Types of Leases
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Our team will work around the clock to fully understand your business needs, so we can create tailored, flexible leasing solutions that work for your company and help you preserve cash.
Types of Leases
A few of the different types of leases we can help you with include:
Capital Lease
With a capital lease, the lessee assumes all the risks and benefits of asset ownership. This type of lease is suitable for equipment that has a long and useful life (over 5 years), such as tools and machines. It may not be the best option for technology and electronics, which can quickly become obsolete.
A lease that meets any one of the following 4 criteria qualifies as a capital lease:
- Ownership of the asset transfers to the lessee at the end of the contract
- The lease contains a bargain purchase option
- The lease term is greater than 75% of the estimated economic life of the leased equipment
- The present value of the minimum lease payments is greater than 90% of the leased property’s fair market value at the inception of the lease
A capital lease is often best for businesses that ultimately want to own the leased asset. It benefits the lessee by using depreciation and interest deductions to offset income and offers an attractive purchase price at the end of the agreement. (Click Here To Get Started)
Operating Lease
An operating lease is the rental of an asset from a lessor, but not under terms that transfer the ownership of that asset to the lessee. During the lease term, the lessee typically has unrestricted use of the asset but is responsible for the condition of the asset at the end of the lease, when it’s returned to the lessor.
This type of lease is useful in situations where your business needs to swap out old assets for new ones at regular intervals. This lease is considered to be an ‘off-balance sheet’ liability, allowing the lessee to acquire the equipment for just a fraction of the useful life of the asset. It may contain a provision to purchase the equipment at the end of the lease for fair market value.(Click Here To Get Started)
Skip Payment Lease
This type of lease works great for seasonal businesses, as it can be structured so you can skip payments during your slow months. It also contains a payment plan tailored to fit a unique cash flow cycle. This can be very beneficial for businesses with fluctuating cash flow streams, where matching the timing of revenues to expenses is an important financial strategy. (Click Here To Get Started)
Step Payment Lease
A step payment program is either a step-up or step-down in your monthly payment amount after a specified period of time. A step-up payment structure means that your payments will be smaller at the beginning of your loan, for an assigned period of time, with payments increasing over the life of your loan.
A step-down payment is when your payments start off higher at the onset of your loan and taper off during the latter half. This type of structure is useful when you require your lease to be paid down more quickly.(Click Here To Get Started)
Master Lease
A master lease is a continuing lease arrangement under which additional equipment may be leased by executing a new lease schedule instead of negotiating a new lease contract. This allows businesses to acquire other assets in the future under the same basic terms and conditions without having to negotiate a new contract.
This type of lease puts the lessee in control of future equipment purchases, making it a powerful tool for businesses who want to expand their capital infrastructure. (Click Here To Get Started)
Sale and Leaseback
Sale and Leaseback financing has three components to it. You sell your equipment to a finance company (lessor), which in turn leases the equipment back to you (lessee) without interruption of use for an agreed-upon monthly payment.
This type of lease provides options to companies who want to increase liquidity, optimize cash flow, and improve balance sheet presentation. For businesses that require flexibility in structuring financial matters, leveraging the equity in your current assets is a strategic way to procure capital for growth. (Click Here To Get Started)
Lease Line of Credit
A Lease Line of Credit allows your business to combine all of its equipment needs under a single, pre-approved master lease line of credit. It provides businesses with flexibility and convenience because once a lease line has been established, you can tap into it and acquire the equipment you need whenever necessary, without any need to continually reapply for credit or renegotiate terms or documents. (Click Here To Get Started)
