Operating Leases


An operating lease has many advantages: There is little upfront cost, a lower payment than a finance lease of similar length, and has a lower impact on your balance sheet. You can return the equipment and upgrade at the end of the term, if desired.

Our fair market price purchase and lease renewal options provide you the control of the asset you need, but with a lower cash payments than a loan or finance lease.

Currently financings that qualify as operating leases do not appear on your balance sheet for either book accounting or, generally, tax purposes. New U.S. FASB accounting rules are changing soon, and the lease obligations will be show up on the balance sheet, though not as debt or equipment, but as "Other Liabilities" and "Right of Use" asset, at the discounted value of the lease payments, not the full equipment value.

So from an accounting perspective, while currently operating leases have no impact on the balance sheet, they will still have less impact on the balance sheet after the changes must be implemented in 2018 and 2019 (depending on what type of company you have). In addition, since the obligations are not classified as debt, an operating lease may cause fewer issues when meeting debt to equity, interest coverage, or other covenant requirements under your bank lines.