Definition: A contract by which one party conveys land, property, services etc. to another for a specified time, usually in return for a periodic rental.

The fundamental characteristic of a lease is that ownership does not automatically pass to the customer. Although we can organise this through a 3rd party, who is normally All Equipment Finance Ltd. The funder is the owner of the equipment. The customer is renting (leasing) the equipment from them. The customer is responsible for maintenance and insurance of the equipment.

Benefits: No large outlay - Payment is spread over a number of years, enabling the customer to retain working capital to run their business. They will also continue to gain interest on monies retained in their account.

Tax advantages - Lease rentals are considered as an operating cost, which means that it is often possible to deduct them from taxable profits(as a trading expense)

Budgeting: Payments are regular fixed amounts allowing for them to be worked into a business budget with ease.

Certainty: Unlike an overdraft the facility cannot be withdrawn, provided contractual payments are made.

Definition: A method of buying an article by making regular payments for it over several months or years.

What this means: The customer is a purchaser and there is a promise of ownership for the goods. After all payments have been made the purchaser becomes the owner of the equipment, either automatically, or on payment of an “option to purchase” fee. The funder is both the supplier and seller in this instance, as they are selling the equipment, through an agreed repayment structure to the customer.

The funder has title to the equipment, although the business customer is treated as the owner from inception (as they are purchasing the goods) and can therefore claim capital allowances. The customer is purchasing the goods from the funder. The customer is responsible for maintenance and insurance of the equipment.

Benefits: Minimal capital outlay compared to outright purchase. Payment is spread over a number of years enabling the business to retain working capital. Eventual ownership upon payment of full outstanding balance. 

Tax advantages - The purchaser has the ability to claim capital allowances on the asset. VAT is paid up front so there is no VAT on monthly payments. Interest charges can be offset against profits for taxation.

Budgeting - Payments are regular fixed amounts allowing for them to be worked into a business budget with ease.

Certainty - Unlike an overdraft the facility cannot be withdrawn, provided contractual payments are made.

Definition: A loan allows you to borrow a sum of money, which you pay back in instalments – usually with interest – within a set timeframe

What this means: The funder will, upon successful underwriting, provide a monetary amount to a business for the agreed purpose.

Benefits: Versatile - A loan can often be used for any agreed purpose. They are a great alternative to leasing when looking to fund non-tangible items such as website development, consumables, stock or even things like lighting funding cannot be secured for these asset types.No initial input from the customer. No upfront payment is required from the customer and the documentation fee is deducted from the loan amount transferred to them.

Certainty - .Unlike an overdraft the facility cannot be withdrawn, provided contractural payments are made.

Convenience and speed - There is no supplier involved so there is no need to wait for equipment delivery or invoices before payment is made.