What is Micro- and Small-Ticket Equipment Leasing
Most small business owners have less than $12,000 sitting around and can’t afford to front expensive equipment, but they still need to get the equipment to power their dreams. If what they need costs less than $15,000, good luck getting a bank to consider that loan application.
Micro- and small-ticket leasing can help entrepreneurs get equipment at a manageable monthly price without hitting their credit scores and future borrowing prospects. Here’s how it works and why it’s a smart option.
What is Small-Ticket Leasing?
Small-ticket leasing refers to equipment financing for amounts between $25,000 and $250,000. These leases allow small business owners to access necessary equipment without significant upfront costs. Unlike traditional bank loans, small-ticket leasing is more accessible, with faster decisions and simple terms.
How Much Is a Micro- or Small-Ticket Lease?
Equipment leasing arrangements (sometimes called “tickets” in the industry) span a wide range of amounts, from $500 on the lower end to several million dollars. Because the risks and demands of leasing can vary widely between amounts, financiers break down tickets into these segments:
- Micro: Up to $25,000
- Small: $25,000 - $250,000
- Middle: $250,000 - $5 million
- Large: Over $5 million
Over $1 trillion in equipment value has been secured by leasing, and micro and small tickets account for one-third of that amount—meaning that, by volume, most equipment leases land at $250,000 and below. Clearly, many entrepreneurs take advantage of these leasing options to start and grow their businesses.
What is a Good Equipment Lease Rate?
Equipment lease rates vary based on factors such as creditworthiness, lease term, and equipment type. Generally, rates range from 5% to 30% APR. Clicklease offers competitive rates and simple terms tailored to small business needs.
What Credit Score Do You Need to Lease Equipment?
Unlike traditional bank loans, micro- and small-ticket financing through Clicklease does not require a high credit score. Many applicants qualify with a credit score as low as 500. Additionally, Clicklease does not perform a hard credit pull, ensuring that applying won’t negatively impact credit scores.
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Can You Write Off Leased Equipment?
Yes! Leased equipment is often tax-deductible under Section 179 of the IRS tax code. Businesses can deduct lease payments as an operating expense, reducing taxable income and improving cash flow.
Why Banks Can’t Offer Micro- and Small-Ticket Leasing
Traditional lending institutions, such as banks, assess risk on a different model because they disburse cash, not equipment. Banks require extensive applications, including loads of paperwork, which are then forwarded to a human underwriter to evaluate. Underwriting is a skilled job that requires time and compensation, regardless of whether the loan is approved, and the process can take months. In short: banks can’t afford to loan less than $15,000 because of underwriting costs.
Point-of-sale lessors like Clicklease, on the other hand, are working with self-collateralized equipment, which is much less risky than cash and can be repossessed if payments default. Because of the lower risk profile, Clicklease applications are evaluated by a proprietary algorithm, which returns decisions within minutes. And because we’re not paying underwriting fees, we can offer leasing as low as $500 and up to $25,000.
Micro- and Small-Ticket Leasing Offers More Options than Loans
Beyond accommodating a broader range of amounts than traditional lending, micro- and small-ticket leasing offers several advantages to small business owners—especially those just starting out, trying to grow in a down economy, or running a side hustle.
- Lower Risk: Leasing is tied to a specific piece of equipment, reducing overall business risk. If the lease defaults, only the leased equipment is impacted.
- Simple Funding: Covers the exact amount needed—no concerns about borrowing too much or too little, giving you the leasing option you need.
- Cash Flow Preservation: Instead of a large lump sum payment, small business owners can preserve cash for emergencies while making manageable monthly payments, allowing them to scale.
- No Hard Credit Pull: Clicklease applications don’t trigger a hard credit pull, allowing applicants to maintain their credit scores for the future.
Leasing Benefits for Equipment Sellers
Micro- and small-ticket leasing isn’t just for buyers—it benefits sellers too! Clicklease handles processing and payments, ensuring that equipment sellers receive full funding with no fees and no hassle.
Ready to Offer Point-of-Sale Leasing?
Clicklease can integrate easily into your existing storefront, making it simple for your customers to lease equipment while ensuring you get paid fast. We have helped many small businesses thrive. Let’s chat about how Clicklease can help grow your business today!
