Government leasing is where the lender rents equipment to a government agency at a flat rate for a number of months. At the end of the lease, the government entity can opt to purchase the equipment at the end of the lease, continue leasing, or return it, depending on their needs and budget.
Many times, government budgets cannot afford everything on their own. In fact, most government agencies live year by year, appropriation by appropriation . Government leasing allows agencies that cannot make whole purchases to lease essential equipment easily, paying for that equipment monthly, quarterly, or annually as their funds allow. Lenders can finance equipment for agencies for as much as $20 million if they need to.
Equipment lenders can provide a wide variety of equipment for just about any government department, such as municipal government agencies, public schools, local prisons and fire departments. Some examples of the types of equipment available are police car equipment, garbage trucks, copiers, asphalt equipment and radio towers.
Government leasing for state, county and municipal governments and their agencies
is a tax-advantaged type of financing for state, county and city governments looking for any type of new or used equipment for commercial or personal property. These programs are usually rent-to-own, having no down payment or lease buyout, making government leasing very cost effective. Unlike traditional leasing, municipal government leasing also offers tax-exempt leasing that sells the equipment directly to the customer, not the leasing company, at delivery.
These lease purchases have additional benefits, including the ability for agencies to terminate a lease upon legislative non appropriation. This means that a lease is not classified as a debt. If government agencies are finding no money in the budget for the equipment they need to serve their community properly, leasing the equipment offers flexibility and potential years of use with a reasonable payment plan.
The same equipment leasing company can help local business owners and entrepreneurs as well. Entrepreneurs and businesses can also benefit from government leasing. Any small business at its first stages of development can benefit from equipment leasing. Small ticket leases, or those of $150,000 or less, are possible to place on the personal credit of the owners, if they are willing to make the monthly payments.
Construction equipment leasing is a very common endeavor of both local governments and local businesses. Nearly $3 billion worth of construction equipment is leased every year by companies in the United States alone.
As with any type of financial deal, there are certain scams to watch for when leasing any type of equipment. One of the most common is the “you’ve been pre-approved for a $100,000 leasing credit line” spam mail message. If you intend to purchase the equipment post-lease, beware of companies that offer equipment ownership at lease end. Be sure that a one-dollar purchase option is available in the lease document; otherwise you might have to pay anywhere from 10 to 60 percent of the equipment's original value.
It’s often a good idea to hire a lawyer when making such high priced transactions.
By Kelley Caner