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A recent Gallup survey found that over eighty percent of major corporations seek leasing financing when acquiring dome or all of their capital equipment. That's eight out of ten major companies in the United States.

But regardless of the type of financing used in the acquisition of new equipment, it's important to not lose sight of the fact that higher productivity and profits are the end result of using new equipment, not owning it. With that in mind, you'll discover that leasing can be a cost-effective alternative to purchasing new equipment.

Want to gain a better understanding of some of the differences between lease financing and conventional bank financing? Take a look at the following table which identifies some the specific difference between leasing and buying through the use of conventional financing.

1. Can I acquire equipment without a substantial cash outlay?

Lease

Yes. OFC Capital can finance up to 110 percent of your equipment cost, including soft costs, such as shipping, installation, initial maintenance, and training.

Buy

No. Most banks require a large down payment. In fact, banks typically will only finance 75-80% of the actually cost of the equipment.

2. Can I upgrade or add equipment without difficulty?

Lease

Yes. This is one of the major advantages of leasing. Upgrading and adding more equipment are everyday occurrences on leases. Your original lease can be amended, or a new lease can be structured at the time of the new acquisition.

Buy

No. Most banks require the customer to re-apply for another loan.

3. Can I finance software purchases?

Lease

Yes. Virtually any kind of business or equipment lease can be financed through OFC Capital, including 100% software transactions.

Buy

Absolutely not. Banks typically deal only with "hard" collateral, uch as machinery.

4. Can I finance used equipment?

Lease

Yes. We make every attempt to structure transactions that meet your needs and consequently will consider the financing of used equipment.

Buy

Typically not. Banks generally avoid financing of used equipment.

5. Can I match my payment to my cash flow?

Lease

Yes. An OFC representative will work with you to find the best cash flow solution for your company.

Buy

No. Bank usually are more encumbered when it comes to structuring a repayment schedule that accomodates an unusual cash flow.

6. Are there transaction fees or closing costs involved?

Lease

Yes. A one-time documentation fee of $150 for the application for loans up to $150,000 applies.

Buy

Yes. Banks typically charge between 1-4% of the transaction amount for fees and closing costs. These fees can have a significant effect on the effective interest rate of your loan. Get the figures before you sign on the dotted line.

7. Can I avoid affecting my bank line of credit?

Lease

Yes. Our UCC will be filed on the leased equipment only. Your company can maintain its financial flexibility without compromise.

Buy

No. In fact, the effect can be significant. Frequently, the bank will place a blanket lien on all of your assets. If they then were to decline to renew your line, at any point in the term, the blanket liens would remain in effect, prohibiting you from using your own assets as collateral for any new funding.

8. Do I have to submit ongoing financial information to maintain my lease?

Lease

No. You will never have to submit financial information to OFC after your initial approval or upgrade.

Buy

Yes. You will be required to submit annual or quarterly financial statements and/or tax returns by almost every bank for their review. Further, bank loans are often conditioned on your retention of bank-specified key financial ratios. Debt-to-equity, current and quick ratios, along with working capital tests, are commonly specified. If you fall beneath your bank's mandated ratios, you can be considered in default.

9. Can I deduct all or most of the monthly payment from my taxable income?

Lease

Yes. Most businesses will write off 100% of their lease expenses.

Buy

No. Equipment financed through bank loans must be capitalized and can only be gradually depreciated. This occurs over a period 5, 6, 7 or more years.

10. Are the interest rates on my financing fixed?

Lease

Yes. Lease rates are guaranteed for the duration of the loan.

Buy

No. Bank line rates float with interest rates and can be unpredictable in a volatile market.

11. Will I own the equipment at the end of my financial obligations?

Lease

No. However, at the end of your lease, you can simply return the equipment and upgrade to new equipment. If you prefer to retain the equipment, the leasing company will sell you the equipment for its then-current fair market value. In the course of your lease, your company will have fully expensed the payments for tax purposes, unlike a conventional term loan or credit line.

Buy

Yes. However, typically the equipment has become technologically obsolete or worn out from usage by the time you reach the final loan payment.

As you see, leasing affords your business substantial benefits. We offer capital equipment leasing and financing services for businesses in a wide range of industries throughout the United States. And we're committed to offering you leasing options that are customized to your needs.

Our goal is to provide you with financial tools that give you a competitive edge in your industry. Our aim is to provide you with the buying power you need to stay on the forefront of technology, enhance your productivity, and maximize your profitability.