Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Equipment Leasing as a Current Financing Strategy for Middle Market Companies

By E. Jay Foster
January 03, 2005

Equipment leasing remains a viable tool for middle market companies in today's environment. The Equipment Leasing Association of America (the “ELA”) estimates that of the $668 billion spent by U.S. business on productive assets in 2003, $208 billion, or 31.1%, was acquired through leasing, and for 2004 the ELA projects that leasing activity will grow to $218 billion, or 30.7 cents of every dollar American businesses will invest in equipment.

The leasing industry has a history of employing product and market strategies that meet changing customer needs and economic realities. As a result of these actions, the industry has established a relatively consistent market-penetration range ' 28% to 32% of annual business investment in equipment ( See Table 1, below), from which the industry's recent and anticipated performance has not deviated. While it is true that lease pricing will increase with the expiration of bonus depreciation, and accounting regulations may impose new rules that impact the financial reporting of lease obligations, many of the historical motivations to lease will remain, and new economic and environmental factors will drive the offering. This article will review some of the primary reasons why leasing has served as a relevant financing strategy through multiple business cycles and in light of changing customer needs. Moreover, we will identify some specific reasons why leasing will continue to serve as a valuable financing strategy for U.S. business: both middle market companies and larger companies, alike.

[IMGCAP(1)]

Read These Next
Yachts, Jets, Horses & Hooch: Specialized Commercial Leasing Models Image

Defining commercial real estate asset class is essentially a property explaining how it identifies — not necessarily what its original intention was or what others think it ought to be. This article discusses, from a general issue-spot and contextual analysis perspective, how lawyers ought to think about specialized leasing formats and the regulatory backdrops that may inform what the documentation needs to contain for compliance purposes.

Hyperlinked Documents: The Latest e-Discovery Challenge Image

As courts and discovery experts debate whether hyperlinked content should be treated the same as traditional attachments, legal practitioners are grappling with the technical and legal complexities of collecting, analyzing and reviewing these documents in real-world cases.

Identifying Your Practice's Differentiator Image

How to Convey Your Merits In a Way That Earns Trust, Clients and Distinctions Just as no two individuals have the exact same face, no two lawyers practice in their respective fields or serve clients in the exact same way. Think of this as a "Unique Value Proposition." Internal consideration about what you uniquely bring to your clients, colleagues, firm and industry can provide untold benefits for your law practice.

Risks and Ad Fraud Protection In Digital Advertising Image

The ever-evolving digital marketing landscape, coupled with the industry-wide adoption of programmatic advertising, poses a significant threat to the effectiveness and integrity of digital advertising campaigns. This article explores various risks to digital advertising from pixel stuffing and ad stacking to domain spoofing and bots. It will also explore what should be done to ensure ad fraud protection and improve effectiveness.

Turning Business Development Plans Into Reality Image

This article offers practical insights and best practices to navigate the path from roadmap to rainmaking, ensuring your business development efforts are not just sporadic bursts of activity, but an integrated part of your daily success.