Leasing and finance options for startups

Posted on 3rd January 2015 at 4:10pm by Carl Reader in Business

For asset purchases, it is often prudent to consider whether the item can be purchased using a lease or a hire purchase agreement, which is itself secured against the asset.

There are two types of leases – operating leases, and finance leases. They have different accounting treatments, and fundamentally with an operating lease you are merely “renting” the item, whereas with a finance lease you are “purchasing” the item. Make sure that you get clarity on the type of lease before entering into any commitment.

Banks will look for you to consider these arrangements when you are looking to fund a start up with capital assets, as it spreads the funding risk for them.

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