Start a Leasing Company

Summary: Equipment is necessary for a business to operate. Some businesses acquire loans to buy equipment, but some find leasing more advantageous for financial or other reasons. Interested in starting a company leasing equipment like computers, laboratory apparatus, vehicles and agricultural machines?

Our guide discusses some important aspects of this company.

Leasing Company Opportunities

Every business needs some equipment to operate. But for some, especially startup companies, equipment are difficult to procure because of the large funding necessary to purchase them. One option for businesses with limited financing and those just starting up is to lease equipment. You can cater to this need by starting an equipment leasing company or by adding this opportunity if you are already in the business of selling equipment. Aside from startups and small companies, you can also serve institutions with equipment that are constantly being upgraded, like hospitals and laboratories.

Important Aspects of Leasing

• Leasing Terms. You can offer different lease types, such as true lease, fair market value, direct financing, etc. Discover and understand how each work so that you could choose the lease structure you want to offer clients. Commonly, a lease means the return of the equipment after the end of the contract period. The period could be for months, a year or several years or the useful life of the machine. If the contract is for the useful life of the machine, you can also offer clients other opportunities, like upgrading to a new model, or buying the equipment for its fair market value.
• Equipment. As an equipment leasing company you can lease out audiovisual equipment, vehicles, medical equipment, IT equipment, computers or equipment for industries, offices, and agriculture. You can lease out equipment if you are already in the business of selling them. If not, you would have to order them from manufacturers.
• Contract. This will contain the leasing terms, and will be drawn once a potential lessee satisfies the requirements for a lease. Usually, up to a certain amount, the client will only need to submit a prepared application form to apply for a lease. If the lease is for a higher amount, there will be other requirements like personal financial statement and tax returns, and bank and trade references.
• Payments. Payments could be structured depending on the ability of the lessee to pay. If the lessee has seasonal cash flows, the contract may be tailored so that it pays higher on months when its cash flow is good and lower when it’s slow. It may also be semi-annual if the lessee can pay lump sums during half-years.
• Repairs. Repairs may be shouldered by the lessor alone or shared between lessor and lessee. Terms regarding repairs should be specified in the contract.