Should I negotiate a personal guarantee?

Read it carefully. Most equipment leases for small businesses require personal guarantee from the owner. Negotiate: (a) cap the guarantee amount (often the equipment's residual value rather than full lease balance); (b) eliminate confession-of-judgment clauses (illegal in some states); (c) carve out post-bankruptcy or post-dissolution exposure; (d) ensure release of guarantee on early payoff or end of term.

What if the equipment breaks down?

Depends on lease type. Net lease: Lessee bears all maintenance, repair, and replacement cost — even for inherent defects. Full-service lease: Lessor maintains and repairs. Verify the maintenance and repair allocation and consider negotiating manufacturer-warranty assignment for the first year or two.

What's a UCC-1 filing and why does it matter?

A UCC-1 financing statement perfects Lessor's interest in the equipment against Lessee's creditors and bankruptcy trustee. It prevents a bankruptcy trustee or other creditor from claiming the equipment. Lessor typically files at the Secretary of State; this is standard and not negotiable. The filing remains on public record but does not affect Lessee's credit unless cross-defaulted.

What happens at end of lease term?

Depends on the end-of-term option. Return: deliver equipment in good condition to Lessor's location at Lessee's expense; damages charged at FMV. FMV purchase: pay fair market value (Lessee or Lessor obtains independent appraisal if disagreement). Fixed purchase ($1 buyout): purchase at nominal price; equipment becomes Lessee's. Renew: continue at agreed-upon market rate. Decide BEFORE signing — end-of-term renegotiation rarely favors Lessee.

Equipment Lease Agreement

Lease of business equipment — terms, payments, maintenance, return, end-of-term options.

Customise

Effective date

Lessor (owner) — name

Lessor address

Lessee (renter) — name

Lessee address

Equipment description

Serial numbers / VINs

Lease term (months)

Monthly payment ($)

Security deposit ($)

First payment due date

End-of-term option

Fixed purchase price (if applicable)

Maintenance responsibility

Insurance requirements

State (governing law)

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EQUIPMENT LEASE AGREEMENT

This Equipment Lease Agreement (this "Lease") is entered into as of May 7, 2026 (the "Effective Date") by and between:

  Lessor: Sunrise Equipment Leasing, LLC ("Lessor")
  Address: 1840 Industrial Way, Phoenix, AZ 85040

  Lessee: Mesa Print & Graphics LLC ("Lessee")
  Address: 5544 E Main Street, Mesa, AZ 85205

1. EQUIPMENT.
Lessor leases to Lessee the following equipment (the "Equipment"):

1 × Heidelberg Speedmaster XL 75 offset press, 6-color, 2022 model, S/N HM-XL75-2022-0418
1 × Heidelberg Stahlfolder TH 56, 2021 model, S/N STH-2021-0309
Includes manuals, calibration tooling, and ink-management software license keys.

Serial numbers: HM-XL75-2022-0418, STH-2021-0309

2. TERM.
The lease term begins on the Effective Date and continues for 36 months, ending 36 months after the Effective Date (the "Term").

3. PAYMENTS.
Lessee shall pay Lessor monthly rent of $4,250.00, due on the same day each month, beginning May 7, 2026. Total rent over the Term: $153,000.00. Late payment (over 5 days): late fee of 5% of the unpaid amount.

4. SECURITY DEPOSIT.
Lessee deposits $8,500.00 as security against damage to the Equipment, returnable within 30 days after lease end, less deductions for damage beyond ordinary wear and tear or unpaid amounts.

5. USE.
Lessee shall use the Equipment only for its intended business purpose, in accordance with manufacturer specifications and applicable law. Lessee shall not relocate the Equipment from Lessee's address without Lessor's prior written consent.

6. TITLE; OWNERSHIP.
Title to the Equipment remains with Lessor at all times. Lessee shall not grant any security interest, lien, or encumbrance, and shall not paint, mark, or modify the Equipment in a manner inconsistent with Lessor's ownership.

7. MAINTENANCE.
Lessee shall maintain the equipment in good operating condition at Lessee's expense, including all routine maintenance, repairs, and replacement parts (net lease / triple-net).

8. INSURANCE.
Lessee shall maintain at all times during the lease term: (a) commercial general liability insurance with limits of not less than $1,000,000 per occurrence; (b) commercial property insurance covering the equipment at full replacement cost; (c) Lessor named as additional insured and loss payee on the property policy. Lessee provides certificates of insurance to Lessor within 14 days of effective date and at each annual renewal.

9. RISK OF LOSS.
Lessee bears the risk of loss, damage, or destruction of the Equipment from any cause from the date of delivery until return to Lessor. Lessee shall continue to make all payments due under this Lease regardless of equipment loss or damage; insurance proceeds shall be applied to repair, replacement, or remaining lease balance as Lessor directs.

10. REPRESENTATIONS BY LESSOR.
LESSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, REGARDING THE EQUIPMENT, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. LESSOR ASSIGNS TO LESSEE ANY MANUFACTURER WARRANTIES TO THE EXTENT ASSIGNABLE. THE EQUIPMENT IS LEASED "AS IS."

11. DEFAULT AND REMEDIES.
Default occurs if (a) Lessee fails to pay any amount when due and the failure continues 10 days after written notice; (b) Lessee breaches any other material provision and fails to cure within 30 days of notice; (c) Lessee files for bankruptcy or becomes insolvent; (d) the Equipment is seized by creditors; (e) Lessee dies, dissolves, or ceases business operations. Upon default, Lessor may, in addition to any other remedies, declare all remaining payments immediately due, repossess the Equipment, and recover damages and reasonable attorney fees.

12. END OF TERM.
At the end of the Term (or earlier termination), Lessee shall:

Purchase the equipment at fair market value, as determined by an independent appraiser if the parties cannot agree.

13. RETURN CONDITIONS (if equipment is returned).
Equipment shall be returned to Lessor's designated location, at Lessee's expense, in good operating condition (ordinary wear and tear excepted), with all manuals, accessories, and software licenses included. Damages or missing items will be charged at fair-market replacement cost.

14. INDEMNIFICATION.
Lessee shall indemnify, defend, and hold Lessor harmless from and against any claim, loss, damage, or expense arising from Lessee's use or possession of the Equipment, except to the extent caused by Lessor's gross negligence or willful misconduct.

15. ASSIGNMENT.
Lessee may not assign this Lease or sublease the Equipment without Lessor's prior written consent. Lessor may assign this Lease (and grant security interests in lease payments) without consent.

16. UCC FILING.
Lessor may file a UCC-1 financing statement to perfect Lessor's interest in the Equipment. Lessee authorizes Lessor to file such financing statements as Lessor deems appropriate.

17. GOVERNING LAW; DISPUTE RESOLUTION.
This Lease is governed by the laws of the State of Arizona. Disputes shall first be submitted to mediation, then to litigation in state or federal court located in Arizona.

18. ENTIRE AGREEMENT.
This Lease constitutes the entire agreement between the parties regarding the Equipment and supersedes all prior agreements.

19. NOTICES.
All notices shall be in writing, sent to the addresses above (or as updated in writing).

20. COUNTERPARTS.
This Lease may be executed in counterparts, each of which is deemed an original.

IN WITNESS WHEREOF, the parties have executed this Lease as of the Effective Date.


_______________________________            _______________________________
Sunrise Equipment Leasing, LLC                  Mesa Print & Graphics LLC
Lessor                                       Lessee

By: _____________________________            By: _____________________________
Title: __________________________            Title: __________________________
Date: ___________________________            Date: ___________________________

About this template

An equipment lease is the most-common alternative to financing the purchase of business equipment. Equipment leases come in two principal flavors that have very different tax and accounting treatment: (1) Operating lease (true lease) — Lessor retains ownership; Lessee pays for use only; payments are deductible as operating expense; equipment does not appear on Lessee's balance sheet. Best for: equipment that becomes obsolete quickly, short-term needs, or where capital is constrained. (2) Capital lease (finance lease, $1 buyout) — Lessor finances Lessee's purchase; Lessee acquires equipment at end of term for nominal price; for tax/accounting purposes, treated as financed purchase; equipment appears on Lessee's balance sheet; payments are split between interest expense and principal. Best for: equipment Lessee intends to keep long-term and that retains value. The IRS distinguishes the two using factors set out in Revenue Ruling 55-540: a true lease must NOT have purchase option below FMV, must not transfer ownership at end of term, must allow lessor to recover original investment plus reasonable profit through rent payments alone, and must have lease term shorter than equipment's useful life. Most-litigated lease issues: (1) Maintenance allocation — net lease (Lessee maintains) vs. full-service lease (Lessor maintains). For complex equipment (medical, manufacturing), full-service is common; for simpler equipment (computers, vehicles), net lease is standard. (2) Insurance and risk of loss — Lessee almost always bears risk and must maintain property insurance with Lessor as loss payee. Failure to maintain insurance is a common default trigger. (3) Default and acceleration — most equipment leases allow Lessor to accelerate all remaining payments on default. Courts have upheld acceleration clauses, treating equipment leases as similar to commercial loans. (4) End-of-term obligations — return condition, location, and pricing for damage are frequent disputes. Photos at delivery and return are essential. (5) UCC filing — Lessor typically files a UCC-1 financing statement to perfect interest against Lessee's creditors; this prevents bankruptcy trustee from claiming the equipment. Sales tax: most states tax lease payments as a service (sales/use tax). Some states (NY, FL) treat lease as sale at inception; others (CA, TX) tax monthly. Lessee should verify before signing. Personal guarantees: small-business equipment leases often require personal guarantee from the LLC/corp owner — read carefully and negotiate caps. Cross-default clauses: some leases include cross-default with other obligations of Lessee to Lessor; this can cascade defaults dangerously. State considerations: Article 2A of the UCC governs commercial equipment leases in 49 states (Louisiana adopted with modifications). Article 2A creates "finance lease" category with specific consumer-like protections that differ from true lease.

When to use it

Leasing business equipment instead of purchasing (offset, copier, printing press, MRI, vehicle fleet, etc.).
Setting up a sale-leaseback structure for tax or balance-sheet reasons.
Equipment that becomes obsolete quickly (technology, medical imaging) where ongoing upgrade is preferred over ownership.
When capital constraints make purchase impractical.
Multi-year equipment commitments where flexibility on end-of-term is desired.

What to include

Equipment description with serial numbers / VINs.
Lease term, monthly payment, and payment schedule.
Security deposit and late-fee terms.
Maintenance and insurance allocations.
End-of-term option (return, FMV purchase, $1 buyout, renewal).
Default and remedies (including acceleration).
UCC-1 filing authorization.
Indemnification and limitation of warranty.

Frequently asked

Depends on terms. True lease (operating lease): Lessor keeps ownership, Lessee pays for use; payments fully deductible. Finance lease (capital lease, $1 buyout): functionally a financed purchase; payments split between interest and principal for tax purposes; equipment on Lessee balance sheet. The IRS uses Revenue Ruling 55-540 factors to characterize, including purchase-option pricing and lease-term-vs-useful-life ratio. Discuss with a CPA before signing.

⚠ Legal disclaimer. Equipment leases are governed by Article 2A of the UCC in 49 states (Louisiana variants). The distinction between true lease and finance lease has significant tax and accounting consequences and should be discussed with a CPA before signing. Sales/use tax on lease payments varies by state. Personal guarantees and cross-default provisions warrant careful review. For high-value leases (over $100K), engage a business attorney. Not legal or tax advice.