Quite simply, to live within a strict budget while still
offering the best in technology and equipment for your
classrooms, labs, libraries, cafeterias, conference rooms and
other educational facilities.
Leasing also helps schools to make the right capital
allocation choices by removing the pressures of cost from the
decision-making process. When there's no room in the capital
budget to buy an asset with cash, lease payments from the
operating budget are an attractive alternative.
Chart
Click
on each of the following benefits to learn why more and more
schools are turning to leasing as a financing option. Please
contact us through the Contact
Us section or call our toll free number (800) 496-4838, ext. 364 if you have any unanswered questions about what
lease financing can do for you.
| Cash Management
Equipment Efficiencies
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Flexibility
Financial Issues
Off Balance Sheet Financing
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Little (Or No) Down
Payment
With leasing, your initial cash outlay is
generally limited to a deposit of one to three months of
normal lease payments. This leaves you with more cash for
other areas of your business. Banks, on the other hand, often
require a down payment of 10 or 20 percent, which could be
more than you can afford or more than you want to sink into a
down payment. Leasing is an excellent choice for avoiding a
large initial cash outlay.
Reduced Monthly
Payments
Lease payments are lower than loan
payments, because with leasing you pay only for how long you
use the property. Your monthly savings in cash will vary with
the type of property being leased among other factors.
Better Cash
Management
Leasing brings financial peace of mind
because you'll know at the outset exactly what your payments
will be for the duration of your lease. Payments are
determined at a fixed amount, payable monthly, quarterly,
semi-annually or annually. Once established, they remain at
that amount, no matter what.
Planned Replacement and
Upgrade Schedules
A lease-financing package enables
you to replace or upgrade property prior to the end of a lease
on an orderly, predictable timetable that fits your operating
and financing needs. You're assured of having the most
up-to-date property, which leads to higher operating
efficiencies and added capacity for your operations.
Avoid Potential Risks of
Obsolescence
By leasing rather buying capital
assets, especially technology and communications equipment,
you'll reduce possible risk of technological obsolescence.
When the lease term expires, you can decide for yourself to
keep the property you already have or create a replacement
schedule to upgrade to the newest property the market has to
offer.
Lower Maintenance,
High Efficiency
By replacing and upgrading property
on a regular basis, you reduce repair and maintenance costs.
Productivity rises through better integration of new property,
and you'll have less down time with property that operates
more efficiently.
Flexible Payment
Options
Lease payments can be structured around the
use of the leased property, changes in revenue streams and the
lessee's accounting needs. Flexible payment options include
scheduling payments at different intervals, on a step-up or
step-down basis, matched with cash flow from earnings
generated by the leased property, or around swap leases.
Additional Credit
Source
Leasing provides the chance to save cash and
supplement existing bank relationships with an additional
source of credit. If a school is unwilling or unable to pursue
a bank loan, leasing is an ideal alternative. With leasing
only the equipment is lined, unlike most bank loans + lines of
credit where all assets of the school could be subject to
lien. Leasing also provides schools with more flexibility,
because with lease financing they're not subject to
compensating balances or restrictive covenants often
associated with bank loans.
Convenience, Speed and
Flexibility
CalFirst Gov/Ed initially
provides a master lease agreement spelling out the basic terms
and conditions. We then can quickly and easily add schedules
with minimal additional paperwork and streamlined approval
procedures as your needs evolve for additional property and
financing. CalFirst Gov/Ed follows through with prompt
and courteous customer service during the lease's
duration.
With CalFirst Gov/Ed lease, you can select the
property you want from the vendor of your choice. Just tell us
what you've selected, and we'll do the rest.
Off Balance Sheet Financing
Whether or not a lease appears on the balance sheet
depends upon its classification-capital or operating-from the
perspective of the lessee and its accountants. If the lease is
a capital lease, the lessee from an accounting standpoint is
treated as owner of the leased property. Financial Accounting
Standards require owned property to appear as an asset with a
corresponding liability on the balance sheet. Leased assets
are expensed when the lease is an operating lease. Such leases
do not appear on the balance sheet, but rather show up as an
operating expense on the income statement. These assets do not
appear on the balance sheet, which can improve financial
ratios. Only the balance sheet footnotes disclose the
existence of operating leases.
The most important benefit of operating leases is the
effect they have on financial ratios. Off-balance-sheet
financing lowers the debt to equity ratio, raises the current
ratio (liquidity), and increases return on assets (ROA).
Improved ratios may help an organization obtain additional
traditional financing, providing more capital for growth and
profit-generating activities. Operating leases can help
improve financial ratios which are often used to measure the
performance of organizations and their management. You should
consult with your accountants regarding the availability of
off-balance sheet treatment through leasing.
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