As Mr. Womack states it is not an simple decision including access to capital.

I have found though that two questions lead me towards an answer.

First, are you going to use the equipment until it can't basically be used anymore or isn't cost efficient to continue using (i.e. - high maintenance and repair costs)?  If this is the case, you will be led more towards purchasing rather than leasing because you're not that interested in having the option to return the equipment to the lessor at lease end.  You can have the option to purchase the equipment out of the lease at lease end (or with an early buyout option), but that tends be keep you paying interest for a much longer period of time since you have paid during the lease and now to finance the buy out from the lease.  If you want to be able to return the equipment in say five years, either because you like to roll over your fleet or because you are in a joint venture and may not need or don't know if you'll need to own the equipment at the end of the JV, then you'll want a lease with the ability to return the equipment or purchase the equipment at lease end.

Second, do you want it on the balance sheet or not?  This is usually a function of how you want to present your balance sheet to your creditors.  If you want it off your balance sheet (i.e. - no fixed asset listed), then you may want to lease under an operating lease.

If you're doing a lease, you may want to negotiate a fixed percentage buyout rather than a FMV (fair market value) option.  It gives you more certainty.  To keep it off the books it would need to be a percentage probably larger than 10%, otherwise it would be considered a purchase (i.e. - a capital lease).

Also, if you do lease, pay close attention to the return provisions.  You should be negotiating these as to what level of wear you may return it with and where you need to return it to as, normally, transportation costs to get it to the point of return is on your dime.

There are other considerations, but I think these will help narrow your choices.

I assume you mean your primary lending institution is pushing for you to lease equipment instead of buying it.  My answer is structured accordingly.  From a lender's perspective, there is obviously less risk involved when their customer can walk away from a deal and it doesn't have to occupy the balance sheet.  Leasing preserves working capital, and helps preserve good ratios, a lender's only real tool in lending (other than actual knowledge of the client and his operations, but who has time for that?)  The real key in my opinion is whether you have a long term need for the equipment, meaning greater than 18 mos.  Unless the financing agreement is extremely favorable, beyond the mid term (18 mos), the leasing incentive evaporates.  Depending on the math, the typical lease deal is 1) better than short term rental but 2) not as favorable as a three year purchase cost.  I have never found a lease deal that made sense beyond a three year period, even on fleet vehicles where this is used frequently.

Other considerations:  What is the current status of availability of credit for your company?  Is this the 'only' way to get the equipment you need?  What is the long term approach to ownership and maintenance of the equipment?  Are you in a growth mode?  What are the intermediate and long term market considerations? 

This isn't an easy question to answer, as there are lots of variables.  Three years ago, we made the 'purchase' decision on approximately $2mm in equipment, approximately 4 months before our primary market cratered.  Now the burdon is on us to sale the equipment in a down market, rather than simply walk away.  So always consider the down side, regardless of current conditions. 

 Good luck!  dwomack