Leasing is corporate America’s biggest external source of equipment finance. It is bigger than bank loans, bigger than bonds, bigger than stocks, bigger than commercial mortgages. It is the fastest growing form of business investment. Over $75 billion of equipment was leased in 1984 and in 2015, total public and private investment in equipment and software totaled $1.5 trillion, of which 68% or $1.02 trillion was financed.
Nearly 8 out of 10 (78%) of businesses used at least one form of financing when acquiring equipment (excluding credit card use). Of the 68% of equipment that was financed in 2015, 39% was leased, 16% used a secured loan and 13% used a line of credit.
The top three reasons companies gave for financing equipment acquisition over cash purchases were optimization of cash flow, protection from equipment obsolescence and tax advantages.
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Companies lease everything from printing presses to power plants, hay balers to helicopters and office copiers to offshore drilling rigs. Eight out of ten companies – from mom and pop proprietorships to the Fortune 500 – have turned to leasing.
The Equipment Leasing Industry has proven to be one of the most resilient financial services. Despite struggling with varying economic conditions over the past three decades, leasing is still a predominant force in capital equipment financing. Leasing has shown a unique ability to adapt and thrive in an ever changing economic and regulatory environment, producing new and innovative financial products. It seems that this trend will continue and assist businesses to grow and succeed.*statistical information courtesy of Equipment Leasing & Finance Foundation