In the leasing contract is to report the following:

• Lessee or user: person or company that will use the property in exchange for the payment of periodic installments to the lessor for the duration of the contract, and that once completed this period, you will have the option to buy the property.
• Landlord: bank, financial institution or leasing company that at the request of the lessee acquires ownership of a particular good from a particular supplier, then lease it to the tenant.
• Provider: company to which the landlord is going to buy the property.
• Well, leased fixed assets usually consist of machinery or equipment.
• Canon: amount of rent payable by the tenant. To determine this amount, taking into account the cost of acquisition of property, interest on investment and the commission may charge the leasing company.

Generally, this amount is higher than it would be if it were the payment of contributions needed to cancel a loan of the same value as the price of the goods, but less than you would pay if it were the payment of fees for the hire purchase it.

• Duration of contract: length of time the lease contract duration, the time will the transfer of the property and payment of rents. Generally, this period usually lasts as long as the estimated useful life of the asset.
• Option to purchase: option to have the lessee or user of the property after completion of the contract. This option should be mandatory throughout the lease.
• Price of the property after completion of the leasing contract: after completion of the period specified in the contract, the user can choose between acquiring the goods or return the property to the leasing company. If you decide to buy, you pay the price stipulated in the contract.

This price is usually the value of the asset, the difference between the original price of the goods plus expenses and interest, and fees paid by the user.

Leasing can be considered a form of financing because the bank or leasing company we financed the acquisition of an asset, can we make use of it, without having to invest or pay the total value of the property.

Leasing is a good alternative when we want to acquire more machinery, for example, to increase production, and we have no investment or capital needed for this, or simply do not want to distract the working capital.

Besides this possibility of financing, which was precisely the reason why this product was designed, leasing has other advantages for the user, such as tax benefits (contributions are tax deductible), or the possibility of the user to obtain equipment or equipment, and then can easily get rid of them without having to buy, for example, not considered to have become obsolete.

This search for funding is given basically for two reasons:

• When the company is lack of necessary liquidity to meet daily operations, for example, when you need to pay the debts or obligations, buy supplies, maintain inventory, pay salaries, rent the premises, etc..

• When the company wants to grow or expand, and does not have sufficient equity capital to meet the investment, for example, when you want to buy new equipment, when you want to have more teams, get more goods or raw material for increase the volume of production, enter new markets, develop or launch a new product, expand the local, open new branches, etc..

Let’s look at what are the main sources of funding for what we can in search of money or funding that we may need to continue operating as a company, or to invest and make it grow:

Family or friends
The simplest way to obtain financing is borrowing money from friends or relatives. This source is typically used only when the money needed is small.

Banks
The most common way to obtain financing is requesting a loan from a bank.

To grant a loan to a company, it is usual that banks ask for a minimum of six months experience in the market.

If the amount is high, it is usual to ask for guarantees, either property or business assets or personal property.

Non-bank financial institutions
Some of them specialized in small and medium business, so that the requirements are usually lower than calling a bank, but the loan amount granted is generally lower, usually granted for a shorter time, and usually has a higher cost or interest rate.

Leasing Companies
Banks or financial institutions that provide leasing the product, which is a contract whereby we ask the bank or financial institution to acquire ownership of an asset (eg machinery or equipment), so that later leased it to us and, after completion of a deadline, we buy it.

Factoring Companies
Banks or financial institutions to lend the proceeds of factoring, which is a contract by which you give in to a bank or financial institution the rights of our accounts receivable in exchange for the pay us in advance (after deduction of interest or fees the bank may charge us).

Consumer Finance
For example, those that provide credit cards. This source of funding is not tied to a business or company, but a source from which we get money for our company.

Related Searches
By obtaining a business loan, for example, we can get a supplier to provide us with goods, raw materials or any assets, and allow us to pay in monthly installments instead of having to make a single payment in cash.

Issue of shares
A funding source is the sale of shares, which consist of securities that give the possessor the right to participate in the distribution of company profits and the distribution of social capital if it is liquidated.

Bond
Another source of financing is the issuance of bonds, which are debt securities that the company issues, and undertakes to pay interest periodically and repay the debt value at maturity of a specified date, to whom the purchase.

Exchanges or barter with other businesses
Exchanging a product or service for another, for example, paid listings or advertising our products, or offer our services to employees of a company, in exchange for inputs or provide us goods.

Find a partner
Find a person who wants to invest in our company and, in turn, work with us in its growth.

Find an investor
We might look, for example, “venture capital organizations” or “angel investors” (which unlike venture capital institutions, use its own funds and not others), or just any person, company or organization wishing to invest our company money in exchange for a percentage of profits.

To request a credit or loan from a bank or financial institution, we must first determine what amount we’re going to apply, and analyze in a first instance if we are able to pay that amount.

Second, we must evaluate the various financial deals that exist, taking into account the loan amount, term and each bid costs (fees and commissions).

At this point we must bear in mind that the interest rate indicated banks or financial institutions is often not actually the only cost to pay for the loan, but there are usually other costs not mentioned in the first instance, such as maintenance fees.

In evaluating the various financial deals, we must also take into account the bank or financial institution itself, that is, regardless of their reputation, their attention quickly to assess your application and to give us the loan, etc..

Third, once we know the amount, cost, and time, we evaluate whether we will be able to repay the amount to pay for this, we must find the monthly fee to pay (which can give us the same bank or financial institution), then include that amount in our income and expenditure projections (projection of our cash flow), and thus whether the revenue we generate, we pay for these fees.

Fourthly we must find out what the requirements requested by the bank or financial institution we have chosen, it is usual that we ask the following:

• Experience in the market: 6 months to 1 year at least be able to demonstrate it is necessary that the company is certified.
• Be eligible for credit: that is, not be classified as a delinquent customer or deficient in meeting its obligations.
• Have borrowing capacity.
• Historical financial statements.
• Projected financial statements (budgets or projections, especially cash flow projections).
• Declaration of income tax.
• Trade references.
• Ratio of three major customers (past billings).
• List of major suppliers.
• Commercial guarantees.
• Business plan (in the case of investments, for example, to expand the business): This requirement can prove that one has full knowledge on what is going to invest, can also assess whether the business is profitable, and if one will be able to repay the loan with the fruit of the business.
• Formal presentation.

Several of these requirements will vary according to the bank or financial institution, and according to the amount requested.

For example, if a bank or financial institution specialized in microfinance mypes or the requirements may be more accessible, for example, can you ask for only 6 months experience in the market.

Even in some cases, the staff of such entities, not expected, but goes directly into our business to collect the information himself.

Even these institutions do not ask for collateral or guarantees up to certain amounts, just call or submit a draft business plan, show income, show the movements of your company, etc.

Following the steps, in fifth place, we must prepare to answer the questions we do about our company, ready to say why we need the money, provide details of the investment, demonstrate ROI, and prove that we are able to pay the debt.

And finally, it will wait for the bank or financial institution to assess and measure the risk of extending credit and, accordingly, decide whether to approve the loan.

In addition to the amount and requirements or conditions that may apply, the factors or criteria should take into account when deciding on the most suitable financial offer are:

The cost of borrowing
Before taking into account the interest rate offered by banks or financial institutions, which in reality we must take into account is the total cost of financing (known as total financial cost or actual cost), which is formed by the rate interest, plus other costs normally included in the loan, such as the costs of issuance or maintenance.

The total cost of financing is the true rate to be paid on a loan, and is the most important thing to take into account when comparing different financing options that exist in the market.

The loan term
The period is the period of time gives the bank or financial institution to repay the loan and pay interest. In evaluating the various financial deals exist, we must consider that the period is granted us according to our ability to pay.

The lower term is generally lower interest rate but higher fees to pay. And longer term, usually higher interest rate, but lower fees to pay, and therefore the possibility of acquiring a larger loan.

The type of interest rate
Another aspect we must consider is the type of interest rate. We must consider whether it is a fixed rate, variable interest rate, or a combined rate.

Fixed rates are constant during the life of the loan, variable rates are set according to certain parameters, and the combined rates usually start at a fixed rate and then become variable rates.

Fixed rates allow us to know in advance what the fees and, therefore, provide control and security of knowing how much are we going to pay. While rates have uncertain variables that may increase at any time, but usually are lower than fixed rates.

The main parameter to set a variable rate is the country’s economic situation, so if the economic situation is unstable, it is advisable to purchase fixed rates to avoid sudden increases in assessments. But if the economic situation is stable, it is recommended to buy variable rates that typically are lower than the fixed stars.

The depreciation system
We must also take into account the system or depreciation method used by the bank or financial institution, which points to the way they are going to repay the capital and therefore pay off the loan.

Basically we use two methods: the German method, where quotas are decreasing, ie initially charged high fees, which then will decline, and the French method (which is now the most common), where quotas are fixed, ie, all periods are paid the same fee.

Early cancellation
We should also consider whether the business credit gives us the possibility to make additional payments in order to reduce the debt, or to cancel in advance of the deadline given.

We must bear in mind that sometimes the early termination option, may represent an additional cost to the loan.

The financial institution itself
Even when we are the ones who are going to receive credit, it is always desirable to take into account the reputation and experience of the bank or financial institution.

We must evaluate their customer service, their willingness to give us all the information you require, their ability to address any concerns you have, its speed to assess the request for the loan, etc..

Credit History
And finally, to choose the business credit indicated, we must consider our credit history.

It is advisable to purchase the products of financial institutions which are already clients, in order to form a good credit history and thus have access to credit later in more facilities and benefits.