Commercial Lease Pro

Asad Haroon asked:


There are commercial leasing vendors for just about every piece of business-related equipment, including photocopiers, computers, office furniture, office space, etc. Commercial leasing allows a company to rent equipment and facilities instead of purchasing them. When you lease equipment, you will also be able to upgrade your equipment at the end of the term of the lease, which helps ensure that you have the latest technology available.

Leasing may offer substantial financial benefits because it is less capital-intensive and offers more flexibility, allowing a company to make short-term location and equipment decisions that can be easily changed at the end of the lease. Leasing may provide different tax and financial reporting treatment when compared to ordinary business expenses.

As you can imagine, choosing the right commercial leasing vendor can be challenging. If you need help Click Here. To ensure you find the right vendor for your needs, consider the following:

•Make a List of What You Need – Assess what pieces of equipment you will need. Do you need furniture or a commercial photocopier? Find a company that can provide more than one item because they may provide a bulk discount for multiple items.

•Space Leasing – Many office space facilities will also lease items such as furniture, a copier, and other equipment. Check before leasing these separately.

•Estimate Purchase Versus Lease – Some items may be worthwhile to purchase, such as computer, but remember, you will have to pay taxes at the time of purchase AND on an annual basis for as long as you have the items.

•Check References – Check the Better Business Bureau for information and do a Google search to uncover negative feedback about a company before you commit to a contract.

•Up-Front Fees – Many companies have up-front fees for their services. Ask about any and all fees associated with each lease. Some items may have different fees than others. You may pay a higher depreciated asset fee for a computer than you would for an office chair because of the rate of depreciation.

•On-Going Fees – What are the monthly fees to lease each item? How do these fees compare with comparable items that you could lease from other companies?

•Early Termination Fees – Make sure that you understand the early termination policy. If you choose to leave your current office space, will you be able to take leased items with you? Will you have to pay an early termination fee?

•Lease-to-Own – Some companies have lease-to-own programs so companies can make purchases at a lesser rate at the end of the period of the lease. If you decide that you want to keep certain items, you may wish to have the option of purchasing them once the lease expires.

•Damage and Replacement Fees – Who covers the cost to replace or repair a piece of equipment that you accidentally damage? What is considered normal wear and tear? Make sure you understand the fees in advance.

Before entering into an expensive commercial leasing contract, check with your accountant to see how it will impact you vs. purchasing. If you want commercial leasing vendors to compete for your business, click here. For additional information, you can visit our Commercial Leasing wiki.

Bob Newman asked:


There are two ways to pursue Commercial Equipment Leasing – either you try to get that loan from a traditional lender like a commercial bank or you pursue loans from non-traditional lenders. The difference is that traditional lenders like a bank will require you to produce evidence of a very good (even excellent) credit score and that you have a history of being a good borrower (meaning, someone who pays loans on time.) In itself, this is not bad since most banks are secure lenders. The problem lies in the fact that if you pursue commercial equipment leasing with your bank, you are actually eating away at your own credit line with the bank. For each commercial equipment leasing transaction you take out, a portion of your credit line is used up (as recorded by the leasing department of the bank.) This is because any transaction you make with the bank will be counted as part of your cash borrowing capacity or term leasing activities.

Another mistake many small business owners make is to mix up their personal credit lines with their business credit lines – which should never be. Although your personal credit score, credit rating, or credit history will show a lot about you as a personal loan borrower, it does not adequately show how you perform as a businessman – for that, the bank or other lenders will have to examine the company’s own credit history instead.

What you should also bear in mind about pursuing Commercial Equipment Leasing is that you should also be scrutinizing the lenders themselves before you submit yourself and your company to scrutiny. Take into account the attitude of the staff towards you, and ask about the level of experience the lender has had with this type of business loan. There are certain lenders who will only allow companies operating in a specific industry to get Commercial Equipment Leasing from them while other lenders lend to almost all companies, provided these are financially sound.

It would be nice if you had contacts among the owners or managers of other similarly-sized companies and ask them for referrals to lenders. These small company owners or managers will be able to give you insider info on how these lenders operate, how they were treated during the loan processing process, and the experience of the small company owners or managers with making payments on the Commercial Equipment Leasing loan. A crucial question to ask your contacts is: if you need to, would you ask for a Commercial Equipment Leasing loan from the same lender or choose another?

If you do succeed in getting through the initial steps of securing a Commercial Equipment Leasing loan, try asking what payment options are open to you from that preferred lender. Do they require fixed monthly payments alone, or can you be given the skip lease option (which means you can stop paying during lean months when company earnings are weak)? Another option is a step-up lease payment plan, meaning you start paying low amounts then move up to the higher payment amounts incrementally. The lender might also have what is known as a 60-day deferred commercial equipment leasing plan that doesn’t ask you for a downpayment but will defer your payments for two months. Its counterpart is the 90-day commercial equipment leasing plan that will defer your payments for three months, and also needs no downpayments.