[UPDATE: October 4, 2022]
Why Equipment Leasing?
Many companies that use cash or corporate revolvers to finance equipment purchases can benefit from an equipment finance / leasing product.
- Equipment leases can be added to a company’s current capital structure without expensive refinancing or amendments to existing debt.
- Since equipment loans or leases are secured by the equipment, there is no need
for additional collateral.
Benefits of Equipment Leasing
Greater Access to Capital
- Equipment leases can provide borrowers with additional access to capital and incremental leverage without costly amendments or having to upsize primary credit facilities.
Efficient Process with Speed and Certainty
- A shorter documentation process for lease agreements can result in significant legal cost savings.
- Lease agreements can be less onerous than traditional credit agreements.
- Additional equipment can be quickly funded under new schedules tied to an existing Master Lease Agreement.
Flexibility in Financing the Equipment Lifecycle
- A company can match an asset’s useful life more closely to the term of financing by utilizing an equipment loan or lease structure.
- Lease structures provide optionality to purchase, return, or renew equipment at
end of term.
Capital Structure Optimization
- Utilizing equipment leases preserves revolving credit facility availability and reduces risk of triggering liquidity or other covenants tied to revolver draws.
- Lease structures often provide advance rates as high as 100% of the equipment invoice cost.
- Funding capital investments using fixed rate financings, such as leases, allow for easier capital planning than utilizing floating rate credit facilities.
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