Equipment leasing is the preferred method of financing for most medical and healthcare equipment purchases. Equipment leasing allows you to finance 100% of the equipment purchase price including ancillary costs like software, training, installation and shipping.

Leasing can also allow for flexible terms and payment structure, including “stepped payments” of small monthly payments at the beginning of the lease gradually increasing to larger payments when the equipment begins to generate income.

This flexibility, combined with the fact that leasing equipment will not impact your personal credit or require additional collateral other than the leased equipment itself, make this type of financing the optimal choice for medical professionals.

Types of Leases

$1 out lease

This is true 100% financing as there are no large down payments. Leases usually require only first or first and last only down payments. This down payment may be the actual first or last down payment. Some companies charge this as a security deposit which would require you to start your payments right away. It is always best to ensure this is an actual payment not a security deposit.

10% PUT(payment upon termination)

At the conclusion of the lease you pay one final payment of 10%. Some companies may change the PUT to be higher. This option allows for lower monthly payments during the term of the contract. The PUT is not an option but a required final payment.

FMV Fair Market Value

Monthly payments are made according to the lease terms, but at the end of the term the lessee has the option to either return the equipment to the finance company, pay the Fair Market Value of the now used equipment or continue to lease in annual increments. The FMV is determined by the lender according to the terms of the lease. If the return option is chosen by the lessee, the lease agreement specifies how and where the equipment must be returned.

Tax Implications

Just for 2008, Section179, a tax benefit created to fuel growth for small businesses, has increased the first year depreciation amount to $250,000 in equipment purchases.

If you purchase less than $800,000 in equipment in 2008, the first $250,000 can be depreciated 100% for 2008.

When the Section 179 tax benefit is combined with other available tax incentives such as the MACRS depreciation, a very large percentage of the purchase price of capital equipment can be depreciated in 2008!