Article from: LEASING, not buying, is being put forward as an option for small businesses as tough times settle in.

Mortgage and Finance Association of Australia (MFAA) boss Phil Naylor said leasing instead of buying could improve cash flow and may even save money.

“There is concern in the small business sector about financial pressures, including rising interest rates, lack of available credit and a loss of consumer confidence,” Mr Naylor said.

“A slight fluctuation in rates, wages or even staff numbers can have a big impact on the bottom line of small businesses.

“One option to consider is a commercial leasing arrangement where the lender pays for your business equipment then leases it to you for a monthly tax-deductible rental payment,” Mr Naylor said.

“You may even be able to build maintenance costs into this type of loan.

“Some commercial leases allow you to upgrade to new equipment,” he said.

“You will be charged a higher interest rate and lease payment for this kind of flexibility but, if your business relies on the latest technology, it’s a good, viable option,” he said.

He said businesses should be aware of the different tax structures of commercial leasing and hire purchase.

On a commercial lease, the entire monthly payment can be claimed as a tax deduction, but on hire purchase, only the equipment depreciation and any interest charged can be claimed.