Benefits of Equipment Leasing

Advantages of Leasing Equipment

The primary advantage of leasing business equipment is that it allows you to acquire assets with minimal initial expenditures. Because equipment leases rarely require a down payment, you can obtain the goods you need without significantly affecting your cash flow. 

Another financial benefit of leasing equipment is that your lease payments can usually be deducted as business expenses on your tax return, reducing the net cost of your lease. In addition, leases are usually easier to obtain and have more flexible terms than loans for buying equipment. This can be a significant advantage if you have bad credit or need to negotiate a longer payment plan to lower your costs.

Leasing also allows businesses to address the problem of obsolescence. If you use your lease to attain items that are subject to becoming technologically outdated in a short period of time, such as computers or other high-tech equipment, a lease passes the burden of obsolescence onto the lessor, as you are free to lease new, higher-end equipment after your lease expires.

Time To Take Advantage of Deductions!

Using Section 179 and/or Bonus Depreciation with an Equipment Lease or Equipment Finance Agreement might be the most profitable decision you make in 2012.

Why? Because the amount you deduct will exceed your cash outlay for 2012 when you combine (i) a properly structured Equipment Lease or Equipment Finance Agreement with (ii) a full Section 179 deduction. It is a bottom-line enhancing tool (plus, you get the new equipment and software you're adding to your business).

Also, the '$179 bonus per $10,000 financed' is available thru 12/31/2012. This means that you (a) get your equipment, vehicles, and/or software now, (b) get to take full advantage of the Section 179 deduction in 2012, and (c) get Section 179 bonus cash as well.

Leasing and Section 179

Did you know that your company can lease equipment and still take full advantage of the Section 179 deduction? In fact, leasing equipment and/or software with the Section 179 deduction in mind is a preferred financial strategy for many businesses, as it can significantly help with not only cash flow, but with profits as well.


The obvious advantage to leasing or financing equipment and/or software and then taking the Section 179 Deduction is the fact that you can deduct the full amount of the equipment and/or software, without paying the full amount this year. The amount you save in taxes can actually exceed the payments, making this a very bottom-line friendly deduction (you are reading this correctly; in many cases, the deduction will actually be profit).

Our Customers say it best

“Working with Mazuma Capital allowed us to ride the tailwind of our newly signed service contracts with the right equipment in place.  The flexibility Mazuma offered us was refreshing and it was a great fit for our needs,” said the CEO of the Services Company. “The team at Mazuma did not feel like your typical lender/banker, their business is relationship based on every level.  The dynamic throughout Mazuma’s staff was one of professionalism with an added level of personalized service. Working with a top notch lender that provided exactly what we needed was a great experience.”

Kevin, CEO Ground Reclamation Services

“As our company searches for more opportunities for lease financing, I received a call from Mazuma Capital Corp. As I laid out to Mazuma and other companies what we were looking for in the way of lease financing, Mazuma came through with the best over all cost of funds as well as meeting our needs and time schedules. I have enjoyed working with Mazuma Capital Corp, because of their willingness to be flexible and the way they keep me updated on all that happens through the process. Everyone there is so easy to work with and I will continue to work with them on an ongoing basis. My experience was well within what I hoped for from a lease financing company.”

–Tom, VP of Finance & CFO

Leasing- A Smart Option for New and Used Equipment

In need of new equipment, but not ready to use all your capital to purchase it? 
Leasing is a GREAT solution.  Why you ask?

Not only does leasing help you conserve your cash, it also ensures that you don't wind up paying for equipment that becomes obsolete or unsuited for your needs. And think about this: if you need the equipment only for a short time or special project, leasing saves you the hassle of having to be both a buyer and, then later, a seller. 
Mazuma Capital will work on crafting a lease to help minimize your federal income tax liability, maximize your accounting objectives and customize cash-flow solutions to your budget.  Our Associate Structuring Group has expertise in all these areas and will help guide you to the best structure for your situation.

• Tax oriented leases “true or guideline” leases
• Non-tax oriented leases
• Loan, conditional sales contracts, balloon, and other purchase option structures
• Operating leases
• Lease facilities
• Sale & lease back options
• Step up/step down leases
• Seasonal leases
• Differed payment options
• Bundled lease products
• Non-tax operating leases, and other tax/GAAP products

From technology and medical equipment to renewable energies, leasing is a great option. There's no limit to the type of equipment available for leasing. Even a one-person operation can lease equipment. Unlike loans, leases do not require a down payment. You're required to pay for the use of the equipment during the lease term. You may also be responsible for routine maintenance and other costs as well. When the lease expires, the equipment goes back to the leasing company, you can opt to purchase however you choose to complete your obligation.
Lease payments are considered an expense that you deduct from your business income, just like any other expense.

Flexibility is another leasing feature. If customers or the competition demand that you always have the latest technology, a short-term lease can help you get what you need and keep your cash in other uses. Another plus is that most leasing companies offer lease-to-own plans if you determine that purchasing the equipment is in the best interests of your business.
The Equipment Leasing and Financing Association, a trade group of leasing companies and financial services companies, has a special section that explains the basics of leasing at its website, elfaonline.org. You'll also find guidance on leasing options and benefits, loan/lease differences, leasing terminology.

Mazuma Capital is a national direct lender, financing $100K-$10MM transactions. 
Mazuma Capital offers amazing vendor services and broker programs as well. 
Contact Mazuma at info@mazumacapital.com 801-816-0800

2011 Looking Bright For U.S. Company Growth and Purchases

Companies are looking to expand and that means new equipment purchases in the near future.  This outlook is bright coming off of two tough years in the equipment leasing industry.  Slow growth combined with economic uncertainty was not a good combination for the leasing industry.  There seems to be a bright light at the end of this tunnel. Forecasts seem promising and the tax benefits for companies to buy are enticing.

Investment by U.S. companies in equipment and software in the third quarter was up 15% from a year earlier to $1.08 trillion, nearly matching prerecession levels, government data show.
Corporations received more incentives to invest Dec. 17, when President Obama signed into law a tax compromise reached by Congress that, among other things, lets companies deduct from taxable income 100% of certain types of investments in 2011.

It seems that big U.S. companies have cleaned up their balance sheets and, appear to be flush with cash.  These U.S. companies are open to using the cash in 2011 on factories, stores and even hiring. Companies worked hard the last few years and especially in 2010 to preserve cash, and are slowly coming around to spending it.  According to Bloomberg Business U.S. companies are turning around and starting to feel comfortable with the economic outlook.

The maker of specialty glass and ceramics is investing $300 million to expand its research and development center near its headquarters in Corning, N.Y., adding about 100 researchers and Ph.D.s. It also is spending $800 million on a liquid-crystal display factory in China and building more LCD capacity in Taiwan.

Engine maker Cummins Inc., meantime, plans to add about 2,500 U.S. jobs in 2011, many requiring engineering or other technical skills. In 2010, Cummins raised its U.S. employment by only 185 people. The company has about 14,800 U.S. employees.

At the end of the third quarter, cash held by 419 nonfinancial companies in the Standard & Poor's 500 list was up 49% from three years ago—before the start of the recession—while total debt was up a more modest 14%, according to an analysis by The Wall Street Journal.
The good news: The improvement in just the past year was even more pronounced: cash was up 10.6% from the 2009 level, while debt grew 2%.

Profits are higher, too, after companies slashed their work forces and closed less-efficient operations. Total U.S. corporate profits in 2010's third quarter rose 26% from a year earlier to $1.64 trillion, the highest in four years, according to government data.

With this stronger foundation, coupled with new confidence about the global economy, corporations are looking to expand.  Continued growth in the mining and energy businesses around the world is expected to fuel a wide range of U.S. companies. IT spending seems to be on everyones mind and will head up the priority spending list this new year.

Source:

Standard & Poors Capital IQ

Bloomberg Business

Wall Street Journal

Proposed Accounting Changes...What is next for businesses?

The big question looming over the proposed accounting changes, is how will big business deal with the disappearance of operating leases? 
I'm not an expert, however I can tell you a few things for certain. First, most companies lessors and lessees are hiring accountants with heavy international experience in real estate. Second, the financial accounting impact is not going to result in competitive disadvantage since all companies must comply. Third, there will be differences in the overall adjustments experienced depending on how mature the leases are with respect to tenant occupying the space.

The valuation topic will pick up more steam and perhaps the number of options to renew included in the original lease will be reduced, basically the leases may be written differently. Overall there will be more transparency as to financing strategy in companies who have chosen to lease all locations rather than invest in capital assets - the wirelesss telecom industry generally leases all tower locations or builds to suit on leased land. There are many discussion brewing within this industry regarding how to move froward with new tower locations.

Most important at this moment is to prepare the shareholders for drastic changes in reported numbers. Applying the proposed changes will mean putting most of your leased assets on balance sheet, which will result in changes of businesses financial performance indicators, such as ROI. It will also affect the structure of earnings statement, as the expenses will be moving lower in your income statement. It is also important that some bank covenants may be affected. The preparation for such changes requires careful management of expectations, from both, shareholders and banks.

Bottom line, business will adjust and continue on, still exercising the option to pay cash or lease. The leasing industry will continue to grow and evolve with the changes likely to be put into effect (Mid- 2011).  New products and offerings will still add value for businesses and will continue to be a great option to keep operating cash clear, as well

What will 2011 hold for Equipment Finance?

Looking towards 2011 we are asking a lot of questions.  What will the equipment leasing industry do, how will it adapt? Will Money Come Back into Equipment Finance?

We are already seeing a large number of banks bid aggressively for middle-market and larger small-ticket transactions. Some of the national banks have been going up to $250,000 and $300,000 on an application-only basis for bank customers on equipment and industry sectors they like.

There are a few new entrants into the small-ticket application-only market, including the broker market (on a selective basis). This trend will probably continue in 2011 and pricing will be very aggressive on quality transactions.

This is a mixed bag for syndicators of transactions. On one hand, there will be more sources of capital available. On the other hand, there may be a large rate differential between walking down the street to Wells Fargo and getting financed at 4% and selling a broker transaction with points - so the syndicator world will continue to be predominantly "B" and "C" deals, not true "A" deals.

Lots of Smaller Banks will Continue to Fail and Shed Assets
The FDIC will begin to press weaker banks to shed assets and shut down now that there is ample liquidity in the overall system. As such, we see opportunities to purchase portfolios and leasing companies from banks next year. There will, however, be lots of bidders for those assets.  In general, we will see greater separation of the "haves" and the "have nots" in the funding world and the "haves" are going to be buying market share.

What will 2011 Hold?
We are coming out of a very deep recession, and tangible recovery is only just begging. For many leasing companies it is still going to be a difficult year. Overall equipment demand - especially for small businesses - is still weak (even though it is better). There are just not enough good deals to go around.  The next year is going to require huge amounts of hard work to be profitable.

More Competitive
Even small leasing companies are in a world market. Large companies like GE, Wells Fargo, Bank of America, Chase, etc. are constantly investing in new technology. These companies do collections from India at a much lower cost than small companies in the US. The large companies are run by smart people who are out to crush us all (Yikes!). In 2011 this trend will continue (as it will in 2012 and 2013 and forever). You had better be ready to compete.  You had better add some value or you are done.

Banks Will Still Be Banks
Having said that large institutions and especially banks are going to continue to be big competitors, there is an opposite side of the coin. The banks are struggling with increased regulation (unlikely all of it will be repealed even with a Republican House) and they are generally not interested in small, complex areas of the economy. Thus, we see that value will continue to be added by focusing on the complex and focusing on "niche" markets.

People Will Wake Up to Accounting Change
Radical accounting changes are coming. The smaller the borrower the less effect the changes will have. However, it will open up real opportunity for lessors willing to take big residual risk in the future as companies will be interested in shedding liabilities from the balance sheet. We will be back to having lessors who are actually in the equipment business. Change will not likely come until 2013, but next year is only two years away!

Leasing Benefits

Leasing Benefits

Tһе benefits οf leasing mау result іח οff-balance sheet financing reporting, tax incentives аnԁ conserving cash flow аחԁ preserving lines οf credit fοr working capital purposes. Mazuma  leases finance 100% οf tһе cost οf tһе equipment such аѕ soft costs wһісһ include shipping, software, training аחԁ installation. Additionally, leasing lets уου regularly upgrade уουr equipment, eliminating уουr utilization οf οƖԁ, outdated equipment аחԁ reducing repair options.
Take advantage of these benefits today! info@mazumacapital.com