Own it, return it or upgrade it: pick the lease that fits
The right lease structure matches your payments to your cash flow, protects your working capital, and gives you the end-of-term outcome you want. Here’s how each option works.
Every structure, side by side
Gold-topped cards end with you owning the equipment. Navy-topped cards give you the choice to return, renew or buy.
FMV lease (true / tax lease)
- Best for
- Technology or equipment that becomes outdated fast
- How it works
- The lessor owns the equipment. Payments may be deductible as a business expense.
- End of term
- Buy at fair market value, keep leasing, or return it
$1 buyout lease (capital / finance lease)
- Best for
- Long-term use when you want to own the equipment
- How it works
- Payments cover all or most of the value, with a token buyout
- End of term
- You own it for $1
10% purchase option lease
- Best for
- Owners who want a lower payment than $1 buyout but still plan to keep the equipment
- How it works
- A set residual at the end
- End of term
- Buy it for 10% of the original cost
Operating lease
- Best for
- Equipment you need for less than its useful life
- How it works
- The term is shorter than the equipment’s life, and the lessor takes the residual risk
- End of term
- Return, extend, or buy at FMV
TRAC lease
- Best for
- Commercial trucks, trailers and titled vehicles
- How it works
- A lower payment, with a residual value agreed up front
- End of term
- Buy at the agreed residual, or the vehicle is sold and the difference is settled
Equipment Finance Agreement (EFA)
- Best for
- Larger purchases you plan to keep
- How it works
- You own it from day one and repay it like a loan. Sales tax is often paid up front rather than financed.
- End of term
- Nothing to decide. It’s yours.
Sale-leaseback
- Best for
- Freeing up cash tied up in equipment you already own
- How it works
- We buy your equipment and lease it back to you
- End of term
- Depends on the lease type you choose
Skip payment lease
- Best for
- Seasonal businesses
- How it works
- Planned months with no payment and no penalty
- End of term
- Depends on the lease type you choose
Deferred lease (60/90/120 days)
- Best for
- New equipment that produces revenue
- How it works
- One advance payment, then the first regular payment is due after 60–120 days
- End of term
- FMV or $1 buyout options
Accounting note: under the current lease standard (ASC 842), most leases longer than 12 months, including operating leases, are recorded on the balance sheet. Always confirm tax and accounting treatment with your CPA. See also: lease vs. EFA.
Payments that match how you earn
Leases typically run 24 to 60 months. Most are paid monthly, but quarterly and annual schedules are available too.
Keep more cash in the business
Understanding your equipment write-off options
How lease structure affects what you can write off, including Section 179. Always confirm with your CPA.
Section 179 guideStartup leasing requirements
- Active business entity or business license
- Personal guaranty from all owners
- Minimum 650 FICO
- No bankruptcies in the last 7 years
- No unresolved tax liens
Three things to get started
- Online application: submit it, upload documents and authorize processing. We start with a soft inquiry. A lender may run a hard inquiry once you’re approved.
- Invoice or quote: multiple vendors are fine, bundled into one monthly payment. A bill of sale works for some private sales.
- 3–4 months of bank statements: for income, any down payment and automatic ACH payments.
Pro tip: don’t pay for equipment with daily or weekly merchant cash advances. Stacked advances crush cash flow. A lease or loan structured around your revenue keeps your runway intact.
From trucks to tube benders
Commercial trucks, waste and recycling equipment, tractors, tube benders, crushers, cranes, boom lifts and other big-ticket equipment. The equipment is the collateral, so there’s less paperwork, faster processing, and often lower credit thresholds than a bank loan.
Sell equipment? Offer financing on the spot.
If you sell new or used equipment, trucks, trailers, machinery or medical equipment, we help you close more deals with a wider credit window. Every applicant starts with a soft inquiry, we bundle multi-vendor invoices into one payment, and you get dedicated underwriting and fast answers.
Lease type questions
Which lease has the lowest payment?
Usually an FMV (fair market value) lease, because you’re not paying for the full value of the equipment. At the end you can buy it at fair market value, keep leasing or return it.
What’s the difference between a $1 buyout lease and an EFA?
Both end with you owning the equipment and have similar payments. With a $1 buyout lease, the lessor holds title until you pay the $1. With an EFA, you own it from day one and repay it like a loan.
How long are equipment lease terms?
Typically 24 to 60 months, with monthly, quarterly or annual payment schedules. Step, seasonal, skip and deferred structures are also available.
Can a startup lease equipment?
Yes. Startups need an active business entity, personal guarantees from all owners, a 650+ FICO, no bankruptcies in the last 7 years and no unresolved tax liens.
Are operating leases still off the balance sheet?
Mostly not. Under ASC 842, most leases longer than 12 months are recorded on the balance sheet as a right-of-use asset and a lease liability. Ask your CPA how it affects your financial statements.
Ready to structure the right lease?
Choose a payment plan that fits your cash cycle and keeps growth on track. Call for a free consult: (888) 511-6223.
Programs and terms are subject to credit approval (OAC) and may change without notice. We don’t provide tax, accounting or legal advice; confirm treatment with your CPA. Liberty Capital Group, Inc. NMLS #2009539. CA DFPI #60-DBO49692.
Our small business financing experts are available to guide you through the funding Process.
Despite technological advancements, loans, especially in leasing equipment financing, predominantly involve personal interaction with an underwriter to ensure as fraud prevention. Automation may not suffice, particularly when dealing with a third party like the vendor and the complexities of equipment purchase. In such scenarios, business owners are often better served by collaborating with a Business Loans Broker like Liberty Capital Group, Inc., who can steer them in the right direction.
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