1. The adoption of financial leasing by small and medium-sized enterprises (SMEs) has two main functions, i.e., financing function and marketing function. Therefore, it can give full play to its financing function in times of economic development when enterprises need capital; and it can give full play to its marketing function in times of economic depression when enterprises need to promote investment and consumption demand. No matter which direction the market changes can bring business opportunities to the financial leasing industry.
2. 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 term, which can accelerate depreciation, expand the current cost, reduce the payment of income tax in the current period, and enable lessees 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.
3. Low financing costs
The rent of financial leasing, at first glance, is higher than the bank's loan interest. 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 spend some of the costs to 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 lease project can also enjoy the benefits of accelerated depreciation, can be seen from the overall cost of funds, financial leasing is still much more cost-effective than the loan on the project.
4. can extend the financing period, 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 leased equipment life. And financial leasing, the financing period generally reach more than half of the life of the equipment, and thus can reduce the pressure of SMEs repayment, ease the tight liquidity situation of SMEs.
5. Saving the project construction cycle
Financial leasing will finance and procurement of two procedures into one, so it can improve the efficiency of the project construction work. 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 enable enterprises to put into production early and see the benefits early, seize the opportunity to seize the market. At the same time, because the first to use advanced equipment, and do not have to bear the risk of technological progress to make the equipment outdated, outdated, on the timely updating of technical equipment, enterprises to quickly adopt new technologies, new techniques to improve product competitiveness and market share is very favorable.
6. It belongs to off-balance sheet financing
Generally, enterprise loans should be reflected in the financial statements, and if the proportion of liabilities is too large, it will affect the creditworthiness of the enterprise. Through the operating lease mode of financial leasing, the leased assets can be shown in the lessor, the lessee can use the leased object, but also does not show the liability, to achieve off-balance sheet financing, which is conducive to reducing corporate liabilities, 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.
7. 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 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. Hope it can help you Thank you