Consider leasing gear to conserve cash

Tips For Small Business

July 27, 2008|By Stephen L. Rosenstein

If you plan to invest in new equipment for your business sometime soon and are considering a loan to finance the purchase, you might also want to investigate leasing as an option.

No matter what type of business you are in, almost any equipment you would need to purchase also can be leased. According to the Equipment Leasing and Finance Association (ELFA), U.S. businesses lease about $218 billion worth of equipment annually.

Leasing can conserve cash. A loan usually requires a down payment, while a lease does not. A lease generally does not need a down payment and finances only the value of the equipment, which is expected to be used during the lease term. When you purchase the equipment, you assume the risk of its becoming obsolete.

Leases are not loans, so their costs are calculated differently. Payments on an operating lease are considered an overhead expense that can be deducted from business income.

You can tailor a lease to fit your month-to-month, seasonal or annual cash flow needs. If your customers or competitors demand that you always have the latest technology, a short-term lease can help conserve cash.

The ELFA, a trade group of leasing companies, has created a Web site called Choose Leasing, which explains leasing basics. It's at

Stephen L. Rosenstein is co-chairman of the Greater Baltimore SCORE Chapter No. 3. Call 410-962-2233 to speak to a SCORE counselor or visit To send a question to SCORE, e-mail

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.