Commercial Leases

Hi,
In today's business world, commercial leases are used for everything from the salt and pepper shakers at the restaurant down the street to the irrigation systems in rural farming areas. Leasing enables business owners to get the equipment they need while conserving their cash flow. In many cases, business owners would not be able to afford some of the equipment they are able to acquire through a lease. A good example of this is when farmers lease $750,000.- $1,000,000. worth of irrigation equipment: equipment they would not be able to afford even with a conventional loan.
By taking advantage of the irrigation lease, the farmer might increase the yields on his crops three to four times over, while increasing the value of his or her farm 200%-300%. Another good use of commercial leases is for restaurants. When opening a new restaurant for the first time, most people need to conserve their cash flow and can ill afford to buy $250,000.-$500,000. worth of equipment and furnishings. Leasing is a perfect option for them. Another area in which commercial leases are a suitable option is the construction business. Due to the exorbitant cost of equipment, many small to mid-size construction companies could not be in business if they had to purchase their equipment. Commercial leasing is also a perfect fit for people starting out in the medical field. Two drawbacks of commercial leases are:
1) In most cases, personal guarantees are required by the leasing company.
2) In the event of business failure, it is often difficult to find someone acceptable to the leasing company to assume the lease.
Leasing companies are similar to mortgage companies in that there are primary leasing companies and secondary leasing companies. Leasing rates vary drastically between the two markets. It is imperative for people exploring the option of commercial leases to check with different leasing companies to find the best deal available to them.
Tomorrow I'm going to talk about conditional sales contracts.
Until then,
Alan