Mesa Leasing, Inc. - Why Lease Equipment

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For Business Owners

WHY SHOULD I LEASE EQUIPMENT?

There are two main reasons to lease. They are:

Use, Not The Ownership, Of Equipment Earns Profits
You Have Better Alternative Uses For Your Cash

Ownership makes no sense when the equipment is going to become obsolete and lose much of its value rapidly so what you really want to do is gain the use of the equipment for the time you will need it and use your valuable cash elsewhere.

THERE ARE LOTS OF USES FOR CONSERVED CASH – HERE ARE TEN

Reserves - You must have cash reserves to protect against disasters such as slow paying customers, drop offs in sales volume and, of course, payroll needs. Lack of cash reserves has put many companies out of business.

Cash Discounts – many suppliers offer “2/10 net 30” terms meaning you get a 2% discount for paying within 10 days. Saving 2% every 10 days is an annualized return of 72%.

Quantity Buying Opportunities - Buy more and pay less per unit.

Book Big Orders – many small companies must pass on large opportunities because they lack the funds to cover raw material costs during the manufacturing process.

Research and Development – finding new or more profitable products can greatly expand earnings.

Marketing – Developing new ways to reach old customers, or ways to reach new markets can make a huge difference.

Sales Talent - Hire the best available. How about your competitor’s top salesperson?

Buy Other Companies – ones which offer synergistic growth opportunities.

Appreciating Assets – Things like real estate tend to go up – not down –in value.

Vacation Time - Take that well deserved one you’ve been delaying so you can “recharge your batteries.”

In short, tying up money in equipment can cost a lot more in lost opportunities than you will ever save.

OTHER ADVANTAGES OF LEASING

Article 179 - Small businesses can now write off up to $100,000 of equipment the year they put it in service. By leasing that equipment, you can have the government pay its share in front while you pay for the equipment over time.

Direct Tax Expensing – For companies not qualifying for or choosing the Article 179 alternative, lease payments are written off as made, eliminating the need for depreciation schedules and allowing faster write off. The result of this is more cash freed up for other uses.

"100% Plus" Financing - Mesa Leasing finance contracts can cover everything you need to make your equipment work, including software, installation, leasehold improvements and training. This reduces your initial costs, and lets you earn profits faster.

Proven Alternative – Leasing the single largest form of external corporate finance in the U. S. About a third of all the equipment acquired here each year is acquired under a lease contract; and most companies, from small start ups to the "Fortune 500," lease some or all of their equipment.

Financial Reporting Advantages – In some cases, Mesa Leasing can structure leases to meet FASB requirements for “off balance sheet” accounting treatment. In that case, lease obligations wouldn’t show as a liabilities, making your overall ratios look better.

Protecting Bank Lines - Banks lines are extremely valuable for short term needs and emergencies so should be kept open. Tying up part of them in equipment loans can create problems. Banks like short term credit lines better anyway. Let your bank do what it does best.

Avoiding Bank Restrictions – Mesa Leasing leases don’t include blanket liens, restrictive covenants, rate escalator clauses, “call anytime” provisions, compensating balance requirements (which raise your real cost of money since they are lending you your own money and charging you for it); or any of the other unpleasant surprises you might find in your bank loan agreements.