Many small businesses have trouble getting a loan. Lack of credit history, a short period of operation, lack of adequate security – these are just a few reasons why banks reject their applications.
That is why leasing is a popular way of financing business among small (but not only) companies. Last year, leasing companies operating in Poland financed the purchase of fixed assets worth nearly USD 50 billion, which is over 16% more than a year ago.
A short internship is not a problem
Most banks direct their credit products for companies to enterprises present on the market for a minimum of one year, and in some institutions, it is necessary to demonstrate up to two years of experience. Most lessors do not set such barriers. You can apply for leasing from the first day of business, e.g. at Good Credit Leasing or Good Finance-Leasing.
An entrepreneur with a good business Good Credit, but without credit history or market experience can finance a new or used passenger car up to USD 120,000 under the ‘Leasing for a good start’ offer. USD. If the company employs less than 10 people, it also meets the condition to buy a new machine or device worth up to 100,000. USD – says Monika Ostaszewska, product manager at Good Finance-Leasing Polska SA.
Get Leasing is another company in which start-up entrepreneurs can easily lease a passenger car or truck up to 3.5 tons or a forklift. For other types of fixed assets, e.g. equipment or machines, a six-month internship is required. But it is much shorter than in the case of bank loans.
However, it is worth knowing that although it is possible to lease a fixed asset from the first day of operation, waiting a few months allows for better conditions. Companies that have already been operating for 3-6 months can count on such. They then have more offers to choose from (not all lessors provide financing from the first day, more often from the third or sixth month), and they can also use less own funds for leasing. Younger companies have to reckon with the fact that the lessor will require, for example, a higher initial payment (in the said Getin Leasing it is 25%, while for companies with longer experience the required contribution starts from 1%), a larger number of collateral or a higher one margin.
Easier access to leasing for start-ups is primarily due to the fact that the lessor remains the owner of the leased asset throughout the duration of the contract. In the event of failure of a new venture, the financed equipment or machinery returns to the leasing company, depreciating at least partially the incurred loss. So it is the subject of the lease that is basic security. Another is a promissory note. No other security is usually required.
No financial documents
Another facilitation for companies considering financing through leasing is the minimum of formalities that are usually associated with it. The use of the so-called simplified procedure, i.e. resignation from such requirements as provided by the entrepreneur declarations of non-arrears with payments to the Social Insurance Institution and Tax Office as well as financial documents of the company.
Of course, the simplified procedure applies only to some fixed assets (in most leasing companies they are cars) and only up to a certain amount, but there is a tendency to relax these rules. For example, at the end of last year, Good Finance-Leasing extended the possibility of using a simplified procedure also when applying for leasing for machines of significant value, up to 250,000. USD. Previously, the simplified procedure was used only for passenger cars, IT equipment, and other small devices.
Using the simplified procedure, the company will not have to provide financial documents. However, she will have to complete a declaration in which she will have to provide this kind of information.
Leasing for a company at a loss?
Due to the fact that in many cases leasing companies do not require the presentation of financial documents and do not examine their creditworthiness, leasing can also be counted on by enterprises that recorded a loss in the previous year. Of course, they should think carefully about whether they can bear the extra commitment.
However, the loss can often result from depreciation charges or investments made and does not mean liquidity problems. Despite this, banks will probably refuse to grant such a loan to a company, and leasing should not be a problem.
Initial payment from 0%
Depending on the lessor, the minimum initial payment required is 0% or 1%. At least, this is the result of the information they provide. And indeed, in some cases, you can count on such an offer, which means that leasing may also be available to entities that do not have any funds to buy the selected equipment. In practice, however, not every company can receive such an offer.
It is reserved only for the so-called safe customers, i.e. those with longer experience and presenting financial documents. The aforementioned Good Finance-Leasing, which recently expanded the number of entities that can benefit from the simplified procedure, simultaneously requires a minimum of 10% in this situation. initial payment.
The amount of initial payment required may also depend on what you want to lease. With new passenger cars, it can actually be 0% or 1%, but with specialized machines, it is already 10%, and with used cars even up to 45%. A higher initial payment usually also results in better conditions.