Leasing vs. Purchasing: Which Is Right For Your Business?

If you’re a small business owner, you may have contemplated whether it’s better for your company to continue leasing property or to buy it. You may have already established a lease with an option to purchase from your lender, giving you a clearer path to ownership, or you may be considering your financing options while searching for new property.

In this article, I’ll discuss the lending options you have available to you as well as the benefits and potential drawbacks of leasing versus purchasing property.

Lease With An Option To Purchase

A lease option is a type of loan contract used in both residential and commercial real estate financing that allows the renter the option to purchase a property outright after they have rented for a specified amount of time. This differs from a lease purchase where parties are bound to a sales contract agreement.

This type of lease is ideal for buyers who cannot fund a down payment on their own as it requires less money up-front than a traditional mortgage.

It’s also advantageous for borrowers who are relocating their business, and need time to resolve credit issues or sell their previous property.

Down Payments: Are SBA Loans Or A Conventional Mortgage Better?

If you meet its qualifications, you may be able to apply for a loan from the Small Business Administration (SBA).

SBA loan programs are designed to finance the purchase of fixed assets (such as real estate) at below-market rates, and its loan programs are tailored to the specific capital needs of your developing business.

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