, owner of a small New Jersey business that sells pumps, found himself facing a gut-wrenching dilemma last summer. Should he continue paying $ 1,500 each month for essential telecommunications services he no longer receives and for leased equipment he claims was never installed? Or, should he stop making payments and face a potential lawsuit from the firm that financed the equipment under a 'hell or high water' lease? Mr. Caringi's company is one of several thousand small companies around the country reeling from the bankruptcy of Norvergence, a reseller of telecommunications and Internet services. At the core of the quagmire facing Mr. Caringi and others is that Norvergence succeeded in getting customers to sign separate lease and service contracts that provided its services.
How Venture Leasing Added Millions To A Startups Equity Value
Craig Berman beamed noticeably after completing his board presentation. Berman, CEO of a startup that develops nanotechnology applications for the defense industry, had just closed a $ 20 million equity round. Berman finalized the round at an equity valuation that made the whole board blush. Only six months earlier, Berman's team faced a daunting technical delay that set the company back three months. With only four months of cash remaining from a previous equity round, the delay would cause Berman's company to burn cash faster and to fall short of an important benchmark.
The Lease And Purchase Option
If you have an investment property, should you rent it or sell it? The answer to that question is that you should do both. If you have lots of time on your hands and are handy with tools, you can choose to rent out your property. However, if you have several properties for rent, maintaining them can consume lots of your time. You can choose to hire someone else to maintain your properties, but it cost you money. And higher expenses mean lower profits. In addition to investing your time, finding good tenants for your properties is not easy. Tenants that choose to rent usually do it for a reason. They are usually having credit problems. In addition, most tenants do not take good care of your properties like they would their own homes. And when things go sour, they can mess up your house before they move out. Your goal is to find good tenants to rent your property, transfer the maintenance responsibility to them, and create incentives for them to eventually buy your property. Including the option to purchase to the least contract can eliminate most of the headaches associated with maintenance and dealing with bad tenants. There are several other benefits to the lease and purchase option.
Interim Rent: Equipment Leasing?s Trap Door
Many lessees enter into lease transactions that they believe are competitive based on faulty rate assumptions. Most lease rate calculations don't take interim rent into consideration. Interim rent is the trap door that allows lessors to receive increases in lease pricing. It is unpredictable and the amount can be arbitrary. By understanding how interim can impact your lease, you can close this trap door and enjoy the lease pricing you thought you negotiated.
Increase Your Business Growth and Cash Flow Through Equipment Leasing
"If it can be manufactured, it can be leased." For the past decade or so, this statement has become more and more true to fact. From computer software to commercial aircraft, equipment leases are utilized day in and day out in a constantly changing and highly aggressive business environment worldwide. To gain or to keep the edge over their competitors, companies of every type and size are constantly looking for creative ways to conserve working capital while expanding operations. Many have turned to leasing their equipment to help in the effort. For this reason, the leasing industry is being defined as a major player in equipment financing today.
Leases And Tenants - The Spooky Tenant
You, Mr. Landlord are pleased to find qualified tenants for your rental house. The man and woman sign a one-year lease on Tuesday.
True Tenant Tales, Volume One
Working with tenants can be an amazing experience. (Owners and contractors are equally astounding, but those are subjects for another day.) It seems I get my most memorable anecdotes over the phone. Here are a few of the ones I've culled from my blog and experience and put together for your reading amazement.
Basic Things You Should Know About A Lease Purchase Contract
What exactly is a contract?
Lease or Buy? That is Always the Question with Car Financing
Leasing is a perfectly viable and legitimate way to finance a new car. Although leasing offers attractive benefits, it is somewhat more complex than buying with a loan. This means there can be pitfalls if a decision to lease is made for the wrong reasons.
Venture Leasing - A Smarter Way To Build Enterprise Value
In 2003, venture capitalists and investors dispensed over $18 billion to promising young U.S. companies, according to VentureOne and Ernst & Young Quarterly Venture Capital Report. Less documented and reported is venture leasing's activity and volume. This form of equipment financing contributes greatly to the growth of U.S. start-ups. Yearly, specialty leasing companies pour hundreds of millions of dollars into start-ups, permitting savvy entrepreneurs to achieve the biggest 'bang for their buck' in financing growth. What is venture leasing and how do sophisticated entrepreneurs maximize enterprise value with this type of financing? Why is venture leasing a cheaper and smarter way to finance needed equipment when compared to venture capital? For answers, one must look closely at this relatively new and expanding form of equipment financing specifically designed for rapidly growing venture capital-backed start-ups.
Explore An Effective Revolutionary Approach To Traditional Business Financing
For business owners who need working capital now there is a revolutionary, tax-deductible cash flow solution that frees up capital and gives them the money they need to grow. This diversified cash flow solutions is known as "asset leasing."
How To Choose An Equipment Leasing Company
Leasing has become a preferred form of equipment financing, accounting for more than 30% of business equipment acquisitions. Each year, thousands of U.S. companies face the challenge of finding attractive financing to acquire business equipment. Many of these companies approach the lease sourcing process seeking the lowest lease rate. While securing a low rate is a worthwhile goal in choosing a leasing arrangement, it alone is usually not a reliable standard for obtaining the best lease transaction or leasing experience.
Equipment Leasing Blunders That Can Cost Your Firm a Mint
Rod McHenry, the financial vice president of a document imaging company, thought he had great cause for celebrating. He had signed an unbelievable $370,000 lease proposal covering computer servers, workstations, software and other networking equipment. McHenry believed he had snared an incredible lease rate, capping off weeks of negotiating an acceptable equipment price with the equipment vendor. The proposal guaranteed a lease closing and offered a return of the 2% 'commitment fee' paid by McHenry's company if the leasing company failed to give credit approval within two weeks. Little did McHenry know that signing this proposal would lead his company into the 'Twilight Zone' of equipment leasing. Ultimately, his firm would fork out more than $15,000 in legal fees seeking lessor performance, only to learn that the lessor was already insolvent and mired in several similar lawsuits.
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