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9 Reasons why Leasing Equipment is Better than the Bank:
- Lease payments are fixed making budgeting easier. Bank rates float and are unpredictable.
- Leasing offers 100% financing with no down payments. Leasing allows businesses to roll-in other costs such as training, installation, freight/logistics, and other professional services.
- Leasing does not require a ‘compensating’ balance. Banks require minimum amounts of capital in business bank accounts during loan borrowing.
- You may accelerate equipment depreciation with leasing. Writing off equipment is faster and easier with leasing.
- Leasing is an ‘off balance sheet’ expense. Ownership of equipment is not yet realized so the asset is not considered a liability therefore not impacting debt ratios and further restricting debt/liquidity ratios.
- Banks require that you pledge other collateral and assets. Leasing is more flexile because you only pledge the asset being leased. Many banks require ‘blanket liens’ and other subordination agreements further compromising your financial flexibility and growth.
- Leasing is faster and more flexible with less paperwork. Credit decision turn-around times are faster and you can acquire equipment with less stress than a bank contract.
- Lease payments can be tailored to meet cash flow requirements. Seasonally adjusted billing and skip payment programs make managing large capital acquisitions easier for a growing business.
- American Capital allows you to pre-pay your equipment lease without a financial penalty or additional fees. Bank penalties for prepayment can reach 1-2% of the agreement.
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