Small business leasing is best used for equipment. Businesses will typically lease large pieces of equipment which are necessary for operations. There is a big difference between a loan and a lease, so it is important to understand some of these differences so you can make the best decisions possible for your business.If a business uses a loan to obtain a piece of equipment they would be required to put a down payment down on the item. The loan would then finance the rest of the item. With a lease there would be no down payment, and the total financed is only the value of the equipment that is expected to be depleted during the lease term. Often times the business is given the opportunity to purchase the equipment for a much lower price at the end of the term.
Other benefits to a lease compared to a loan is that at the end of a lease the business you leased from gets the used item back even if the item has become obsolete and invaluable. If you took out a loan to get a product you own the item at the end of the loan term even though it has depreciated in value. With a lease you can also get a new lease for the updated and newest product.With a true lease a business can also qualify the whole lease amount as a tax deduction. When compared to a regular loan only the interest on that loan is tax deductible. A lease also makes the item more available for purchase at the end of the lease because your business will have more cash flow at the end and the equipment is cheaper.