What is financial leasing?

Financing lease: refers to the lessor entering into a supply contract with a third party (supplier) at the request of the lessee (user). According to this contract, the supplier contributes to purchase the equipment selected by the lessee.

By purchasing the financing subject matter and leasing it to small and medium-sized enterprises, the financial leasing company collects funds by collecting rent and obtains certain income. These items are often facilities and equipment urgently needed by small and medium-sized enterprises, which can create certain value for small and medium-sized enterprises and are an important material basis for their survival and development.

Small and medium-sized enterprises know that once they default, the financial leasing company will recover the financing subject matter. After all, the ownership of the financing subject matter belongs to the financial leasing company, which will cause a fatal blow to small and medium-sized enterprises. Without facilities and equipment for production, enterprises will stop working or even go bankrupt.

Therefore, compared with supply chain finance, SMEs' subjective willingness to default on financial leasing companies is lower, because its default cost is too high. It is based on this point that the lessee does not own the ownership of the financing subject matter, and the risk of the financing leasing company will be small.

Extended data

The future development trend of the general financial leasing industry has two directions:

First, it has developed into a large comprehensive financial leasing giant. Such financial leasing companies will continue to expand their business areas, from traditional machinery manufacturing and shipbuilding industries to cultural creativity and agricultural products;

The other development direction is to develop into specialized sub-sectors, deepen in a certain sub-sector and develop into characteristic financial leasing enterprises.

With the development of financial leasing industry, more and more financial leasing companies will appear in the market competition, but the increment of social capital is not large in the short term, which means that most financial leasing companies are small in scale and have limited assets.

Except for a few large financial leasing companies in the market, most of them are small and medium-sized financial leasing companies with limited assets. The development direction of such companies should be to explore niche markets and dig deep into a certain sub-industry.

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