Operating Leases

An Operating Lease, also know as a fair market value lease, allows businesses to essentially “rent” equipment with off-balance sheet financing.

Benefits of 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