Questions and Answers

What vendors can I use for the equipment?

Any reputable vendor.

 

Can I use more than one vendor?

Yes.

 

What kinds of equipment can be leased?

• Classroom and nursery furnishings -- desks, cubbies, storage lockers, sensory tables, chairs, cribs, cots.
• Computers and software -- for classroom or office use.
• Office equipment and furnishings.
• Playgrounds and some types of movable tile fall zone matting.
• Lofts and shade structures.
• Soft costs such as shipping and installation that are related to the equipment you order can be included in your lease. Generally 30-50% is allowable for playground installations.
• Books, toys, supplies, and expendable items are not allowable.

 

What happens at the end of the lease?

Most lessees opt to purchase the equipment. Or you may return the equipment to the lessor or renegotiate your lease terms and continue to lease the equipment.

 

Can any type of center apply for a lease?

Any type of center or school with the exception of a home-based child care center can apply, including for- and non-profit child care centers, private schools, public agencies, municipalities, school districts, and park and recreation departments.

 

What are the tax implications of leasing versus purchasing equipment?

Some types of leases are considered true leases by the IRS and convey tax advantages. True leases allow the lessee to deduct their rental payments as a direct expense against the income of their business. If the term of the lease is shorter than the depreciation schedule allowed by the IRS, taxes are deferred, thus providing an advantage over purchasing and depreciating the asset. An accountant or tax attorney should be consulted regarding eligibility.

 

What are the benefits of leasing?

• Equipment leasing allows you to expand and acquire the equipment you need while protecting your cash flow.
• Using leasing to acquire equipment diversifies your sources of capital and keeps your bank credit lines open, allowing you to take advantage of unexpected opportunities or react to business setbacks.
• True leases provide tax advantages, avoid the Alternative Minimum Tax, and provide simplified bookkeeping (no depreciation schedules to keep track of).
• Lessors do not require lending restrictions such as minimum bank balances or maintenance of financial ratios.
• Payments are fixed, not variable offering an inflation hedge in times of increasing rates.