When considering your next equipment acquisition compare your options

Lease

Cash Flow Impact

Leases can cover the entire value of the equipment, delivery and installation.

It is possible to write-off 100% of the equipment value.

Leases will typically, require two months payments up front.

You have the option to return , purchase or release the equipment by making your

decisions at the beginning and the end of the lease.

Cost of Capital

Fixed payments

Conditions

UCC filing specific to the leased equipment

Obligation to make monthly payments no other reporting required.

Loan

Cash Flow Impact

Typically, loans are made with the requirement of equity in the area of between twenty-five to thirty

percent of the equipment cost, delivery and installation.

Equipment value is typically depreciated over time.

You own the equipment at the end of the loan the value of which will be depreciated by use and

obsolescence.

Owner has the responsibility to dispose of the asset if it’s use has ended or the equipment is impractical for

future service.

Cost of Capital

Variable or fixed rate of interest

Borrowers need to consider the imputed and opportunity costs of the down payment,

compensating balances, fees, and closing costs. Further how will the acquisition impact their

current and future lines of credit?

Conditions

Blanket UCC filings common

Obligation to provide payments and typically quarterly and annual financial statements and/

or tax returns.

There may be conditions that require debt to equity to be within a set percentage violation

can mean default.

Various collateralization requirements can encumber other business and non-business

assets.