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Define what each option actually includes
Ask what the U.S. team needs the equipment to do, for how long, and at which capacity. Compare actual offers for maintenance, delivery, installation, insurance, return conditions and any buyout. A lower upfront payment can come with later commitments.
The SBA’s asset guidance discusses leasing and buying as different ways to obtain equipment. Its general advantages and tax comments do not decide this transaction. Use the actual offers and the original cash comparison below.
Follow both options over 36 months
Fictional U.S.-dollar example: purchase costs US$36,000 upfront, with US$200 monthly maintenance. The lease costs US$1,500 upfront plus US$1,100 a month; assume the stated maintenance is included and the machine is returned without an extra fee at month 36. These are invented terms.
| Specified 36-month cash | Buy | Lease |
|---|---|---|
| Upfront equipment/initial payment | 36,000 | 1,500 |
| Monthly payments over 36 months | 7,200 maintenance | 39,600 lease payments |
| Total specified cash out | 43,200 | 41,100 |
| Assumed realised resale receipt at month 36 | 10,000 | 0 |
| Net specified cash out after that receipt | 33,200 | 41,100 |
Resale uncertainty can change the comparison
If the assumed US$10,000 sale does not occur and no other disposal receipt is available within the period, the purchase option still has US$43,200 of specified cash out. That is US$2,100 more than the assumed lease total. Any asset remaining has its actual condition and future use; it is not automatically cash available now.
The purchase also uses US$36,000 upfront, while the lease spreads much of its cash commitment. Decide whether that timing is funded and what other work the money would support. The comparison is nominal cash, without discounting, taxes, financing or accounting depreciation.
Check the period, exit and availability
Ask management for actual quotations, likely usage, maintenance responsibilities, expected condition and evidence for any resale assumption. A short demonstration could justify a different rental period, but do not compare a short trial with three years of ownership as if the service received were identical.
Keep the 36-month schedule separate. The current Cash runway worksheet covers 12 months, so use it for the wider first-year funding picture rather than pretending it reproduces this whole comparison. It does not evaluate every lease clause, resale outcome or day-specific payment. The equipment, service cover and actual operating requirements still need to be suitable.
Scope
- All terms and values are fictional. No available finance, lease classification, deduction, ownership/return right, resale price or universally cheaper option is established.
Next step
Compare actual lease/buy offers over one consistent service horizon, with maintenance, cash dates and a separate residual-value sensitivity; keep the schedule beside the cash model.
Sources & review notes
U.S. Small Business Administration
Passage, dates and research notes
official-guidance · Manage finances; cost-benefit analysis; buy assets/equipment; marketing and sales
Selected commercial planning sections read. No tax deductions, loan eligibility, worker status or other legal conclusions are adopted.
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