Cash Flow - the lifeblood of business

Gabe Jarnot, SVP Business Development

Traditional brick-and-mortar bank are a popular source for long term lending needs.  However, up to 85% of small businesses turn towards leasing at one time or another. There is a recent trend that has picked up pace and we are experiencing a higher percentage in demand for true leases.

True leases provide lower or possibly even $0 up-front costs preserving cash. Lower payments or structured terms improve cash flow while preserving operating and borrowing lines for input costs.

While bank financing remains elusive for many small businesses, lease financing is a viable, but sometimes misunderstood alternative. “So many business owners think they have to pay cash or go to a local bank [to get a loan]. They’re surprised at the benefits of equipment leasing and how it can positively impact their business,” says Paul Pfannenstein, VP Business Development.  For many companies, leasing is not just an alternative to a bank loan; it’s a deliberate financing strategy.

Businesses that can retain their cash and bank lines have the best position to weather tough business climates or take advantage of opportunities. Any credit line that can be established or expanded will allow for more breathing room. Some businesses may be profitable, but their cash is tied up in inventory or receivables. Equipment leasing is an alternative credit source that allows for greater liquidity. 

For companies in a cash-flow crunch, the most valuable advantage to leasing is the ability to hold onto their cash.  Finally, leasing can offer tax benefits by immediately including the payment as a business expense, rather than writing off only the interest and eventual depreciation of the equipment.

Contact Northland Capital for more information about leasing your cash flow financing options.