We first gave an overview of equipment leasing in general, and then got into terms, phrases, and definitions. That was pretty interesting because I’m sure a lot of folks didn’t realize terms like “monthly rent” applied to equipment leases as well. 

We then got into the wear and tear clauses, and what they entail. We also learned it’s a little deeper than “don’t scratch the paint”. Mixed into those two posts was the residual value, and how the types of lease, length, and wear and tear all impact the residual value.

I then got into the topic of insurance, and the why’s and how’s of it all. This is pretty important because a lessee needs insurance even if they don’t own the item, and (surprise surprise) their general insurance may not cover the leased equipment like they think it will. 

And I just used the word “lessee”, so it’s good to point out we also learned the difference between lessee and lessor (the lessee is you, and the lessor is the lender/leasing company, in this case, Crest Capital).

So are we done with leasing? As far as equipment leasing terms and definitions are concerned we are, but I do have a few more points I am going to cover in the near future. Specifically, I’ll do a post or three about end of lease options (lease renewals, purchase options, giving the equipment back, etc.) And it’s also prudent to discuss what happens in the case of early termination. Look for them shortly. 

In the end, leasing is an excellent way to acquire the equipment you need. And to put it into a 2023 context, it’s also very attractive right now due to economic uncertainty regarding rates and inflation. Leasing lets you get the equipment you need without the longer commitment. 

And on that note, let me also state that almost any type of equipment can be leased. Too many people forget this, thinking that only vehicles can be leased. Not true at all. This was posted earlier, but let’s do it again: here are all the different equipment lease types offered by Crest Capital.  

It’s no secret as to why this blog is called “The Lease Guy”. Leasing is awesome, and we love it. And if you need equipment, you will too!

Even though I’m quite schooled on the advantages of leasing equipment and I’ve spoken about it in this blog previously, I never really expressed just how flexible it is, and how it could help companies of any size, no matter their goals.

I also never really got into the accounting principles of leasing, and how the different types of accounting look at leasing. This is actually an important part of the leasing equation, and we should discuss it.

So let’s start a new series on leasing. In the weeks that follow, we’ll discuss:

• The Two Different Accounting Principles – Book Accounting and Tax Accounting.

• How the Two Accounting Principles View Leasing.

• The Advantages of Leasing – Taxes and Balance Sheets.

• Types of Leases and How They Help Companies.

We’ll dive deeper into these topics, but for now, I’m going to give a very big-picture overview: There are generally two main ways a lease can be viewed in an accounting sense – depending on the type of lease, either the leased equipment is seen as “owned” by the company in a tax and balance sheet sense, or it isn’t. 

There are advantages to both ways, depending on a company’s size and goals. Some companies (usually smaller businesses) want the tax advantages of ownership, including claiming a Section 179 deduction. So they will choose a lease structure that offers that.

A larger company may prefer to keep the leased equipment off the balance sheet, and have it viewed almost akin to a “rental”. They cannot claim a tax deduction or depreciation of course, but they can also treat the equipment as an expense, which has its own set of advantages (for example, expenses may not need board approval, where capital expenditures may). 

The bottom line is, leasing is incredibly versatile for businesses, and can be an excellent tool in aiding a company’s growth. Stay tuned for more on this interesting topic. 

This will be my last post for 2017. And besides wishing you all a great Holiday season and New Year, I also want to point out that the time for using Section 179 for 2017 is growing short.

If you want the Section 179 deduction for 2017, you have until midnight, 12/31/2017 to buy and have the equipment in service. Because once the New Year’s ball drops, that’s it – Section 179 for 2017 is over.

Let me reiterate something I’ve been saying all year – the Section 179 tax deduction is so good, that you’d be almost silly not to take advantage of it. It’s a full $500,000, and your total equipment purchases can total $2 million before the tax deduction starts to phase out. This makes it a true small business tax break – most small companies simply aren’t going to exceed that $2 million dollar cap, so it’s very likely that everything you buy equipment-wise you will be able to deduct in full. That’s pretty sweet.

Better still, if you finance the equipment, you’ll take the deduction for 2017, and not make a single payment until 2018 – this can have a profound effect on your year-end financials, and also get you needed equipment right now. For many companies, 2017 was a solid year, and using this tax deduction plus equipment financing can make it even better.

Beyond that, I do hope your December is going great. A lot of companies are really busy now, even if they don’t sell consumer-related products. Plus, a company like mine has a busy December for the exact reason I stated above – companies say “we need to spend $xx on equipment to take a deduction, so let’s get to it”. So I’ll be here until that Midnight bell rings on 12/31.

Have a great holiday, everyone, and I’ll see you in 2018!

When I say flexibility, I am talking about a few things. To most people, the obvious things are “financial” in nature – things like finance term, rate, down payment options, payoff at the end of the equipment lease, etc. A solid equipment financing partner should be able to do almost any kind of (reasonable) finance deal that the buyer wishes – if the buyer wants a five year term, it should happen. If they want a seven year term, that (generally) shouldn’t be an issue.

I say things like “reasonable” and “generally” in the preceding because let’s face it; given the choice, we’d all like zero percent spread out over 20 years! But then Fletch starves (and Mrs. Fletch runs off with the paperboy, who’s making way more than me under that zero percent scenario.)

But anyway, financials aside, “flexibility” means a few other things. Like financing “odd” things, such as software. Believe it or not, there are many equipment financing firms that will not finance (or lease) software. But let’s face it – software increasingly is becoming more and more ingrained into what we do. In fact, many businesses simply cannot be run without it – it’s as every bit as important as a machine. Thus, your equipment financing partner should be able/willing to finance software, and any other reasonable product. Even if you don’t sell software, this type of “proven” flexibility means they will likely be able to help you next year when you roll out “the wonder widget” and are looking to offer financing.

Here’s another thing – how about financing used equipment? Some equipment finance companies will, and some won’t. But in the end, your equipment financing partner should be willing to finance good condition used equipment. Now again, you might be saying “big deal – we don’t offer used equipment”, and that may be true… for now. But could that change? Perhaps. But in the end, it’s better to have a partner who’s willing to do these things NOW than get stuck with someone who won’t play ball when you roll out something new.