Equipment leasing is an affordable means to spread the cost over a designated period of time. The equipment leases are available in varied forms and different uses. It is very important that the equipment which is leased must be compatible to the business requirements and also it should be of low cost. The businesses that require large capital investments can go for the equipment leasing deals.

Equipment leasing offers a good solution for the small business owner who cannot afford to purchase costly equipment outright. It is extremely beneficial for the entrepreneur if he decides to invest in the business through financing and not by purchasing it. Equipment leasing agreements typically last for seven, ten or fifteen years. This article is mainly for small business owners who are interested in leasing equipment.

There are many companies that provide equipment leasing services. They provide loans for leasing and also offer guarantees for the repayment of the loan. Equipment leasing makes it easy for the entrepreneurs to manage finances of their company. The major advantage for the entrepreneur is that he does not have to make upfront payments for the purchased machinery; however, when he takes up a loan, he has to give a security for the loan.

The major uses of the equipment leased by the leasing companies are as follows: research & development purposes, telecommunication, industrial application, medical, electronics, communications and automotive. The equipment which is leased is available on lease for short or long periods of time and at different price rates. The most common rate charged by these companies is the monthly installment method. However, there are various other methodologies applicable such as half-year or annually-period lease, balloon method, etc.

Before approaching a company for the equipment leasing, it is necessary to know certain things. These include the type of equipment needed by the business, the purpose of leasing the equipment and its intended usage. Apart from this, the exact amount to be paid should also be ascertained. When a business owner enters into a specific period contract with equipment leasing companies, it is important to make sure that they would agree on an agreed period of usage of the equipment. Usually, the agreement includes the stipulation that the particular period of usage would be decided upon mutually between the two parties.

For obtaining the equipment leasing loans, the applicants have to submit various details such as the nature of the business, capital structure and their estimated income. Many companies also offer finance at low interest rates, so there is no need to look for lenders who offer high interest rates. Another advantage of leasing loans is that the lessee gets lower capital charges. These low capital charges are calculated based on the difference in the cost of the total assets owned by the lessee and the total assets, the lessee wishes to lease. Equipment leasing financing provides excellent cash flow facilities to small and medium sized businesses.