Leasing vs. Bank Loan vs. Cash for your telecommunication system.

Leasing vs. Bank Loan vs. Cash

Our leasing programs can be a common-sense complement to an existing bank relationship.
Cash or working capital may be the ideal way to meet daily and short-term business needs, such
as paying suppliers, meeting a payroll, or dealing with a business emergency. However, working
capital isn't ideal for funding longer-term assets like equipment. Take a look:

LEASING - Non cancelable contract extending over a fixed term

Advantages

100% financing, including installation,
wiring, taxes, and software
Conserves capital
Preserves bank lines
Flexible terms
Hedge against inflation
Obsolescence protection
Fixed lease term and payments
Full use of equipment without ownership
Creates new credit source
Easy add-on / upgrade

Disadvantages

Non cancelable agreement

BANK LOAN - Repaid in regular installments

Advantages

Direct Ownership
Depreciation
Appropriate when bank lines remain
untapped or there is a loan
covenant requirement

Disadvantages

Capitalizes equipment
Relatively short term, usually 24 or 36 months
Extensive documentation
Covenant restrictions
Exhausts credit lines
No obsolescence protection
May require compensating balances (usually 20% or more of the loan amount), down payment, and/or origination fee
Variable interest rate could rise

CASH PURCHASE - Use working capital for acquisition

Advantages

No finance charges
Direct ownership
Depreciation

Disadvantages

Depletes cash reserves
Reduces investment leverage
No hedge against inflation
No obsolescence protection