While leasing isn’t a loan, it could be an effective way to reduce the amount of money needed to start or expand. Leasing allows the business to use machinery, vehicles or other equipment similar to how one would a rent, except over a longer term. A leasing company owns the asset but the business uses it.
A business may want to lease to get smaller monthly payments than if it was purchased with a loan, certain tax advantages and lowering upfront costs. Downsides include costing more in the long term and contractually obligated to paying on that equipment for a certain period of time. ,