Lease refers to the behavior that the lessor transfers the right to use assets to the lessee for lease within the agreed time limit. The main reasons for the existence of leasing are as follows: tax saving; Reduce transaction costs; Reduce uncertainty.
Benefits of lease to lessee
The vigorous development of leasing business shows that leasing is more beneficial than owning some property. For the lessee, leasing has the following advantages:
(1) Leasing has opened up new financing channels, which is of special significance to the majority of small and medium-sized enterprises. The lessee can make use of the loan amount and scarce cash resources of the lease reserve bank to enhance the flexible utilization ability of the working capital of the enterprise.
(2) Full financing can be carried out at a fixed interest rate. Leasing does not require the lessee to pay cash immediately, which helps to alleviate the shortage of funds for new enterprises in the development period; In addition, fixed rent helps to prevent the increase of capital cost and avoid the risk of inflation; Fixed rent is convenient for calculating the return on investment and helps the lessee to complete the investment decision quickly.
③ Flexibility. There are fewer restrictive clauses in the lease agreement and the lease method is flexible. The creative lessor can sign a lease agreement according to the special needs of the lessee. For example, you can agree to wait until the equipment starts running. The lessee can pay the rent only after it has the production capacity, and it is not necessary to mortgage the acquired new equipment to the main lender, so the lessee can avoid signing an expensive refinancing agreement.
(4) It is helpful to speed up the renewal of machinery and equipment. For enterprises with fast equipment elimination and update, leasing creates convenient conditions for the rapid upgrade of machinery and equipment. In most cases, the lessee transfers the residual risk to the lessor, which reduces the risk of outdated equipment.
(5) The lease qualification examination procedure is simple and the application approval speed is fast, which helps the lessee to grasp the business opportunities.
(6) Conducive to the revision of financial statements. When operating lease is adopted, rent is treated as operating expenses, which can effectively prevent the increase of asset-liability ratio by avoiding increasing large debts for purchasing equipment.
(7) There is no need to increase capital to purchase equipment, which is conducive to maintaining the stability of equity distribution.