New Economic Stimulus Plan Can Benefit Corporate Leasing

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Corporations that Lease Equipment could see Favorable Lease Rates as Leasing Companies Pass on the Benefits to its Customers.

The new Economic Stimulus Plan signed last week by President Bush, could have the effect of lowering lease rates for corporate borrowers as leasing companies pass on the benefits to their customers.

A provision included in the stimulus plan was "Bonus Depreciation" a term used to describe accelerated depreciation of purchased equipment that exceeds $250,000. The main benefit of this provision is to give businesses an opportunity to accelerate the depreciation of a large purchase.

Normally, if a company acquired $1,000,000 in equipment, the company could claim depreciation in the first year of $200,000 (20% of $1 million). However with the new Bonus Depreciation, that same company could deduct $600,000 in the first year (a 50% Bonus depreciation of $500,000, plus $100,000 which is 20% of the $500,000). The remaining cost can be depreciated over the remaining recovery period.

In a research note to clients, The Optimus Group strongly recommended that Corporate Finance and Treasury departments consider how this new legislation could reduce their corporate borrowing rates as leasing companies may be inclined to pass on the economic benefit of accelerated depreciation on to its customers.        

The Optimus Group (optimusgroup.com) is an independent financial advisory firm that negotiates with leasing companies and banks on its clients' behalf. The Optimus Group is NOT a leasing company. In most cases, The Optimus Group, through its expertise in lease/loan contracts, would be able to reduce total lease expenses by at least 10% to 15%. A typical Optimus Group client invests over $5 million in new equipment annually and is the company CFO or Treasurer. For further information, contact Blaine Ung at 949.862.0555 ext. 106 or visit the The Optimus Group website at: The Optimus Group

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Blaine Ung

Jay Zeinfeld
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