LEASING FOR ENTREPRENEURS

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Leasing is a form of medium- and long-term financing that consists of the rental of an asset, usually a fixed asset, by one company to another in exchange for the payment of a rent. In contrast to leasing, at the end of the leasing contract, the company that has leased the asset has the option to purchase it for a previously established residual value. Leasing can be an interesting option for companies that need to acquire fixed assets such as machinery, computer equipment, vehicles, among others, without having to make a large capital investment.

Some advantages and disadvantages of leasing are as follows

Advantages:

• It allows the asset to be rented in exchange for a monthly rent, which reduces the impact on the company's cash flow.
• The leased asset does not appear on the company's balance sheet, which can improve the company's debt ratio and solvency.
• At the end of the leasing contract, the company has the option to purchase the asset at a pre-determined price, which allows it to acquire a fixed asset without having to pay the full amount of its market value.
• Leasing can have tax advantages, as the income paid by the company is deductible for corporate income tax purposes.

Disadvantages:

• The total cost of leasing is usually higher than the purchase cost of the asset, as interest and other expenses are included.
• The company does not own the asset until the leasing contract is terminated and the purchase option is exercised, which may limit its ability to use the asset or its ability to sell or transfer it.
• The company may find it difficult to terminate the leasing contract before its end if its needs or financial situation change.

In a nutshell, leasing can be an interesting financing option for companies that need to acquire fixed assets without having to make a large capital investment, although it should be carefully evaluated according to the needs and financial situation of each company.

Leasing to internationalise

Leasing can be an interesting option for companies seeking to expand internationally and needing to acquire capital equipment or machinery for their foreign operations. Through leasing, the company can obtain the necessary assets for its activity without having to make a significant initial investment, which can be particularly beneficial when it is a new market where it does not yet have a consolidated revenue stream. In addition, leasing may offer some tax advantages to the company, such as the possibility to deduct leasing fees as an expense in the tax return. Also can be a more flexible form of financing than a bank loan, as the term and conditions of the leasing contract can be adapted to the specific needs of the company. On the other hand, A disadvantage of leasing can be that, at the end of the contract, the company does not have ownership of the purchased asset, which can be a problem if changes or improvements need to be made to the asset. In addition, the total cost of leasing may be higher than the outright purchase of the asset, especially when interest and other expenses associated with the contract are taken into account.

In general, leasing can be an interesting option for companies seeking to expand internationally and needing to purchase capital equipment or machinery for their overseas activity, provided that the terms of the contract are carefully assessed and compared with other forms of financing.

Practical examples of leasing

1. A transport company needs to renew its fleet of vehicles in order to provide a better service to its customers. Instead of buying the vehicles, it opts for a long-term leasing contract with a financial institution. In this way, the company can use the vehicles as if they were its own, but without having to make a large initial investment.
2. A manufacturing company needs new machinery to expand its production. Instead of buying the machinery, it opts for a leasing contract with a financial institution specialised in capital goods. In this way, the company can obtain the necessary machinery without having to make a large initial investment and with the advantage of being able to upgrade the machinery at the end of the contract.
3. An entrepreneur wants to open a fashion shop and needs equipment for the premises, such as shelves, counters, lighting, etc. Instead of buying all the equipment, he opts for a leasing contract with a financial institution specialised in commercial furniture. In this way, the entrepreneur can equip his shop without having to make a large initial investment.
4. A technology company needs to upgrade its IT equipment to improve the efficiency of its work. Instead of buying the equipment, it opts for a leasing contract with a financial institution specialised in technology. In this way, the company can obtain the necessary equipment without having to make a large initial investment and with the advantage of being able to upgrade the equipment at the end of the contract.

In all these cases, leasing allows companies and entrepreneurs to obtain the necessary assets without making a large initial investment and with the advantage of being able to upgrade them at the end of the contract. In addition, leasing can provide tax benefits for companies, such as the deduction of leasing payments in corporate income tax.

What types of goods can be financed through leasing?

Leasing can be used to finance different types of assets, both movable and immovable, including:

• Industrial machinery and equipment.
• Vehicles.
• Technological equipment.
• Office furniture and equipment.
• Real estate such as commercial premises or industrial buildings, among others.

It is important to It should be noted that each financial institution sets its own limits and restrictions on the assets that can be financed through leasing, so it is necessary to consult with them before entering into any transaction. Leasing is a form of long-term financing that allows companies to acquire goods or assets without having to purchase them outright. In a leasing arrangement, the 'lessee' company (the entrepreneur) pays a monthly rent to the 'lessor' company in exchange for the use of the asset for a specified period of time. At the end of the period, the company can choose to purchase the asset at a fixed price or return it to the leasing company. This form of financing is useful for companies wishing to acquire expensive assets without having to commit their capital, and also allows them to maintain efficient cash flow management.

The advantages of leasing for an entrepreneur are as follows

1. Flexibility: leasing agreements can be customised to suit the specific needs of the entrepreneur.
2. Capital conservation: leasing allows entrepreneurs to obtain the assets they need without having to spend a large amount of money.
3. Improved creditworthiness: leases can be used as a way to enhance the creditworthiness of the company and improve its risk profile.
4. Ease of administration: the lessor takes care of the management and maintenance of the asset, allowing entrepreneurs to focus on their business.
5. Better budgetary control: leasing allows entrepreneurs to accurately budget their costs and reduce uncertainties.
6. Improved profitability: By using leasing, entrepreneurs can obtain greater profitability, as they do not have to pay a large amount of money to acquire an asset.

How to apply for leasing? 

TO APPLY FOR LEASING, AN ENTREPRENEUR MUST FOLLOW THE FOLLOWING STEPS:

1. Research the different leasing options and choose a financial institution that offers a suitable product for your needs.
2. Preparing a presentation to explain your business and your application for funding (+). Include financial information, such as bank statements, business plan, etc.
3. Go to the financial institution and explain your request, including the amount you need and what it will be used for.
4. Provide additional information that the financial institution may require, such as a credit history or business references.
5. Sign the leasing contract and establish the payment terms.

It is important to note that each financial institution may have its own requirements and procedures for applying for leasing. Therefore, it is important to research and compare different options before making a decision.

THERE ARE SEVERAL TYPES OF LEASING, SOME OF THE MOST COMMON ONES THAT YOU CAN USE IN YOUR NEW BUSINESS ARE:

1. Financial leasing: where a company contracts with a financial institution to obtain an asset in exchange for periodic payments.
2. Operating leasing: where a company rents an asset on a long-term basis and has the option to buy it at the end of the contract.
3. Fleet leasing: where a company hires the fleet of vehicles it needs for its operations.
4. Equipment leasing: where a company rents the equipment and tools it needs for its operations.
5. Real estate leasing: where a company rents commercial or office space.