At present, many of China's small and medium-sized enterprises backward equipment, low level of technology, in the face of increasingly fierce competition in the market, equipment renewal and transformation is particularly important, which requires a large amount of money. Due to the small size of SMEs, low credit rating and unstable profitability, it is difficult to satisfy the demand for capital of these SMEs through bank loans or domestic and overseas listing. In this case, financial leasing, which is simple and quick, with low credit requirements, and does not require additional guarantees or mortgages, is a very good way.
1, the types of financial leasing
Financial leasing is to maintain production or expand development by renting equipment. At present, financial leasing is basically divided into two forms:
●One is the enterprise according to their own equipment investment needs to the leasing company to put forward equipment leasing requirements, the leasing company is responsible for the financing and procurement of the corresponding equipment, and then delivered to the lessee for use, leasing the lessee to pay the rent on a regular basis, the lease expires when the lessee enjoys the right to stop leasing, renew leasing, or stay to buy the equipment of choice.
●The second is the use of their own original equipment to the leasing company to buy back the re-lease requirements of the leasing company and the enterprise for the purchase and re-lease procedures, and then the enterprise to get the leasing company to buy the equipment to achieve the purpose of the financing, and to the leasing company to continue to pay rent to the original use of the equipment, the expiration of the lease period, the lessee enterprise enjoys the right to stop, lease renewal, or to stay in the purchase of equipment options. On the surface, financial leasing is to rent equipment, but in fact, or borrowing funds, only the way of financing is more unique.
2, the advantages of financial leasing
Small and medium-sized enterprises using financial leasing can not only finance the funds, you can also get tax concessions, but also to avoid the risk of equipment obsolescence and obsolescence, summarized in the financial leasing of small and medium-sized enterprises have the following advantages.
◆1.Favorable to SME financing
Financial leasing is not the lessee's past financial records, but the cash flow generated by the use of leased equipment, the lessee's history of assets and liabilities is not high, which can avoid the drawbacks of the SMEs' lack of standardization of financial information, so that the SMEs can easily access to financing opportunities. Moreover, financial leasing to lessee equipment as collateral, generally do not need additional security or mortgage, can solve the problem of SMEs unproductive collateral difficulties. Therefore, the financial leasing method is favorable to the financing of SMEs and fills the gap of bank loans.
◆2. Advantages of two-way counter-market development
The adoption of financial leasing by small and medium-sized enterprises has two main functions, i.e., financing function and marketing function. Therefore, it can give full play to its financing function when enterprises need funds during the period of economic development; and it can give full play to its marketing function when enterprises need to promote investment and consumption demand during the period of economic depression. No matter which direction the market changes, it can bring business opportunities to the financial leasing industry.
◆3. Tax incentives can be obtained
The actual depreciation period of financial leasing equipment is determined according to the principle of the shorter of the statutory depreciation period and the lease period, which can accelerate the depreciation, expand the current cost, reduce the payment of income tax in the current period, and enable the lessee to enjoy the deferral of tax payment. In fact, some of the taxes that should be paid are used to repay the rent, accelerating the upgrading of the equipment.
◆4. Low financing cost
The rent of financial leasing, at first glance, is higher than the interest of bank loans. However, financial leasing is a combination of services, in participating in the project evaluation and equipment selection and other preliminary work and equipment procurement and services, but also to spend some of the costs, shall be included in the cost of leasing. These costs lessee loans on the project is also in addition to interest payments need to be spent, added together, it will be higher than as a comprehensive cost of the rent. In addition, the leasing project can also enjoy the benefits of accelerated depreciation, which can be seen from the overall cost of funds, financial leasing is still much more cost-effective than the loan on the project.
◆5. Can extend the period of capital financing, increase the cash flow of small and medium-sized enterprises
Small and medium-sized enterprises from the bank loan to buy equipment, its loan period is usually much shorter than the use of leasing equipment life. And financial leasing, the financing period generally reaches more than half of the life of the equipment, and thus can reduce the pressure of SMEs to repay the loan, and ease the tight cash flow of SMEs.
◆6. Saving project construction cycle
Financial leasing can improve the efficiency of project construction by combining the two procedures of financing and procurement into one. Due to the flexibility and risk-resistant ability of leasing itself, it also reduces many unnecessary and complicated procedures in the process of project construction, which can make the enterprise put into production early, see the benefits early, seize the opportunity and seize the market. At the same time, because of the first to use advanced equipment, and do not have to bear the risk of outdated equipment due to technological advances, be eliminated, the enterprise in a timely manner to update the technical equipment, rapid adoption of new technologies, new techniques, improve product competitiveness and market share is very favorable.
◆7. It is off-balance sheet financing
Generally, enterprise loans should be reflected in the financial statements, and if the proportion of debt is too large, it will affect the creditworthiness of the enterprise. Through the operating lease of financial leasing, the leased assets can be shown on the lessor, and the lessee can use the leased objects without showing the liabilities, realizing off-balance-sheet financing, which is conducive to the reduction of enterprise liabilities, and may not be bound by the specifications of the funds. This is very important for enterprises, especially small and medium-sized enterprises (SMEs), which need multiple channels of financing. Enterprises can finance up to 100% of the value of the leased property, thereby saving liquidity and maintaining existing credit lines.
◆8. Preventing exchange rate and interest rate risks
If you purchase leasing equipment from abroad, you need to use foreign currency. Financial leasing can be leased in RMB after converting the foreign exchange into RMB, which can enable the lessee enterprise to avoid the exchange rate risk due to the depreciation of RMB. Since financial leasing adopts fixed interest rate at the beginning, the lessee enterprise can also avoid the interest rate risk caused by interest rate fluctuation.
It is because of the advantages of financial leasing that many other financing methods do not have, many small and medium-sized enterprises choose this method when they cannot obtain bank loans.
Financial leasing is particularly suitable for small and medium-sized enterprises with small capital but high value of the equipment used, as well as science and technology enterprises in the early stages of growth and the transformation of high-tech achievements of the enterprise's projects.
The domestic leasing industry can be involved in the field of broadly include: real estate leasing, automobile leasing, equipment or instrument leasing, medical equipment, communications equipment, large electrical appliances, machining equipment, aviation leasing, talent leasing, books and audio-visual leasing, apparel leasing, toys leasing, outdoor sporting goods leasing, etc., the industry penetration is quite extensive.