Financing and leasing are not the same. With financing, the business owns the equipment from day one and pays off a loan secured by it. With a lease, the lessor owns it and the business pays to use it, with a buyout or return at the end. This article compares them, explains sale leasebacks, and covers leasing commercial space in Clovis, NM.
Is Financing the Same as Leasing? A Plain Answer for Curry County, NM Businesses
No, financing is not the same as leasing. When you finance equipment, you own it, the partner holds a lien, and the lien is released when the loan is paid. When you lease, the lessor owns the equipment and you pay for its use over a set term. At the end you may buy it, renew the lease or hand it back, depending on the lease type.
| Equipment financing | Equipment lease | |
|---|---|---|
| Who owns it during the term | The business | The lessor |
| End of term | Lien released; you own it | Buyout, renewal or return |
| Monthly payment | Covers the full price plus interest | Can be lower if a buyout remains |
| Tax treatment | Ask your tax preparer | Ask your tax preparer |
Illustration only, invented figures: a $60,000 machine financed over 60 months at an invented 10% annual rate costs about $1,275 a month, about $76,489 in total. A 60-month fair market value lease at $1,180 a month totals $70,800, plus a $9,000 buyout if you keep it, $79,800 in this invented example.
Curry County, NM Businesses That Weigh Leases
Construction had 102 employer establishments in Curry County, NM in 2023, 67 of them specialty trade contractors (County Business Patterns), and real estate and rental and leasing had 58. Contractors weigh leases against loans for loaders and trailers; restaurants for kitchen lines; repair shops for lifts. The construction page covers contractor equipment, and the equipment financing page covers leases for every trade.
Three Lease Types a Clovis, NM Owner Will See
- Fair market value lease: lower payments, with an option to buy at the machine's value when the term ends.
- $1 buyout lease: payments cover nearly the full price, and ownership passes for a nominal sum at the end; it works much like a loan.
- Operating or rental-style lease: shorter terms, and the machine goes back at the end; suits equipment you expect to replace.
Ask which type an offer is before comparing it, since the end-of-term cost changes the total.
What a Partner Reads for a Lease or a Loan
The review is close to the same for both: the equipment quote, business bank statements, time in business and the owner's credit. A used machine draws questions on its age, its meter hours and its condition. A lessor also cares about what the machine will be worth when it comes back, which is one reason lease pricing differs from loan pricing for the same item.
What Is a Sale Leaseback Transaction? How It Plays Out in Clovis, NM
A sale leaseback transaction is a business selling an asset it owns, such as equipment or a building, to a buyer, and then leasing it back. The business gets cash from the sale and keeps using the asset, paying rent to the new owner. It turns equity in an asset into working cash.
What Is a Sale Leaseback Structure? How It Plays Out in Clovis, NM
A sale leaseback structure has two documents and two parties. The purchase agreement sets the price the buyer pays for the asset. The lease sets the rent, the term, maintenance duties and what happens at the end: a buyback, a renewal or the asset staying with the buyer. Read both together, since the rent depends on the price.
Clovis, NM: How to Lease a Commercial Property
The economics of a sale leaseback model come down to the cash received against the rent paid.
Illustration only, invented figures: a contractor owns equipment appraised at $120,000 and sells it for $90,000, then leases it back at $2,050 a month for 48 months. The rent totals $98,400, or $8,400 more than the cash received in this invented example, before any buyback price.
What Is a Sale Leaseback Model? Notes for Clovis, NM Owners
Before agreeing to a sale leaseback deal, check:
- The appraisal behind the sale price.
- The total of all rent payments against the cash received.
- Whether you can buy the asset back, and at what price.
- Who pays for maintenance, insurance and repairs.
- What happens if a payment is missed.
Compare the deal with a term loan secured by the same equipment, which leaves ownership with you.
What Is a Sale Leaseback Deal? A Plain Answer for Curry County, NM Businesses
Leasing a commercial property in Clovis, NM, as a tenant, follows its own steps:
- Confirm the space's zoning allows your use with City of Clovis planning staff.
- Ask what build-out the landlord will pay for and what you pay for.
- Read the rent, term, renewal options and escalation clauses.
- Check who pays property taxes, insurance and maintenance.
- Ask whether the lease can be assigned if you sell the business.
A build-out inside a leased space can be financed with a term loan; the property itself is a real estate question outside the six funding types here. Other articles are on the blog.
By Flintshore Financial · Updated
