Companies Gain a Competitive Advantage in Today's Uncertain Economy

April 26, 2001 - ARLINGTON, VA - Businesses are looking for ways to control costs, leverage capital and ensure long-term survival in today's changing financial landscape. The leasing industry has emerged as a strategic financing option that companies of all sizes are utilizing to leverage capital, increase cash flow, take advantage of tax benefits and hedge against the risk of technological obsolescence. Companies across all industries are taking advantage of leasing to better control procurement costs, contribute to the bottom line and increase business growth.

In 2001, the Equipment Leasing Association (ELA) estimates that the leasing industry will grow by 8 percent ($20 million).

Equipment leasing offers companies the opportunity to procure equipment at a fixed rate, for a fixed amount of time without having to purchase equipment outright. By leasing, a company is relieved of the uncertainties and risks associated with equipment ownership and can concentrate on using that equipment as a productive part of its business.

"Leasing has always been a strategic solution for businesses, and with the economic uncertainty of the past few months, businesses in all sectors of the economy are considering how leasing can help them successfully ride out the storm," said Amy J. Miller, ELA's vice president of communications. "Leasing offers valuable financing options that allow companies to maximize their purchasing power."

Benefits of Leasing

• 100 Percent Financing. With leasing, there is very little money down - perhaps only the first and last month's payment is due at the inception of the lease. Since a lease does not require a down payment, it is equivalent to 100 percent financing.
• Tax Treatment. Companies can deduct lease payments from corporate income because the IRS does not consider an operating lease to be a purchase, but rather a tax-deductible overhead expense.
• Balance Sheet Management. Because an operating lease is not considered long-term debt or a liability it does not appear as debt on corporate financial statements, making a company more attractive to traditional lenders.
• Flexibility. Companies can upgrade or add equipment to meet ever-changing needs at any point during the lease term. Companies also have the option to include installation, maintenance and other services, if needed.
• Asset Management. A lease provides the use of equipment for specific periods of time at fixed payments. It assumes and manages the risk of equipment ownership.
• Upgraded Technology. If the nature of an industry demands having the very latest technology, a short-term operating lease can help acquire equipment and control cash flow.
• Customized Solutions. A variety of leasing products are available allowing companies to tailor a program to fit month-to-month or year-to-year cash flow needs.
• Speed. Leasing allows companies to respond quickly to new opportunities with minimal documentation and red tape. Many leasing companies approve applications within one or two days.

For more information on the leasing industry or ELA, please contact Robin Baker at 202.293.8567 or via email rbaker@hillandknowlton.com. You can visit ELA online at http://www.elaonline.com or check out ELA's informational portal for financial decision-makers at www.leaseassistant.org.

Organized in 1961, the Equipment Leasing Association (ELA) is a non-profit association representing companies involved in the dynamic equipment leasing and finance industry. ELA's mission is to promote the leasing industry as a major source of funds for capital investment in the United States and abroad. ELA maintains an informational portal for financial decision-makers at www.leaseassistant.org. Headquartered in Arlington, Va., ELA has more than 850 member companies and a staff of 27 professionals. Equipment leasing is estimated to be a $280 billion industry in 2001. Visit ELA online at http://www.elaonline.com.