The Benefits and Drawbacks of Small Business Equipment Leasing

Small businesses that succeed find the best ways to do more with less resources. Business equipment leasing provides a mechanism for small businesses to limit upfront spending, while enjoying numerous benefits that come from a well drafted and executed leasing agreement.

Why should small businesses considering leasing equipment rather than buying it?
Although monthly payments for leasing equipment tend to be higher than monthly payments for financing it, small businesses enjoy many benefits from leasing agreements. Besides limiting cash outlay, business owners enjoy the following leasing perks:

  • Keep credit lines open by avoiding heavy financing for equipment purchasing.
  • Stay on top of the latest technology since shorter lease terms provide the option to introduce new equipment every few years.
  • Many leases include maintenance services as part of the agreement.

The shorter time frames and lower commitment level to equipment leasing appeal to many small business owners. However, equipment leasing also has it’s drawbacks:

  • Lifetime cost of the leased equipment will always be higher when leasing.
  • No ownership rights are earned by leasing, which can set up higher costs at the end of the lease if the equipment has become essential to the business, but is still too expensive to purchase at the end of the lease.
  • Start ups and new businesses may need to use credit lines to secure leases in the first place, limiting their financial flexibility.

Spend time planning, drafting and executing the lease agreement carefully.
At Rob Cohen Law we deal with many small businesses who want to lease equipment. In advising our clients we always make sure they weigh the decision carefully, considering all the strategic points relevant to preserving the legal rights, while allowing their business to flourish. Whether clients need us to review, prepare or negotiate lease terms, we work together with all parties to ensure the best outcome. Call us today for a free consultation to discuss your equipment leasing questions.