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May 15, 2019updated 23 May 2022 7:13am

What is small-ticket leasing?

By chris lemmon

Small ticket leasing offers businesses the opportunity to finance new equipment, such as computers, software, printers and furniture, without having to request a loan from a bank or financial institution.

A small ticket lease is also much cheaper than a direct purchase. Businesses do not require large cash sums upfront and can also avoid the long process of applying and waiting for financing approval.

Small ticket leasing enables businesses to pay for their equipment in small instalments, preserving capital for more urgent business matters. Companies also have the option to own the equipment at the end of the lease agreement by signing a lease-to-own agreement.

Transactions for small-ticket lease agreements range from £1,000 to £100,000. Businesses do not typically have to produce financial statements to secure the lease deal, but may be asked to provide personal guarantees along with business partners. Credit scoring models will then be used to process each company’s application, which can in some cases be completed within 24 hours.

Contracts for small-ticket leasing tend to run for 1-5 years. Contracts are not usually open for negotiation on small-ticket items, due to their low margin, high volume nature.

Rates for leasing small ticket items can vary greatly from one provider to the next, while businesses may also receive differing quotes for the same piece of equipment. This could be for a range of factors, including the credit history of the lessee, the length of the contract, the actual equipment required, and whether the lessee is the primary beneficiary of tax credits associated with the deal.

FLA Figures

According to figures from the Finance & Leasing Association (FLA), in March 2022, IT equipment finance and business equipment finance sectors reported new business up by 73% (£342m) and 29% (£239m) respectively, compared with the same month in 2021.

For the 12 months to March 2022, IT equipment finance stood at £1.674bn, down 29%, compared to March 2021, while business equipment finance stood at £1.970bn, up 17%, compared to March 2021.

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