Leasing Services






			What are the Types of Leases and How Do They Work? Market Research Reports Small Business Administration 1999 2000 Leasing Works for Inc. 500 CEOs Information used with permission from ELA.

	What are the Types of Leases and How Do They Work? Back to top The type of equipment you want to lease, the term, and whether you want to keep the equipment at the end of the term will all be factors in choosing a lease. Lessees may lease one piece of equipment at a time or many items with a single lease. Companies that continually acquire equipment may use a master lease (see Master Lease in the glossary) to avoid executing a new contract every acquisition. Two common types of leases are operating leases and finance leases.
			Operating Lease
			With an operating lease, the term is shorter than the expected useful life of the equipment. Rental payments do not cover the equipment cost for the lessor during the initial lease term. This type of lease is popular for high-tech equipment because shorter term leases help equipment users stay ahead of equipment obsolescence. The lessor uses its equipment remarketing expertise to subsequently find other users for the returned equipment, something the typical equipment user does not have the time or ability to do.

			Finance Lease
			With a finance lease the term is longer, more nearly covering the useful life of the equipment. Rentals tend to be lower because of the longer term and less residual risk. From an accounting standpoint, an operating lease is the simplest type of lease for you to account for because you only expense rentals; there is no requirement to add the asset to the balance sheet, as long as the footnotes to the financial statements indicate the amount of your firm's lease rental obligations.Another lease product you may find beneficial is the sale-leaseback: You purchase the equipment you need and use it for a period of time before selling it to a lessor. After selling the equipment, you then lease the equipment. This is another way to free up your operating capital. On smaller equipment leases worth thousands of dollars, leases tend to be more standardized. Above that cost range - several hundred thousand into the millions—variations appear more frequently. A leveraged lease on a big ticket acquisition such as an airplane, may include several customized provisions and options that would not appear in a typical lease for a smaller amount.Therefore, flexibility is a product of the size of the lease.

Small Business Administration's Survey 1999                      Back to top

National Survey Shows Equipment Leasing is
Time-and Cost-Saving Financing Option for Small Businesses

May 24, 1999 - Arlington, VA - The nation's leading small businesses are using leasing to manage cash flow, take advantage of the latest technology and reduce costs, according to a survey by the Equipment Leasing Association of America (ELA). In a survey to the winners of the Small Business Administration's (SBA) State Small Business Contest, ELA found that 85 percent of small businesses lease equipment and 89 percent plan to lease again.

"Small businesses are realizing that the value of equipment comes from using it, not owning it," said ELA President Mike Fleming. "Leasing offers businesses purchasing power to acquire more and higher-end equipment without draining the working capital needed for inventory and expansion."

Survey participants say the factors that lead them to lease instead of purchase equipment include:

Cash Flow

35 percent

Dollar Value

17 percent

Convenience and Flexibility

13 percent

Access to Latest Technology

13 percent

Maintenance Options and Cost

13 percent

Tax Advantages

9 percent

According to the survey, small businesses lease photocopiers (26 percent), phone systems (24 percent), fleet vehicles (18 percent), computers (16 percent), printers and imagers (8 percent) and other (8 percent). More than 60 percent of respondents rated the leasing option a four or higher on a scale of one to five, with five being the best.

The survey was conducted in May 1999. The Small Business Person of the Year will be named during National Small Business Week (May 23-29, 1999).

Leasing Survey Results - SBA State Small Business Winners

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Small Business Administration's Survey 2000 Back to top Survey of Small Businesses Reveals Equipment Leasing is the Favored Strategic Financing Solution Arlington, VA -- May 22, 2000 -- The nation's leading small businesses are using equipment leasing as a strategic financing solution. In a survey to the winners of the Small Business Administration's (SBA) State Small Business Contest, the Equipment Leasing Association (ELA) found that small businesses are twice as likely to lease their business equipment than to purchase their equipment outright. Leasing wins out to other financing options considered in equipment procurement decisions. The most common other financing options companies consider include cash purchase, in-house financing, credit cards, bank loans or a line of credit. Although 70 percent of respondents stated that they consider using cash for equipment procurement because there is no interest cost associated with cash, companies recognize that purchasing their equipment with cash decreases cash flow and increases opportunity costs. According to the SBA and ELA's joint survey, the benefits of equipment leasing derive from a company's ability to control their monthly costs through a set lease. Interest rates, inflation and changes in business volume can make for uncertainty when budgeting costs, whereas a structured lease affords stability and certainty in cost modeling. Survey participants say the primary economic factors that lead them to lease instead of purchase equipment include:

	Interest rates	60 percent
	Disproportionate growth in technology requirements	43 percent
	Cash Flow	34 percent
	Dollar Value and Inflation Rates	10 percent
"Leasing offers businesses the ability to leverage their existing capital, control monthly costs and reap the benefit of top of the line equipment while transferring the risk of obsolescence to the financial partner," ELA President Michael Fleming said. According to the survey conducted by ELA, small businesses lease everything from photocopiers to mainframe computers. Of the survey participants who lease equipment, 17 percent of the respondents lease more than 45 percent of all their business equipment. Seventy-two percent lease photocopiers, 36 percent lease computers, 22 percent lease fleet vehicles, 18 percent rent postage machines, 13 percent lease telephone systems and 13 percent lease printing and imaging equipment. The survey was conducted in May 2000. Fifty-two SBA State Small Business Person of the Year nominees, one from each U.S. state, one from Puerto Rico and one from Guam were surveyed. Sixty-seven percent of the companies surveyed responded. The Small Business Person of the Year will be named during National Small Business Week, May 21-28, 2000. Leasing Survey Results SBA State Small Business Winners
What leads your company to lease rather than purchase? What type of equipment does your company lease? Does your company lease or purchase its equipment outright? Source of Data: Equipment Leasing Association and the Small Business Administration Survey of the 52 SBA State Small Business Winners conducted in May 2000 Back to top

Leasing Works for Inc. 500 CEOs Back to top

Inc. 500 Survey Highlights Companies' Equipment Leasing Preferences

October 19, 1999 - Arlington, Va. CEOs of the Inc. 500, America's fastest growing privately held companies, continue to recognize the benefits of equipment leasing. Almost half of Inc. 500 companies currently lease equipment. Of those, 80 percent lease their office equipment, including copiers, fax machines and postage machines. The Inc. 500 survey found that nearly two-thirds of company owners indicated that they currently lease phone systems and 49 percent lease desktop and laptop computers. Forty-two percent of CEOs lease printing/imaging equipment while only 17 percent lease audio visual equipment.

According to the recent survey results conducted by the Equipment Leasing Association (ELA) in conjunction with Inc. magazine, almost one in five plan to lease equipment in the next 12 months. Of those, 47 percent plan to lease office equipment and 29 percent plan to lease phone systems. Fifty-six percent of CEOs plan to lease computers and 32 percent plan to lease audio visual equipment. The survey revealed that 15 percent of CEOs plan to lease printing/image equipment.

Inc. magazine surveyed approximately 200 CEOs and executives from Inc. 500 companies. Sixty-nine percent of the respondents were male while 31 percent were female. The median age for the respondents was 40.

Inc. is the leading industry magazine written for the men and women who own and manage small-to-midsized, fast-growing companies. Published 18 times a year, Inc. helps its 2 million readers by providing expert advice and practical solutions as they face the opportunities, pitfalls, and rewards of growing a company.

The Equipment Leasing Association (ELA) is a nonprofit organization headquartered in Arlington, Va., representing more than 800 member companies, which provide a variety of asset-based financial products, primarily equipment leasing. In 1998 equipment leasing was estimated to be a $183 billion industry.

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