Leasing equipment: Escaping from a lease

"No one goes into business intending to fail, but obviously it does happen," says Steven Galop of Miami-based UniCapital Business Credit Group. Whether you want out of your equipment lease because you're going out of business, or because the equipment no longer suits you, the best case scenario remains the same.

"Try to find someone to assume the lease," recommends Galop. If you're selling the business, the new owners are your best prospect. They will be subject to credit approval, but it's the best way to endear yourself to the leasing company.

Otherwise, try to negotiate an early termination of the lease. The equipment may have retained a high value or even appreciated, in which case the lessor may be amenable to finding a new lessee or buyer on the secondary market. This isn't likely to be the case with computers, but it may be with industrial and commercial machinery.

Galop says there are times when UniCapital gets a call to retrieve the keys at the landlord's office and pick up the equipment. In this situation, the leasing company will sell the equipment to the highest bidder and apply the money toward the lease obligation. The remaining balance is called a "deficiency balance," and remains the obligation of the business owner.

An equipment lease is an obligation for a fixed term, and should never be entered into lightly. You must seriously consider your ability to make payments for the duration and the financial ramifications of an ongoing debt obligation if you do wind up going out of business.