Why Lease?

When it comes to outfitting a professional medical office with the latest equipment medical technology has to offer, a physician has many different options to explore. He or she can pay cash for their high priced medical equipment, secure financing from a local bank or find a way to lease the machines that will allow them to offer the highest level of medical care possible.

For most physicians leasing is the preferred alternative.

For most physicians leasing is the preferred alternative. Not only is leasing a great way to free up a large amount of capital, it is also a fast financing process that makes sense for nearly any business. Physicians are considered preferred clients by leasing companies and therefore can benefit more than most other self-employed professionals. That’s because doctors are considered lower risk clients than other businesses. For that reason, medical professionals receive preferential rates when setting up their leasing structure. In other words, they pay less per month than other professionals for the same amount of equipment leased.

Doctors also experience unique challenges when purchasing high tech office equipment. Unlike many professions where technology evolves slowly, medical equipment is constantly improving. Because of the flexibility leasing offers, doctors can upgrade to new technology quickly and with less of a capital investment. For example, there is no point in purchasing a new x-ray machine if you are going to need to upgrade to a new model in two years. If instead of purchasing a new machine, a doctor chose to lease the same equipment, he or she could easily upgrade at the end of the 24 month lease cycle. In other words, without having to outlay fresh capital every two years, he or she just has to make their monthly payments and then upgrade when the lease term expires for almost no additional cost.

There are a wide variety of lease cycles available, from 24 up to 60 months which allows a doctor to predict how and when he or she will need to upgrade without getting stuck with yesterday’s technology. This allows the medical professional to constantly offer the highest level of patient care.

Leasing also protects a doctor’s personal finances.

Leasing also protects a doctor’s personal finances. If a physician chose to go to his bank to secure a business loan, the amount of the loan would be added to his or her personal credit report. That means it may be harder for the professional to get a good mortgage rate, qualify for new credit cards or secure other personal loans. A lease, on the other hand, is attached to the doctor’s practice and not to the physician themselves. That means that through leasing a doctor can fill their office with the latest equipment without adding to his or her personal debt load.

Another financial advantage is that when you lease, you are paying for the cost of the equipment out of your current operating budget. If you purchase equipment you are essentially spending earlier profits on the new equipment. Those earlier profits could be better spent on an investment that will bring in additional income rather than being used for a one-time expenditure.

The IRS currently allows doctors to take advantage of off balance sheet lending.

There are also significant tax advantages to choosing to lease instead of purchase. The IRS currently allows doctors to take advantage of off balance sheet lending. When you choose this option your equipment is not considered a taxable asset. Instead your monthly payment is considered a debt on your balance sheet and can therefore be written off on your tax statement.

Off balance sheet lending has an additional added benefit that may surprise many physicians. A lease is not shown as a liability on your balance sheet. Concurrently, when a physician’s liabilities (if he or she had a loan for the equipment instead of a lease) are taken out of the picture, their “partner’s equity” actually increases on their balance sheet. The balance sheet is the benchmark for nearly all underwriting decisions (not the P&L statement as is often thought). If a physician’s balance sheet shows strong equity, their company appears solid to underwriters.

Therefore a medical professional actually increases the equity in their balance sheet simply by using the equipment. At the end of the lease term, that equipment actually becomes additional equity as you take ownership of the equipment for a typical buyout price of $1.00!

If you are a medical professional who is considering updating the equipment in your office, you owe it to yourself and your patients to investigate how a low cost lease can put you at the forefront of medical technology. Please take a short 60 seconds to tell us about your needs. You could be on the way to a great high tech office today.

Special Note: You should also know that GCR Capital offers many types of commercial financing programs; whether you’re considering buying new commercial properties, expanding an ongoing concern, or purchasing another business entity, GCR will get the deal done and make your expansion a reality.