All production of “SPiKo” – from separate element up to complex ready-to-operate factories (including services of projecting, assembling, testing and start-up) – can be bought on lease.
What are the advantages of lease? It provides the enterprise with additional opportunities of access to modern and efficient technologies, increase in volumes and profitability of production, increase in quality of the production. That is why today lease in one of the most popular financial instrument for creation of new productions and modernization of the existing ones.
Comparing to other methods of buying equipment at the expense of attracted finance leasing possesses several big advantages and only few disadvantages.
Advantages of leasing
1. Opportunity to receive financing in the volume increasing value of a business because mortgaging security in leasing transactions is the object of leasing itself.
2. Buying equipment on lease does not change balance of own and borrowed finance that lets the enterprise receive bank credits at the same time with buying equipment on lease.
3. Buying equipment on lease let the enterprise cut expenses for taxation because:
3.1 Leasing payments in full volume are to be counted together with production prime cost thus they reduce taxable base and as a result reduce tax on profit.
3.2 VAD taken from leasing payments can be reckoned.
3.3 Due to buying equipment on lease its depreciation is considered accelerated thus tax on property is significantly decreased. In case if during the time of leasing contract the equipment is shown at the balance sheet of the Lessor, the Lessee has not to pay tax on property for the property bought in this period in accordance with this contract.
Disadvantages of leasing:
1. Necessity of advanced payment (20 or 30% dependent on the cost of equipment)
2. Necessity (as in our case) to sign trilateral contract that needs much more time to be adopted by all parties than bilateral one.
It is evident that these disadvantages do not overlap the advantages of leasing.
Main terminology:
Leasing (or financial rent) – it is long term rent of equipment with following buying-out (right to buy-out) by the lessee.
Object of leasing – in our case – separate elements or complex factories for producing wood pellets, briquettes, wood flour, granulated meal, wood particles etc.
Leasing contract – is the contract in accordance with which the Lessor (the Buyer) is obliged to buy the equipment specified by the Lessee from special Seller (in this case from “SPiKo, Ltd.”) or our official representative and provide due payment for timely possession of equipment with its following buying-out.
Main types of buying equipment on lease:
1. To present a number of documents for us to be sure in your financial opportunities.
2. To receive adoption of leasing company
3. To sign the leasing contract (and relevant documents if necessary)
4. Lessee has to pay in advance to the Lessor.
5. The Lessor has to pay for the equipment to the Seller.
6. To produce the equipment and transfer it to the Lessee.
7. The Lessee has to make leasing payments in favor of the Lessor.
8. To transfer the equipment to the property of the Lessee.
Main terms of receiving a lease:
1. The Lessee has to posses sufficient volume of profit necessary to supply leasing payments or to have a guarantee of an enterprise satisfying this demand.
2. Equipment bought on lease has to be highly liquid. It can be equipment with good recommendations produced by a trustworthy producer and possessing all necessary certificates. Our equipment satisfies these demands and this let us to sell already 3 factories on lease (including foreign buyers).
3. The Lessor has to be the resident of the same country as the Lessee.
Our assistance in receiving the lease:
1. Recommendations of leasing companies that cooperate actively with our company.
2. Decrease of advance payment received by our company from the leasing company.
3. Providing of services on pre-project preparation of created production and its start-up that decreases the risks both of the Lessor and the Lessee.
