Leasing your machine tool equipment through Tech Financial Services, A Five Lakes Company, offers numerous advantages over other financing options. Below are a few of the benefits you can enjoy from leasing your next piece of equipment and machinery through TFS.
Customized Leasing Solutions
Companies have different needs, different cash flow patterns, unique and sometimes irregular streams of income. Therefore, your business conditions – cash flow, specific equipment needs, tax situation – dictate the terms and conditions of the lease. Regardless of the current interest rate environment, we have a solution to help you acquire the equipment and machinery your business needs.
Lease New and Used Equipment and Machinery
Virtually any equipment and machinery can be leased. Some tax breaks are only available for new equipment, but there are many other beneficial options to pursue for your equipment needs.
Prevent Equipment Obsolescence
If your industry demands that you have the latest technology, a short term operating lease can help you get the equipment you need fast and allow you to keep your cash. Your equipment needs can change over time due to diversification or other company changes. Your risk of getting caught with obsolete equipment is lower, because you can return the equipment or secure an upgrade at the end of the lease term.
Cash Flow Management – 100% Financing
Borrowing reduces your lines of credit. Leasing keeps them open, so you don’t tie up your cash in equity. Leasing requires very little money down, so you avoid costly down payments. Leasing allows you to include installation, freight, maintenance, software, etc. in the lease payment, so you have more money to invest in revenue generating activities. Leasing offers greater flexibility and maintains your liquidity necessary for future business decisions. Your new equipment is making profits immediately without touching your cash reserves.
Leasing Overcomes Tight Budget Limitations
Because lease payments can be expensed, you do not have to go through the oftentimes tedious process of approving a capital equipment purchase. A lease helps justify a purchase to management who may have delayed a decision until next year because of budget restrictions. With other advantages such as off-balance-sheet financing, leasing helps you better manage your assets and liabilities.
Retains Capital Strength
When you lease, you are able to afford the equipment you need and spread the payments out affordably over time. This allows you to retain your capital for other day-to-day expenses. Because a lease is not considered a long term debt or liability, it will not appear on your financial statement as a debt, which makes you more attractive to lenders if you need them. Since leased assets do not appear on your balance sheet, it can improve your financial ratios.
Reduces Cost of Inflation
Leasing allows you to buy Machine Tool Equipment now before inflation drives up the cost. You can enjoy using the equipment now and paying for it with tomorrow’s inflated dollar.
Tax Advantages
The leasor realizes the depreciation benefits, enabling you to deduct 100% of rental payments as regular operating expenses. Also, if you are subject to the alternative minimum tax, you benefit because lease payments are not considered tax preference items. Consult your tax adviser about your specific situation.
Convenience in Equipment / Asset Management
By leasing equipment and machinery, you transfer the uncertainties of asset management, which allows you to concentrate on making that asset a productive part of your business. The whole idea behind equipment acquisition is business growth. Tech Financial Services can help you expand and meet your ongoing business objectives.
Speed
Leasing allows you to quickly respond to new opportunities with less red tape and documentation. Leases can be approved very quickly allowing you to have your equipment in place much faster.
Flexible Lease Terms
We have many payment options to choose from, most include first and last months payment up front, which is much less than a down payment on a purchase. There are also many options for your equipment at the end of the lease terms. Options include; Renewing the lease, returning the equipment, securing an upgrade, or purchasing the equipment.
Competitive Lease Rates
We offer both fixed and floating rates.
* Please discuss these strategies with your accountant.
When we are working with a client to find the best financial solution for purchasing new equipment and machinery we always look at “What is your total cost of ownership”? Our goal is to always try to be more than just a leasing company to you, because of our experience in the machine tool industry and manufacturing we understand your business and your needs. We want to be your financial resource for leasing both new and used equipment and machines.
If your equipment and machinery has a high out of date factor where newer models offer greater savings in energy and faster output then you should consider leasing versus purchasing equipment. Or maybe your equipment has constant upgrades in software. Equipment and Machinery leasing is ideal if your total cost of ownership increases over time due to outdated equipment that over time requires maintenance and repairs.
It’s almost a given in manufacturing that machinery is going to break down, require an expensive part that is not covered by the warranty. Between the final bill and the cost of downtime… your profit margin just became that much smaller. Manufacturing businesses today need the best commercial equipment and best equipment financing available to stay competitive, operate efficiently and deliver high quality products and services.
Advantages of Equipment and Machinery Leasing
- Balance Usage and Cost – Lease equipment that provides a return that exceeds the cost of the equipment.
- Bundle Equipment – Include multiple pieces of equipment together as one lease package for a simple monthly payment.
- Newer Equipment – By financing your machinery you can seamlessly upgrade your equipment at the end of each leasing period.
- Increase Company Value – A lease is not considered a long-term debt or liability, making you more attractive to investors and traditional lenders when you need them.
- Tax Advantages – The IRS does not consider an operating lease to be a purchase, but rather a tax-deductible overhead expense.
“If it appreciates, buy it! If it depreciates, lease it!”
– John Paul Getty III
Understand Equipment and Machinery Lease Types
One of the biggest challenges for small businesses especially machine shops, is acquiring the equipment necessary to run the operation – without breaking the bank. Tech Financial Services offers a variety of leases from which you can choose. We will help you select the type of lease that matches your equipment needs, business goals and cash flow requirements. The most common types of leases are operating leases and capitol finance leases.
Operating Lease Financing
Operating leases have the lowest payment of any financing alternative. Operating leases qualify for off balance sheet treatment and result in improving ROI due to a lower asset base.
It can also result in higher reported earnings in the early years of the lease. This is because when a lease is classified on the books as an operating lease, the equipment and machinery lease expenses are treated as operating expense and the operating lease does not show up as part of the capital of the business. In an Operating Lease the right to use the machinery and equipment is given to the person or company (Lessee) by the owner (Lessor) which in this case is the leasing company.
The lease is treated as an operating expense on the income statement and has no affect on the balance sheet because the Lessee does not have the risk associated with ownership. Tax advantages of leasing equipment and machinery through a Operating Lease come from the asset being both an asset and a liability. Therefore you can claim depreciation every year while also deducting interest expenses on the lease payment.
* Please discuss this strategy with your accountant.
Capital Lease Financing
Capital Financing leases give the tax benefits of equipment and machinery ownership because the lessee purchases the equipment at the end of the lease term for a guaranteed purchase option. For example: $1.00 buyout.
In a Capital Lease ownership of the equipment or machinery is transferred at the end of the lease. This is because The Lessor only purchases the equipment and machinery for you. Therefore Capital Leases are treated like purchases and you assume all the responsibilities and benefits of owning the equipment.
Tax advantages of leasing equipment and machinery through a Capital Lease come from it being similar to being an purchase and for accounting purposes it is treated as a equipment and machinery purchase. A Capital Lease can be reported as a asset and a liability on your balance sheet. Because of this you may claim the equipment and machinery as a depreciation on assets.
* Please discuss this strategy with your accountant.
Choosing an Equipment Leasing Company
Tech Financial Services, a division of Five Lakes Financial Inc, has been an industry leader since 2003 in equipment leasing. Our team of dedicated professionals is here to guide clients through the equipment leasing process, we also consult established partners on new lease programs, tax benefits, and current promotions.
Choose Tech Financial Services as your equipment leasing company for any type of equipment financing your business needs. We always strive to be more than financing for your machine tool equipment leasing needs, we work to give you the best range of leasing options to fit your individual business needs.
- Machinery Experts – We understand the equipment and the unique needs of manufacturing companies.
- Competitive Rates – Because we specialize in equipment and machinery for manufacturing, we can provide better rates and terms than ‘generalist’ finance companies and most banks.
- Experience – We have decades of equipment leasing experience.