Studies of Small Business Finance: Lease Financing: An Attractive Method of Financing for Small Firms

摘要

A large increase in the use of leasing has occurred in the last fifteen years. This is primarily due, according to the author, to high interest rates keeping firms out of the long-term capital markets. The study states that leasing can produce many benefits over the purchase of the same asset. The cost of leasing can be lower than the cost of purchasing due to a wide variety of tax and purchasing advantages on the part of the lessor. Additional advantages to both parties include: reduced default risk, avoidance of technological obsolesence, and built-in financing. The study concludes that a lease offers significant advantages, especially to a small firm that has difficulty obtaining financing.