ForConstructionPros.com

Small equipment rental business owners often find themselves in need of new equipment such as delivery trucks and computer systems. And with the cash outlay involved, the large majority must be financed from an outside source. This outside financing need leads to a choice.

Should you lease or should you buy?

The answer depends on your financial circumstances. What we will do here is take a quick look at the attributes of leasing versus the advantages of buying.

Advantages of leasing

There is a growing trend in small business toward leasing of significant equipment needs such as vehicles. And many businesses now lease smaller office equipment like copiers and telephone systems. The advantages of leasing are:

Lower down payment requirements. Most lease contracts require little or no down payment. For an equipment rental business with little excess cash on hand, a lease might be the only viable financing alternative.

More flexibility on monthly payment requirements. Lessors are generally more flexible than banks in terms of payment requirements. When you are considering the acquisition of a new delivery truck, you can only estimate the amount of new revenue the vehicle will generate. If your cash flow is already tight, a lower monthly payment can be key.