Small ticket leasing offers businesses the opportunity to finance new equipment, such as computers, software, printers and furniture, without having to request a loan from a bank or financial institution.
A small ticket lease is also much cheaper than a direct purchase. Businesses do not require large cash sums up front and can also avoid the long process of applying and waiting for financing approval.
Small ticket leasing enables businesses to pay for their equipment in small instalments, preserving capital for more urgent business matters. Companies also have the option to own the equipment at the end of the lease agreement by signing a lease-to-own agreement.
Transactions for small ticket lease agreements range from £1,000 to £100,000. Businesses do not typically have to produce financial statements to secure the lease deal, but may be asked to provide personal guarantees along with business partners. Credit scoring models will then be used to process each company’s application, which can in some cases be completed within 24 hours.
Contracts for small ticket leasing tend to run for 1-5 years. Contracts are not usually open for negotiation on small ticket items, due to their low margin, high volume nature.
Rates for leasing small ticket items can vary greatly from one provider to the next, while businesses may also receive differing quotes for the same piece of equipment. This could be for a range of factors, including the credit history of the lessee, the length of the contract, the actual equipment required, and whether the lessee is the primary beneficiary of tax credits associated with the deal.
Last year, the UK asset finance business for small- and mid- ticket segments dipped 1% year-on-year to £1.95bn. This is according to figures from the Finance and Leasing Association (FLA), which found that direct finance remained the preferred route to business with £948m, despite a 3% year-on-year fall.
Geraldine Kilkelly, head of research and chief economist at the FLA, said: “The asset finance market continued to support key economic sectors with new finance for construction and agricultural equipment up by 13% and 9% respectively. The manufacturing sector also benefitted as new finance for production and process equipment was 47% higher over the same period.”