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Considering the small size of an under $100,000 transaction, we recommend using equipment financing for its intended purpose…financing equipment. We advise conserving working capital and preserving bank lines for future growth of your core business.

An additional consideration is the impact of borrowing such a small amount from a bank. As a business owner, you’re probably aware that once you’ve borrowed a small amount from a bank, your company is labeled a “small” borrower. Banks will tend to only lend small amounts to you in the future to match your comparable borrowing experience. Don’t cripple your borrowing power for the future…

LEASING BANK LOAN CASH PURCHASE
A non-cancelable contract over a fixed term Repaid in regular installments Use of working capital
Advantages Advantages Advantages
*100% Financing *Direct ownership *No finance charges
*Conserve capital *Depreciation *Direct ownership
*May lessen tax liability *Appropriate when bank lines remain untapped or there is a loan covenant required *Depreciation
*Preserves bank lines
*Flexible terms Disadvantages Disadvantages
*Hedges against inflation *Capitalizes equipment *Attacks cash reserves
*Obsolescence protection * Relatively short term *Negates time value of money
*Fixed terms and payments *Interest rate subject to adjustment during term *Reduces time value of money
*Full use without ownership *Extensive documentation *Reduces investment leverage
*Creates new credit source *Exhaust credit lines *No hedge against inflation
*Easy add-on/trade up *Non-financial charges
*No obsolescence protection
Disadvantage *May require down payment and/or origination fees
*Non-cancelable


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