The following benefits are specific to an operating lease:
- Little or no down payment required – no large initial outlay of cash
- Conserves working capital
- Allows companies to better manage budgeting cycle
- Can bundle multiple lease items – hardware, software, and services, for example
- No impact on current bank covenants
- Off Balance Sheet financing
- Deduct entire lease payment as operating expense
- Provides protection from fair market value fluctuations on most equipment
- Allows technology refresh – lessee may choose to swap the asset for one of newer technology
- Faster approval than with typical bank loan
- Faster appropriation from operating budgets
- Master Lease Agreements make follow on transactions much easier
- Flexibility at end of lease term
