The primary benefits of leasing are that it improves cash flow, gives the
lessee flexibility to upgrade equipment and has favorable tax and accounting treatment. However, large corporations have different financial requirements and objectives than small businesses. Therefore, the benefits can be different, depending on the size of the company.

THE ADVANTAGES FOR A SMALL BUSINESS

1. PROVIDES ADDITIONAL SOURCE OF FINANCING. Leasing does not impact a company's bank line, and the approval and closing process is much quicker than dealing with a traditional bank. Bank lines of credit remain available for working capital or investment that can allow a company to grow.

2. CONSERVES CAPITAL. Needed working capital is preserved, rather than Depleted, by the purchase of equipment.

3. LOW INITIAL COST. Leasing does not require a heavy down payment. Usually the first month's rent and a small security deposit is required.

4. TAX ADVANTAGES. Lease payments can often be deducted as an expense.

5. FLEXIBILITY. Software, installation and taxes can be included in a
lease. The customer may add on peripheral equipment or upgrade a system during the lease term. At the end of the lease, the customer has the option to upgrade the equipment, purchase it for a fixed price, or return it.

THE BENEFITS TO A LARGE CORPORATION

1. IMPROVES CASH FLOW. Leasing has the lowest payment of any method of acquisition. It does not require a large initial cash expenditure as with a purchase. It typically has a lower payment than similar debt financing.

2. OFF BALANCE SHEET. An operating lease is not put on the balance sheet as an asset or liability, thereby not affecting the company's debt ratios. The payment is expensed through the income statement.

3. NOT A CAPITAL BUDGET ITEM. Many companies have cumbersome requirements for purchasing capital equipment. Lease payments may be considered part of the operating budget and require a less stringent approval process.

4. HEDGE AGAINST TECHNOLOGICAL OBSOLESCENCE. Lessor assumes risk of obsolescence. Customer may return equipment at lease end with no additional fees.