Tight capital budgets—and who doesn’t have one of those nowadays?—make it harder for you to implement your dreams (or even replenish your stock for your next production).
To ease your pain, consider leasing. Leasing lets you convert large capital expenditures into small monthly payments. Its benefits include:
- obsolescence protection by matching payments to the projected utilization and value curves of equipment, facilitating upgrades and keeping equipment inventories “state of the art.”
- enhanced cash flow by requiring little or no down payment. Because of the 100% financing, cash outlays for equipment acquisitions are significantly lower than those required under bank loans or other forms of financing.
- better terms including fixed, not floating, rates; no restrictive covenants or cross collateralization with other company assets; and inclusion of both hard costs of equipment and soft costs related to its acquisition (delivery, freight, labor, etc.).
- tax advantages since payments are deducted as direct operating expenses, reducing short term taxable income. In addition, leasing can be a tool to avoid certain negative effects of the Alternative Minimum Tax.
American Capital Group is an established provider of leasing services to the theatrical industry. Call us at (800) 424-9991 and we’ll be glad to show you how a leasing arrangement with them can help you meet your specific needs.
Thanks to Steve Prettyman of ACG for providing material that formed the basis for this post.
