The Mail on Sunday
help to Britain’
investment. About 750,000 small and medium-sized businesses currently use leasing to hire equipment, typically for three to five years.
Rates vary from seven per cent to nine per cent on most leasing deals, though firms with a higher risk profile may have to pay ten per cent or more.
A key benefit of leasing is that small business owners are not left with outdated equipment that they cannot afford to replace but is worth nothing at the end of the term.
Instead, they can access the latest technology by paying rent. There are many benefits for firms of having new equipment, which typically will be more efficient as well as more environmentally friendly.
As part of Rusting Britain and to help small businesses invest in new equipment, the FLA wants the Government to make all leased equipment eligible for taxenhanced capital allowances. This, it claims, would cut the cost and increase the availability of lease finance.
At present, firms can claim capital allowances only on equipment they buy outright, or through a hire purchase agreement, or if the lease is seven years or longer.
Stephen Alambritis, the chief spokesman for the Federation of Small Businesses, believes leasing is an option worth considering, though he adds that it is likely to be more suitable for ‘slightly larger small businesses, than the really small ones’.
‘Micro businesses are unlikely to look at leasing, as generally they prefer to be in control of what they own and are not fans of openended agreements and renewals,’ he says.
‘Many business owners also prefer to own assets, so that they can form part of their pension.
‘However, leasing as an option should definitely come into its own in these difficult times, even if it is not a panacea.’