Additional Sources of Finance
Leasing facilities the acquisition of equipment, plant and machinery without the necessary capital outlay and thus, has a competitive advantage of mobilizing the scarce financial resource of a business enterprise. It enhances the working capital position and makes available the internal accruals, for business operations.
Leasing as a method of financing is less costly than other alternatives available.
Leasing provides finance without diluting the ownership or control of the promoters. As against it, other modes of long term financials for examples, equity normally dilute the ownership of the promoters
Lease finance is considered preferable to institutional finance as in the former case there are no strings attached. lease financing is beneficial since it is free from restrictive covenants and conditional such as representation on the board conversion of debt into equity, payment of dividend and so on which usually accompany institutional finance and term loans from banks.