Tips for Equipment Leasing

·        Get a flexible payment structure to fit your business needs. If your business has a slow season, ask for seasonal payment plans. 
·        Consider a leasing program that provides for lease expiration at or near warranty expiration. 
·        With an operating lease, if you think you’ll keep the equipment after the lease term, ask for a cap on the purchase price, such as “fair market value (FMV) not to exceed 20% of the equipment’s cost.”
·        Use your existing equipment to generate cash. With a sale and leaseback, a leasing company buys your existing equipment and leases it back to you. You get the cash that is locked up in your equipment while still continuing to use it.
·        Refinancing your existing equipment with a capital or finance lease can lower payments by as much as 50%. 
·        Understand the fine print. Most leases contain a termination value schedule, detailing the amount that will need to be paid to terminate the lease.
·        Don’t be afraid to ask for references when shopping for an equipment leasing company.

Eight Reasons Businesses Finance and Lease Equipme


The vast majority (78%) of U.S. businesses lease or finance their equipment, and the Equipment Leasing and Finance Association has released a new infographic highlighting why this method of equipment acquisition is so popular. The "8 Reasons to Finance Equipment for Your Business" infographic provides a reader-friendly, visually inviting explanation of some of the key benefits businesses enjoy when they lease or finance the equipment they need to operate and grow.

This new tool is the latest resource from ELFA's Equipment Finance Advantage website for end-users, a one-stop resource designed to help current and potential end-users of equipment financing make the best possible decisions. The infographic showcases a variety of ways businesses can use equipment finance to their strategic advantage, including:

  • Finance 100% - Arrange 100% financing of your equipment, software and services with 0% down payment.
  • Save cash - Save your limited cash for other areas of your business, such as expansion, improvements, marketing or R&D.
  • Keep up-to-date - Keep up-to-date with technology by acquiring more and better equipment than you could if the financing option were not available.
  • Outsource asset management - Let your equipment financing company manage your equipment from delivery to disposal.
  • Accelerate ROI - Rather than paying one lump sum for your equipment, make smaller payments while the equipment generates revenue.
  • Customize your terms - Set customized payments to match your cash flow and even seasonal income fluctuations.
  • Benefit from bundling - Bundle the equipment, installation, maintenance and more into a single, easy-to-manage solution.
  • Hedge against inflation - Lock in rates when you sign your lease to avoid inflation in the future.

"There's a reason nearly 8 out of 10 companies lease or finance their equipment—it makes good business sense," said ELFA President and CEO Ralph Petta. "We are pleased to present this new infographic illustrating some of the important ways our industry 'Equips Business for Success.'"

Time to Change Your Mindset

Lease assets rather than buying?

Buying outright might not be the best use of your capital. Look at leasing and hire as an option for acquiring assets. When your business needs to acquire assets, buying them outright might sound like the simplest option; cash purchases can work out cheaper in the long run and the goods are classed as business assets and so can be used as security. However, this might not be the best use of your working capital. If you take out an overdraft or loan to cover the outright purchase of assets, build interest repayments into your calculations and compare that against hire or leasing costs before you make your final decision. If you don’t need to own the item immediately, consider leasing. Leasing allows businesses to use valuable assets – such as machinery, cars or furniture – without buying them outright. These items are instead bought and owned by a finance house and leased to you for a set period.

In Brief – Leasing

  • You get immediate access to the assets but pay back on a monthly basis, thereby easing your company’s cashflow
  • Leasing companies effectively lend you the total cost of items leased
  • Almost anything can be leased – cars; property; IT and telecommunications equipment; machinery; printers and photocopiers; or even furniture
  • There are various tax benefits – for example, you can deduct lease costs from your taxable income
  • It can take only days to organise


  • Cash that would have been spent on assets can be released to finance growth
  • You don’t own a depreciating asset and can return it, offering flexibility
  • You can lease almost anything from company cars through to computers, phones, photocopiers, machinery and furniture.
  • You can access the latest equipment and may receive maintenance and support as part of the leasing deal
  • There are tax benefits. For example, you can claim back VAT on lease payments and you can also deduct the lease costs from your taxable income.


  • If you lease the item long-term you’ll probably end up paying more for the asset than buying outright
  • Leased items are not classed as business assets and so can’t be used as security
Business Lincolnshire

Lease Options - Which is Right for Your Business?

Lease Options


Capital Leasefixed-term lease similar to a loan agreement for purchase of capital asset on installments.  Lessor’s services are limited to financing the asset, the lessee pays all other costs, including insurance, maintenance, and taxes.  Capital leases are regarded as essentially-equivalent to a sale by the lessor.  Must be shown on lessee’s balance sheet as a fixed asset.  Lessee acquires all economic benefits (such as depreciation) and risks (such as the loss of the leased asset) of ownership, but can claim only the interest portion (not the entire amount) of the lease payment as an expense.


Operating Lease short-term lease, equipment returned to lessor at lease end, lessor gives lessee the exclusive right to possess and use leased asset for a specific period, but retains almost all risks and rewards of ownership – full amount of lease payment is charged as an expense on the lessee’s income statement but no associated asset or liability (other than lease payment) appears on lessee’s balance sheet.


Sale and LeasebackOff balance sheet financing in which an owner sells an asset to a leasing firm and, at the same time, lease it (as a lessee) on a long-term basis to retain exclusive possession and use.  Although this arrangement frees capital tied up in a fixed asset, the original owner loses depreciation and tax benefits.  Also called a leaseback.


Loan vs Lease - A Side-By-Side Comparison

Loan vs Lease




Payment Terms

Borrower repays advance of funds with interest over a specific period of time.

Leases involve the payment of rent.




Terms of Ownership of Equipment

Borrower holds legal title to the equipment

Lessee may have a right to purchase the equipment at the end of the lease or during the lease term, but the lessor generally holds legal title to the equipment.

Lender has no expectation of return of the equipment and has no residual value at risk at the end of the term of the conditional sale transaction

In a true lease, the lessor retains significant residual value and tax advantages.  The lessee may return the equipment at the end of the lease term. This reduces the rent payment considerably below the cash requirement of a conditional sales contract.

A loan does not alter borrower’s full ownership of the equipment at the end of the loan term in the absence of any default.

A lease with a Fair Market Value purchase option allows the lessee to return the equipment without further obligation when the lease ends or purchase the equipment at its fair market value or other agreed price.




Down Payment Requirements

An equipment loan usually requires a down payment and finances the remaining cost of the equipment

None. A true lease finances 100 percent of the value of the equipment expected to be used during the lease term. A lease requires only a lease payment at the beginning of the first payment period which is usually much lower than the down payment.




Payment Scheduling

Loan payments are made in arrears of each loan period.

Lease payments may be made in advance or in arrears of each leasing period. Payments can be structured around your business – monthly, annually, seasonal, step-up, etc, and soft costs such as taxes, installation, training, and freight can be included in the lease.


Collateral Requirements

Depending on credit worthiness, a business loan may require customer to pledge current or fixed assets for collateral.  A non-recourse loan, however, limits customer’s liability to the equipment and related cash flows, insurance, and certain indemnity payments. Equipment can be seized in event of default. (Blanket liens)

Lease equipment usually serves as the collateral needed to secure the transaction. (No blanket liens)




Depreciation Allowance

Borrowers/owners may claim a tax deduction for a portion of the loan payment as interest and for depreciation, which is tied to IRS depreciation schedules.

In a true lease, the end user may claim the entire lease payment as a tax deduction. The equipment write off is tied to the lease term, which can be shorter than IRS depreciation schedules, resulting in larger tax deductions each year. The deduction is also the same each year, simplifying budgeting. However, equipment financed under a conditional sale lease is treated the same as owned equipment.




Obsolescence Risk

The borrower/owner bears the risk of equipment obsolescence and devaluation, due to development of new technology.

The lessee transfers risk of equipment obsolescence to the leasing company, since no obligation exists to won the equipment at lease end. Some leases contain provisions for upgrading equipment during the lease term for additional rent.




Assets Eligible to Borrow Against/Finance

Loans can be used to pay for a broad array of capital needs, including sales finance, inventory finance, and business expansion.

Leases tend to finance items of equipment, software, and services.  A “Master Lease” acts as an umbrella for financing multiple deliveries of equipment represented and documented by schedules to the Master Lease.




Inflation Impact

A larger portion of the financial obligation is paid in today’s more expensive dollars.

More of the cash flow, especially the option to purchase the equipment, occurs later in the lease term which inflation makes dollars cheaper.




Turn-Around Time

Commercial loans can take weeks and sometimes months to receive approval and funding and require mountains of paperwork.

Leasing is a fairly quick process and can be approved in hours, funded in just a couple of days with little paperwork required. We can also establish annual lease lines of credit, making future purchases easier and quicker.


Which Lender Will You Choose?

Does your business need to replace equipment? Are you searching for a lender? There are endless possibilities for commercial financing these days.  With so many choices, how do you sort through them with the confidence you are making the correct decision?

These seven questions will help make your decision easier:

1.   Do I need a traditional big bank with unlimited capacity or would a smaller community bank or perhaps non-traditional lender provide enough capacity?

2.   Do I prefer an on-line application or a face-to-face experience?

3.   Is an existing relationship best or someone new?

4.   Should I seek a provider with the lowest rates along with possible fees and charges or a fair rate with no surprises?

5.   Do I need a quick credit decision (less than 10 minutes) or would a processed decision based on mutual respect, trust, and communication be fast enough?

6.   Is this a one-shot deal or is it better to line up future financing with a trusted partner or many deals over many years?

7.   Am I okay with a lender who will plug my company’s financial statements into their credit scoring model or one who will look beyond the numbers and ask questions to personally understand my story?


Which lender serves your needs best?  How important is pricing? What about trust, timeliness, longevity, integrity, experience? How important is building a future relationship?


There are many choices for financing. Choose one that fits your needs.

Why Corporate Leasing Practices Deserve More Respe

Why Corporate Leasing Practices Deserve More Respect

Written by:  Tom Petruno, April 4, 2018 – UCLA Anderson Review

In February 2016, the Financial Accounting Standards Board (FASB) announced a major overhaul to the accounting rules for leases.  The new rules require that all long-term leases be counted on corporate balance sheets as liabilities beginning in 2019.  Current rules distinguish between debt-like “capital leases,” which appear as liabilities, and “operating leases,” which are treated as straight rentals and do not appear as liabilities.  By recording liabilities for operating leases, the new rules will add more than $1 trillion in liabilities to estimated total U.S. corporate liabilities to $26 trillion, according to the FASB.

Historically, operating leases have been “off-balance-sheet” items, usually cited in footnotes of financial statements.  Critics say that invites “window dressing,” or using leases to understate company liabilities and, therefore, financial risk.  But the rule change governing companies’ reporting assets like real estate and machinery – may be targeting an accounting abuse that is more imagined than real, new research suggests.

An extensive study (Documents/sites/faculty/review publications/Caskey Ozel TAR-2016-0176R1, pdf) by UCLA Anderson’s Judson Caskey and N. Bugra Ozel of the University of Texas finds companies’ decisions to use operating leases, rather than debt or capital leases, are primarily driven by business strategy.  More important, operating leases receive not only different accounting treatment, but also different legal treatment.

For example, the bankruptcy code treats capital leases as “secured financing arrangements” subject to similar rules as debt, whereas it treats operating leases as rentals.  In the event of a bankruptcy, an operating lease needn’t get tied up in court proceedings, whereas financiers of debt and capital leases must rely on the bankruptcy settlement.

Because operating leases afford more protection to financiers than capital leases, they help companies gain access to additional financing.  They can also allow a company to get equipment without committing to owning it, a help in uncertain times.  There are also favorable tax treatments that support leasing.

If decisions to use operating leases were largely motivated by a desire to disguise a company’s finances, the study says, you’d expect to see heavy lease activity in situations “where managers have strong incentives to window-dress their financial statements.”  The authors identify such situations, including periods before private companies take themselves public (and want to look as financially fit as possible), and periods before companies borrow heavily (and likewise want to appear healthy to get the best loan terms).

The working paper looked at leasing data from 1990 to 2012 from two separate groups of companies:  142 private and public airlines, because the airline industry has a long history of leasing jets; and the broad universe of 7,712 public U.S. companies.  Overall, the authors found “no evidence that [accounting strategy] plays a major role in leasing decisions.”

In the case of airlines, Caskey and Ozel found that privately held carriers – which don’t have to worry about reporting quarterly financial data to Wall Street – actually rely on operating leases more than publicly-owned airlines.  And in the broad sample of companies, the authors likewise found “no evidence” to associate leasing with efforts to alter reported financial data.

In the interview, Caskey said he was “somewhat neutral” on the value of the new rule.  “On the one hand, it provides a bit of new information, beyond what companies currently report in footnote disclosures about leases,” he said.  “On the other hand, that information can be costly for companies to provide, especially smaller companies with limited accounting staff – and probably lots of leases.”

To Lease or To Loan - That is the Question

Lease or Loan to Finance your Vehicles and Equipment?  What you need to know to decide.

When business owners and managers consider business vehicle and equipment acquisitions, they often think of their payment option as a “lease versus buy” decision.  In any economic environment, preserving your owner capital and cash is important.  Financing through a lease or loan helps your business preserve its cash.

 Choosing your Financing Option

 Whether you finance your business vehicles or equipment through a lease or loan, each has its advantages.  In evaluating your options, it’s important to look at each alternative to decide which will best fit your usage, cash flow and financial objectives.  To help determine the most appropriate option, consider the following questions.

Ten Considerations in a Lease or Loan Decision

 1.     How long will the equipment be used?

·       If the length of time the equipment or vehicle is expected to be used is a short or intermediate term (which usually means 60 months or less), leasing is likely the preferable option.  Vehicles and equipment expected to be used longer than five years could be a candidate for either a lease or loan.

 2.     What is the monthly budget for your vehicle and equipment?

·       With any ongoing business expense, consider the monthly cost for the vehicle and/or equipment and how it fits into your budget.  In general, leasing will provide lower monthly payments.

 3.     What is your cycling plan for your business vehicles?

·       Many small fleet customers look to recycle their business vehicles regularly or according to a plan to lower their repair and maintenance costs and to provide current vehicles to build their brands and keep employee morale up.  Fisher Leasing’s Fleet Management Team can help your business buy the right vehicle and the right price – you get what you want, don’t pay for options you don’t need, and at the right price.

    4.     How is the business vehicle or equipment going to be used?

·       Business vehicles and equipment are revenue-producing assets.  The assets need to operate to generate revenue.  Leasing will provide you the flexibility for skip or irregular payments, step-up payments and payment schedules that will match for cash flow.

5.     How much cash will be required upfront for a lease and for a loan?

·       Leasing can provide 100% financing of the cost of the business vehicles and equipment as well as transportation, delivery, up-fits, and other deferred costs such as sales tax and licenses.  Loans usually require a down payment and do not include other cost benefits.  Also, banks usually take blanket liens on all of your business assets and not just on vehicle or equipment financed as a lease does.

6.     Can the company use the depreciation or would the company get a greater benefit from expensing the lease payments?

·       The tax treatment of the financing is important to your company in choosing between a lease and loan.  A loan provides you with the depreciation tax benefit; with a lease, the lessor owns the equipment and realizes the tax benefit, which is usually reflected in a lower monthly rental payment for your business as well as the ability to expense the entire payment.  In a lot of cases, if your business can’t use the tax benefit, it makes more sense to lease than to purchase through a loan because you can trade the depreciation to the lessor in exchange for better cash flow.

 7.     How will a line of credit be impacted?

·       Many businesses have an operating line of credit through a bank that they use for inventory purchases, improvements and other capital expenditures.  Depending on your loan agreement covenants, it is possible to preserve your bank line by leasing through an independent leasing company.  Our leases have fixed interest rates and the assets leased are the only collateral, not a blanket lien on all of your business assets.

 8.     How flexible does your business want the financing terms to be?

·       A lease can provide greater flexibility, since it can be structured for a variety of contingencies, where a loan is less flexible and subject to the lenders rules.  If your business has continuing use for the equipment at lease termination, extended rentals, purchase options, trade-ups and return options are all available depending on your situation.  The lease term allows your business to match all expenses to the term of the business vehicles and equipment’s use, including income tax expense, book expense and cash expense.

9.     Do you anticipate the need for additional equipment under your financing agreement?

·       If your business is planning for growth, you can use our Master Lease that allows you to acquire multiple business vehicles and equipment under multiple schedules with the same basic terms and conditions.  This provides greater convenience and flexibility that a typical loan, which needs to be renegotiated for additional asset acquisitions.

 10.  Who can help me evaluate what’s best for my business?

·       Whether you finance your business vehicles or equipment through a lease or loan, each has its advantages.  When making your decision, give us a call to help secure the best possible terms for your financing.


Let Fisher Leasing Help You Manage Your Fleet And Equipment!






Which Lease Is Right For Your Business?

Which Lease is Right for Your Business?


Financing and Accounting Terminology


F.A.S.B. 13                   This term stands for Financial Accounting Standards Board Statement No. 13, which created a specific set of guidelines for accounting for all leases.  The FASB is associated with the American Institute of Certified Public Accountants.

CAPITAL LEASE           FASB #13 requires lease be capitalized and depreciated for accounting purposes

OPERATING LEASE     Qualifies under FASB #13 for off-balance-sheet treatment.  In many cases, we can structure an operating lease if it is beneficial for the lessee.


Tax Terminology

TRAC                           (Terminal Rental Adjustment Clauses) Tax lease with lessee guaranteeing residual. Not available for consumer leases. TRAC leases are acceptable only for autos, trucks, and trailers.

TRUE LEASE                (Tax Lease) Lease whereby lessor retains tax benefits of ownership. Conditions of a true lease are broadly defined in Revenue Ruling 55-540.


Industry Terminology

CLOSED-END LEASE    (aka Net Lease, Operating Lease, Walk-away Lease) Lessor provides equipment and assumes depreciation risks.

OPEN-END LEASE       (aka Finance Lease) Lessor provides vehicle, lessee assumes risk of depreciation. In the case of a consumer lease, the Truth In Lending Act limits the risk.

MODIFIED OPEN-END    Quasi open-end lease - lessee’s depreciation risk is limited.

Leasing - That's Good to Know!





Who are we?


F.F. Fisher Leasing Corporation is a regional provider of equipment leasing solutions to small businesses in North Dakota, South Dakota, Minnesota, Wisconsin, Montana, Iowa, Nebraska and other states where our Fargo-based relationships have expanded.  The Fisher Leasing organization is an experienced group of relationship-focused leasing experts delivering exemplary customer service.


Key Facts


·        Founded in 1989

·        Serving over 5,500 clients

·        Experienced in over 50 business segments

·        Average lease term is 42 months and average transaction size is $60,000

·        Transactions can range from $10,000 to over $1 million

·        Over 60% of originations are repeat clients           

·        Average staff experience is over 25 years


Company Focus


·        Small-ticket commercial vehicle and equipment leases and loans

·        Fleet management services

·        Agricultural and transportation equipment specialists

·        Face-to-face sales relationship model

·        Primary sales footprint is a 500-mile radius of Fargo, North Dakota

·        Strong business vehicle acquisition, lease structuring and disposition services

·        Convenient and responsive, with timely turnaround



Why Businesses Lease?


·        Over 80% of businesses lease in the U.S.  Good financial management requires companies to look at financing alternatives to creatively expand borrowing capacity and diversify liquidity sources.

·        Leasing helps companies realize the economic benefits and achieve financial flexibility not available through conventional debt financing.  Off-balance-sheet financing can leverage capital for the business.

·        100% financing that includes up-fits, training, installation and freight is available, helping the company maintain cash for operating. Lower payments and longer terms improve liquidity.

·        Fixed payments structured to the company’s cash flow helps planning and budgeting.  Payments can be expensed in the operating budget.


School & University Leasing Programs


Colleges and Universities are looking at leasing their assets as a valuable tool.  Budgetary constraints can prevent asset acquisition when they are needed.  Beginning new programs and leasing the critical equipment can provide affordable and tailored payments, versus large capital expenditures.  The ability to spread payments out over a 3, 4 or 5-year term helps keep equipment and fleet current.  To help you compare our leasing programs with traditional loans and cash purchases, please note the following:


Issue                     Leasing                               Traditional Loan               Cash Purchase

Rate                      Lease payments are           Banks tend to lend on a floating     No impact other than the

Structure              fixed for the term of          or variable basis.  This places rate  opportunity cost to reinvest funds

                              lease.                                   on you.                                               in your business.


Soft Costs             Leases can incorporate      Typically soft costs are not              More out of your cash flow.

                              100% of the transaction   financed.  You must use your

                              soft costs (shipping,          cash flow to cover these costs.

                              taxes, training, etc.)


Down                    Our lease is typically          You may be asked to pay a                             Not applicable.

Payment               structured with 1st             down payment of up to 25%.

                              payment up front.


Compensating     Not required.                      May require minimum deposit       Not applicable.

Balances                                                                           balances and numerous

                                                                           restrictive loan covenants.


Restrictive            Not required.                      May include demand clauses,         Not applicable.

Covenants                                                         blanket liens on all of your

                                                                           business assets, maintenance

                                                                           of certain financial ratios, and

                                                                           restrictions on future debt.


Revolving             A lease is fixed for              Loan may be classified as a              Not applicable.

Structure              the term of the                   revolving loan and can be

               lease.                                   cancelled on an annual basis.


Security                Only the equipment          May take a blanket lien on                             Not required.  But purchased

Filing                     leased by us is listed.         all of your business assets.                             assets become secured assets

                                                                           A blanket lien may restrict                             in favor of the bank, if a blanket

                                                                           your company from borrowing       security agreement is in effect.

                                                                           in the future.


Application          Simple process that           Process can be lengthy and             Not applicable.

Process                 is much quicker than         intimidating.  Loans can take

                              a loan.                                  up to a month to fund.


Tax                        Depending on the lease     Loans make you the owner of         Limited to depreciation over the

Implications         structure, the transaction the equipment.  This limits the       equipment’s useful life.

                              may be 100% deductible. tax advantages to depreciation

                                                                           and the interest expense.


Our Process


1.      Obtain Our Lease Proposal:  After you determine your specific equipment needs with your vendors, we can provide a lease proposal with terms and payments tailored to your specific situation.

2.      Submit Application:  If you decide to proceed, return a completed lease application, along with any requested financial information.  For your University, that can include the following:

a.      Copy of an Incumbency Certificate and Resolution authorizing the lease.

b.      Copies of your audited financial statements (last two years).

c.      Copy of your licensing approval from any regulatory oversight authority for your CDL program.

3.      Credit Review:  Our credit decision is usually rendered with 48 hours of the information and application receipt.

4.      Documentation:  Once approved, lease documents are prepared and emailed to you.  The documents must be executed by an authorized signor and returned to us.

5.      Vehicle Ordering: Once properly executed documents are received, we issue a Purchase Order to your vendor.  You then coordinate delivery details with your vendor.

6.      Delivery and Acceptance:  Upon our receipt of your vendors invoice(s), we contact you for verification of delivery and acceptance.  Once confirmed, the vendor(s) are paid and your lease begins.


Things to Consider When Comparing Proposals


Number of Advance Payments.  The number of advance payments required (such as first and last) can affect your interest rate.  We only require one upfront payment.

Are the Payments Being Applied to the Term?  True advance payments are applied as payments.  Some companies hold the payment as a “Security Deposit”.  This will increase your overall cost to lease.

Make Sure Your Payment Is Fixed and not adjusted at the last minute, based on an “index.”

Understand Your Purchase Option.  If you are told you will own the equipment at lease end, get it in writing and do not rely on what was stated verbally.

Automatic Renewal Clauses.  Make sure this clause does not appear in your lease documents.  If you miss a deadline at lease end, the lease will automatically renew for another year.