Guide to raise funds





What is?

It is a form of financing of fixed assets through the concept of leasing or renting of the movable or immovable good. By means of a contract between a leasing company, generally a financial organization-owner of the good, rights of use are given to the company in exchange for a fee. At the end of the life of the renting, there is a clause or option of the company enjoying the rights of use, to buy it for a salvage value or return the good.

The leasing contract must obligatorially include an option of purchase of the good, that the company or entrepreneur can exercise when the established period of renting is finalized. In case there is no interest in acquiring property of the good, the purchase option will not be exercised and the good will be returned to the leasing organization, or the renting contract will be renewed.

Use of Leasing

If your company needs equipment, vehicles, furniture, premises, warehouse or any other good, there is no need to make huge outlays, it can also be interesting in cases where the company or entrepreneur wishes to exercise the purchase option. It is, therefore, a suitable instrument to finance in the medium and long term the acquisition of material goods on the part of the companies.

The contract is made in the medium and long term (minimum period of 2 years for movable goods and 10 years for immovable goods), that facilitates optimizing investments adapting the periodic quotas of rent to the generation of wealth that the investment provides. Quotas are generally monthly, quarterly or annual

Leasing is an effective and flexible instrument for the obtention of financing aimed at the acquisition of the good for the development of an economic activity, since it permits financing of up to 100% of the investments made.

It allows us to enjoy a greater liquidity than if we buy the good using our own resources, since it is not necessary to pay from the start the total price of the good.

They are considered tax-deductible expenses, the financial costs and the part corresponding to recovery of the cost of the good (amortization of capital). It can be deducted up to double the lineal ratio according to amortization tables of the Treasury Department (in companies with sales higher than 1.500.000 Euros; 1,5 by the double of the mentioned ratio). The part of the cost of capital paid and not deducted in the year will not be able to be deduced in later exercises.

It permits periodication of VAT during the period of the operation.

As a disadvantage, it is possible to emphasize the financial cost that we must carry. On the other hand, it is also necessary to emphasize that the interest rates are usually better than those applied to mortage loans.

The validity of the contract of financial renting is irrevocable, and cancellation of the contract for causes attributable to our company can have serious consequences (cancellation commissions, loss of tax deductions, ...)

Modalities of Leasing
Based on the subject, we can identify:

Operative Leasing: contract in which the main purpose is not to obtain financing for acquisition of the good on the part of the lease-holder, but exclusively the granting of use of the good during a given period of time.

Financial Leasing: contract by which the lessor grants use of a good in his/her property to the lease-holder in exchange for a periodic rent, incorporating a purchase option that the lease-holder will exercise at the end of the period of validity of the contract.

Movable Leasing: when the object of the contract consists of movable goods (machinery, vehicles, computer material, medical equipment, etc.)

Real estate Leasing: financing of finished or new buildings, second-hand or in construction, destined for commercial uses such as for example industrial warehouses, commercial premises, logistics centers, hotels, etc.

Industrial Financial Renting or leasing of projects: It consists of the renting of industrial facilities "keys in hand", that include both movable and immovable goods. Especially aimed at the energy sector, co-generation plants, mini-power stations, hydraulics, wind parks, etc.

Based on the operation:

Normal leasing: in which the supplier, leasing company and lease-holder are different people.

Lease back: it is a leasing modality that consists of the same company selling to the financial organization some property assets (usually sites and buildings), and immediately afterwards, rents them by means of a leasing contract, that is, incorporating a purchase option.

Therefore, lease-back consists of two operations: the sale of the asset and the renting of it. Even though, at the beginning, it would not be a financial operation, given that the sale and the renting are not financial operations in themselves, the final result is similar to the one which would be obtained if a loan with the guarantee of its own property were requested.

In any case, the object is to refinance the company and, for this reason, financial organizations consider it a very high level of risk.

Barcelona Activa SAU SPM will ensure that this information and the data contained in the reports are accurate and faithful. These reports are published to provide general information. Barcelona Activa SAU SPM will not accept under any circumstance any responsibility for losses, damages or theft, or for any other business decisions based on data or pieces of information that can be extracted from this report.

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