Introduction to the choice of funding
Usually every entrepreneur is faced with a decision at some point: leasing or credit? It is a key choice that affects your liquidity, investment opportunities and overall business development strategy. In this article, we will focus on leasing, looking at what benefits this solution can bring to your business.
What is leasing and how does it work?
Leasing is a form of financingin which an object - for example a car, a machine or computer equipment - is leased by a leasing company (lessor) to an entrepreneur (lessee). The essence of leasing is that the entrepreneur uses the leased object by paying regular instalments and, at the end of the contract, has a the possibility of redeeming the object or it automatically becomes the property of the lessee.
Benefits of leasing for companies
Flexibility and adaptation to needs
Leasing is characterised by a high degree of flexibility. Companies can choose a variety of leases to suit their needs and capabilities. types of leasing (operational, financial), which is particularly important in a rapidly changing business environment.
Tax benefits
One of the main advantages of leasing is the tax benefits. Can be fully credited lease instalments tax deductible, which reduces the tax base. This makes leasing often more tax advantageous than credit.
No need for large start-up capital
Leasing enables companies to use of modern equipment or vehicles without having to commit large sums of money at the outset. This is particularly important for small and medium-sized enterprises, which often face budget constraints.
Optimisation of the company's balance sheet
A company can optimise its balance sheet through leasing because the object of the lease does not count as an asset of the company. This allows the company's financial ratios to look more favourable, which is important when applying for further financing.
Simplified procedures and faster implementation
Compared to credit applications Leasing procedures are often simpler and quicker. With leasing, there is usually not as much documentation to fill in and submit as when applying for a loan. Leasing companies often do not require property collateral or guarantees, which is typical of loans. This means that companies can quickly access the equipment they need and respond to current market needs.
Bottom line - why might leasing be better than credit?
To sum up, leasing offers companies flexibility, tax advantages, a lower initial capital charge, balance sheet optimisation and simplified procedures. Although the choice between leasing and credit depends on the individual needs and capabilities of the business, leasing often proves to be a more flexible and beneficial solution for rapidly growing companies.
