For over 40 years, American business has increased the use of leasing, recognizing that the value of equipment comes from its use, not its ownership. Equipment leasing continues to mean investment in productive assets, economic growth and productivity, and the high quality jobs associated with technological and productive equipment, which makes up the bulk of leased assets.
Leasing is A Major Source of Investment in New Equipment
More companies, particularly small companies, acquire new productive equipment through leases than through loans. Of the $668 billion spent by business on productive assets in 2003, $208 billion, or 31 percent, was acquired by American businesses through leasing. In 2004, projected leasing volume is estimated at $218 billion.
American Leasing Companies Own More Equipment Than Any Other Industry
Who Leases? Everybody! Eighty percent of U.S. companies lease all or some of their equipment. They lease on an ongoing basis -- adding, upgrading, using the flexibility provided by leasing to have the most effective operation possible. Companies that lease tend to be smaller, growth-oriented, focused on productivity, and more technology-oriented. These are companies long on ideas, short on capital, and in need of flexibility as they grow and change. Companies that lease tend to create more jobs and be the most entrepreneurial and competitive.
- The most frequent reason given is the need for equipment flexibility related to either changes in the business or protection against technological obsolescence.
- Cash flow and financial reasons. Leasing permits a close matching of rental payments to the revenue produced by using the equipment. Leasing keeps debt lines open for working capital rather that tied up in capital expenditures.
- Efficiency and convenience. Companies make money by using equipment -- ownership has become incidental depending on business factors. Leasing companies provide a wide range of services related to equipment that can allow a company to focus on its core business -- not managing equipment. Acquisition, disposition, maintenance, and upgrading are just some of the benefits a lease can provide along with the capital itself.
- Stimulating investment and serving growth. Companies are incented to invest in new equipment by the federal and state tax codes. But often the companies cannot use these incentives. Through the use of leasing, however, the benefit of the incentive can be passed through to a company in low rental payments because as the owner of the equipment, the leasing company utilized the depreciation or credit incentive.
Leasing Means Productivity, A Better Environment, and Jobs
Leased equipment tends to be technology based, fuel-efficient, easy to use, safe, and high-output equipment. Because leases provide flexibility, modernizing is made easier. It is estimated that each increase of $1 billion in equipment investment creates approximately 30,000 jobs. Leasing not only equips America, it puts America to work!
Who Are The Leasing Companies?
The several thousand organizations that provide leases to American business are industrial finance companies, banks, and independent companies. They are large and small. They tend to specialize in certain equipment or industries. They offer a wide range of equipment and related services from simply providing the capital through a lease to equipment maintenance, operating, managing, and remarketing.
For information on the ELA member leasing companies, search the Lessor Directory at our Choose Leasing site.
Leasing is International
Equipment leasing in the U.S. is part of a rapidly growing worldwide industry. Over one-half of the world's leasing is now being done by companies in Europe and Japan. Leasing is also increasing opportunities for exports of equipment and financial services.
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