In a world of ever-decreasing human interaction, why would someone seek the help of an unfamiliar leasing company when their local banker calls them by name? We’ll tell you why:
- Many banks often require the individual or business to have a non-interest-bearing secured reserve of 10 to 20 % of the loan amount. This is called the “compensating balance”. What this means is the advertised low interest rate is in reality often 2 to 3 times the quoted percentage. Why is that? It’s because banks are actually only lending you 80 to 90 percent of the money, while you provide the rest.
- Banks typically have a lengthy application process, and require personal and business financials, just to begin the funding/loan application process.
- Banks will generally file a blanket lien against all of your assets, not just the equipment you are financing. Leasing companies, on the other hand, will file a UCC against the single asset being leased.
- Banks will rarely finance the soft costs of installation, freight, or software. These are considered non-tangible assets and therefore, cannot be financed by a bank.
- A loan from a bank is often depreciated over 5 to 7 years. Depending on the lease structure, the equipment lease is normally a capital lease and can be 100% expensed. Lease payments, for the same equipment, are treated as a business operating expense, so there is no depreciation schedule to worry about.
- The Federal government regulates banks and that limits creativity, risk, and responsiveness when approving a loan. A bank’s approval process is historically slow and cumbersome.
Lease Program advantages:
A lease program’s credit approval and funding is generally done within hours for approval and funding within one or two days, with few financials or paperwork requirements. All costs including delivery, installation, training, hardware and software and services can be included in the lease. Tax advantages vary with the lease structure, so it is best to confirm these with your accountant.
David Craig, President of Lease Genie stated, “No matter what the customers’ unique financing requirements might be, such as progress payments, step-up payments, “soft” or intangible cost of training, installation, and software, Lease Genie can help. We will work with both the end-user and/or equipment vendor and are able to finance all the costs associated with the equipment.”
This important choice of loan versus lease should be based on your business’ requirements and circumstances. Lease Genie will take the time to get to know you and understand your business goals and objectives, and recommend a workable lease solution toward meeting your business goals. To inquire about how to get started, visit www.leasegenie.com/offer