| Points of Difference |
LEASE |
BANK LOAN |
| Ease of Application |
One single form |
Multiple forms with tax returns and hundreds of other documents. |
| Time for decision |
Less than 2 to 4 hours depending on credit history. |
A few weeks from point of first contact. |
| Amount Financed |
100% Financing |
Typically 20% - 30% of total cost |
| Down payment |
Zero / two months down |
50 to 70% of project cost |
| Interest Rates |
Fixed Rate / Fixed Payments |
Usually an adjustable rate |
| Financial Statements |
Not mandatory for transactions up to $150,000, used for customers wishing to submit financial, and financial are not required annually after approval |
Required on almost all transactions over $10,000, and bank usually requires annual updates to maintain loan |
| Financial Reporting |
Financed with monthly payment |
Must be paid in advance |
| Sales Tax |
Not required to be reflected on balance sheet as debt |
Carried on balance sheet as debt |
| Hidden Requirements |
None- UCC filling & processing fee only at lease execution, no lease termination costs |
Compensating balances, other bank charges, loan covenants |
| Tax Benefits |
Usually 100% deductible over the term of the lease |
Depreciated over the IRS's useful life of the equipment |
| Opportunity Cost |
Frees bank lines and cash allowing you to invest further in your business |
Ties up bank lines possibly preventing opportunities to expand your business |
