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What is Equipment Leasing?

If your small business needs specialized equipment, leasing it can be a smart choice to maintain cash flow and ensure your business operates efficiently.

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What distinguishes equipment leasing from equipment financing?

Equipment leasing lets you use an asset without the responsibility of ownership. At the end of the lease, you can choose to buy the equipment, return it, or continue leasing. Equipment financing, on the other hand, lets you own the equipment after a set term. Great Energy Capital offers flexible financing options, allowing you to select a program and terms that suit your budget and cash flow.
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Operating Lease

You’re likely familiar with how an automobile lease functions. It can save you money, but you won’t own the vehicle at the end of the term. Some business owners prefer this arrangement because it offers the option to buy or return the equipment after the lease, while benefiting from lower payments compared to financing. Additionally, your CPA might not need to list an operating lease on your balance sheet, which could provide several advantages.

Equipment Finance Agreement

An Equipment Finance Agreement (EFA) resembles a loan in many ways. It generally involves higher payments than an operating lease, but you become the legal owner of the asset. If you are certain about owning the equipment once the term ends, this option is suitable for your business. A similar arrangement, known as a capital lease, may include a bargain purchase option at the end, such as $1 or $101. Choosing between a capital lease and an EFA may have tax implications, so it’s best to discuss this with your CPA.

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