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Buying and leasing decisions for small business owners need to be carefully considered.

Often people having small businesses need a certain piece of equipment. On determining which may be the best option, to buy or to lease, the banks having online services can offer valuable advice. Other than the unique features of the business, decision is made regarding four factors: length of ownership, cash flow, ability to obtain financing and tax advantages. For the length of ownership, if the client wants his equipment on a long term (seven years or more), the best option is buying. In this case the bank can help with a loan, and the equipment can already be considered an asset and offer equity value.

However, if the equipment is for short term use (three years or less), like technology equipments for example, the client is advised to lease. Other than that, you can upgrade your equipment more easily. Therefore, cash flow is essential in this decision. By leasing, the client has immediate access to the equipment, freeing up cash for other investment. Buying is a better option, but only if the business can afford to take the loan. Ability to obtain financing is also important. If the business needs financing for other things as well, it may have difficulties in accessing another loan for the new equipment. Still, leasing does not affect this ability. Besides, leasing gives the client several tax advantages. Up to 100% of the lease payment can be deducted. With the loan the equipment is depreciated as an asset, which can be translated in a smaller tax.