Business Leasing Asset Finance Equipment Needs For The Savvy Business Owner

YOUR COMPANY IS LOOKING FOR ASSET FINANCE SOLUTIONS!

EQUIPMENT LEASE FINANCING - SOLVING EQUIPMENT FINANCING NEEDS

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Financing & Cash flow are the biggest issues facing business today

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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

equipment lease financing equipment leasing companies 7 park avenue financial

Business leasing in Canada. Day in, and day out it seems that Canadian business owners and managers gravitate to equipment asset financing solutions as their preferred method of funding capital expenditures. Why is that? While we might not unlock the secret of the universe along the way we can surely provide some powerful insights into what makes leasing business equipment tick! Let's dig in.

HOW TO APPROACH THE NEED FOR ASSET ACQUISITIONS

Let's take a look first at how clients typically approach the equipment leasing asset acquisition question. Typically it seems to be always driven from a ‘cash flow ' perspective. Companies determine over the course of the time that they need to acquire or replace assets. In many cases, the cost of new asset acquisition (technology is a good example) is significantly covered off by savings in costs as well as opportunities in growth and profit. That's a good thing!

UTILIZING LEASE VERSUS BUY AND ADDRESSING USEFUL LIFE OF THE ASSET

More sophisticated users of lease finance take a look at the cost of the asset, the savings and profits they will generate, and benchmark those against the actual lease, tax and accounting benefits that come with lease finance.

Smaller firms in the SME sector might not actually do that level of analysis prior to working with a leasing company - they tend to focus on the cost of the equipment and interest rates, but smart owners and managers seem to intuitively know that a solid alternative to taking on long-term debt or depleting cash resources often comes via the lease finance solution. While many business owners only focus on lease payments in the short term, which can be easily calculated these days with an online lease calculator it's important to view your transaction in a more holistic manner.

ARE OPERATING LEASES STILL VALID? HOW DO COMPANIES FINANCE THEIR ASSETS ?

In the old days, many firms actually used operating lease to in effect hide debt on their balance sheet. The accounting rules have dramatically changed in recent times and most lenders and owners recognize that quite certainly the equipment lease is liability The bottom line is that any firm, in any business financing decision has to ensure they are watching their debt to equity relationships and the cash flow that suffers and benefits from any financing decision, as well as at the same time assessing the life of the equipment. Whether your firm is leasing machinery or acquiring high-tech assets and software the type of transaction you enter into is critical.

THE CAPITAL LEASE - IT'S THE ' LEASE TO OWN' SOLUTION

Where business leasing is similar to secured lending is that at the end of the term (in a capital ' lease to own ') your firm owns the asset. Remember though that in a secured term loan situation your lender, typically the bank might have restrictive covenants around how much you can borrow now or borrow in the future. Equipment leases tend to place less or no focus on this issue - the focus is on the asset and the cash flow.

INTEREST RATES ON LEASE FINANCE ARE COMPETITIVE

Remember also that today’s equipment finance markets are ultra-competitive. The industry is on a total rebound and that drives interest rates and credit approvals to a positive convergence of ' goodness' for the Canadian lessee.

CONCLUSION

By properly negotiating leases in an upfront manner, either from a capital or operating lease perspective the Canadian business owner /manager is in a position to have a say in the ultimate value and use of the asset at end of the lease term. So your company benefits in knowing your fixed financing costs on the asset as well as having a say in its useful economic life. Talk about eliminating uncertainty.

Yes, you do have to pay attention to claims of ' 100% financing ' and other claims sometimes not true in lease finance. Both new equipment and used equipment can be financed for your business needs.

But, on balance, as we said, we're not quite sure lease financing is one part of the mystery of the universe solution, but we do know that 80% of the crowd can't be wrong, and that's how many companies utilize lease asset finance in Canada.