Equipment Leasing Commercial Finance Lease 7 Park Avenue Financial

Tweet

You Are Looking For Equipment Leasing and Financing! 

You've arrived at the right address!  Welcome to 7 Park Avenue Financial 

        Financing & Cash flow are the biggest issues facing business today 

               Unaware / Dissatisfied with your financing options?

Call Now! - Direct Line - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

Email - INFO@7parkavenuefinancial.com

The leasing industry in Canada has historically been dominated by a number of different types of entities that provide equipment leasing and commercial lease finance to Canadian business.

The types of firms that are the key players in lease financing in Canada can be broken down into the following categories:

Life Insurance Companies

Credit Union leasing firms

Third party Independent Finance Companies - Canadian owner

Third party Independent Finance Companies - Subsidiaries of American firms

Captive Leasing Companies

Bank Leasing entities - Subsidiaries of divisions of Canadian banks

We would venture to say that probably 90% of Canadian business owners and financing managers think of ' Third Party Independent Finance Companies ' when they are looking to source lease financing for their equipment and capital expenditure needs.

Canadian chartered banks have moved in an out of the Canadian lease financing industry over the years. Currently only two the Big 6 Canadian banks have full fledged separate lease entities that actively market lease financing to their customers. In our opinion the reasons customers choose a bank lease financing entity are as follows;

Pricing

Existence of a Current Banking Relationship

Dollar size of transaction

Let's elaborate a bit on those points. Because banks are in the position of having the lowest cost of capital in Canada for business financing rates on bank leasing deals tend to be excellent. On average we would observe that rates on larger deals tend to be 3-4% over the Canadian prime rate. This is excellent pricing, as independent firms tend to price at 4 to 5 to 6% over the Canadian prime rate. That is on average of course because every customer's credit quality and situation is unique.

Business customers have bank lines and term loan arrangements with their bank. So it is a natural logical extension that they would discuss their needs with their banker, who may, or may not be able to offer a lease financing solution. We indicated that only two of Canada's chartered banks have full fledged lease entities. Some of the other banks have leasing division, which are much smaller and more specialized in size, and some banks choose to ' partner ' with third party independent finance firms that are both Canadian and U.S.owned.

We also referenced dollar size as a key factor in a customer choosing a banking lease arrangement. Banks in Canada have virtually unlimited capital, so they certainly can choose to finance any amount they choose. We say unlimited capital, that is a bit of an exaggeration but Canadian banks are currently viewed as some of the strongest in the world re their own credit ratings and capital ratios.

Banks are traditionally a bit slower to enter into the lease financing area, and banks use the function in some respects to develop new corporate banking relationships. In fact we have observed that in the 2009 and 2010 banking environment in Canada the bank lessor in fact attempt to develop a full corporate banking relationship with customers who approach them for lease financing needs.

Leasing is a good source of profit for the banks - the banks tend to make solid credit decisions on assets and corporate credit quality, and lease pricing provides some nice yields compare to some other parts of their business.

Some banks in Canada have, in the past, purchased some of the private independent Canadian lease companies that were getting large and successful or had a specialized market or geographical niche... Banks are often quick to sell portfolios and eliminate leasing divisions when they feel that market conditions suggest that.

In summary, the Canadian equipment leasing and commercial lease finance landscape is made up of a number of market participants. Banks play a key role, but not a dominant role in the industry. Lease financing via a bank is often a relationship driven arrangement with the business customer's current incumbent bank. Banks who participate in equipment leasing finance f have excellent rates but higher credit and asset requirements.

Business owners looking for the best rates, terms and structures  are cautioned to source the assistance of an experienced, trusted, and credible Canadian business financing  advisor to determine which leasing arrangement (bank or non-bank) is best for their needs.

?? 

The leasing industry in Canada has historically been dominated by a number of different types of entities that provide equipment leasing and commercial lease finance to Canadian businesses.

Types Of Leasing Companies In Canada

The types of firms that are the key players in lease financing in Canada can be broken down into the following categories:

Life Insurance Companies

Credit Union leasing firms

Third party Independent Finance Companies - Canadian owned

Third party Independent Finance Companies - Subsidiaries of American firms

Captive Leasing Companies

Bank Leasing entities - Subsidiaries of divisions of Canadian banks

We would venture to say that probably 90% of Canadian business owners and financing managers think of 'Third Party Independent Finance Companies' when they are looking to source lease financing for their equipment and capital expenditure needs.

Canadian chartered banks have moved in and out of the Canadian lease financing industry over the years. Currently, only two of the Big 6 Canadian banks have full-fledged separate lease entities that actively market lease financing to their customers. In our opinion the reasons customers choose a bank lease financing entity are as follows:

Pricing

Existence of a Current Banking Relationship

Dollar size of the transaction

Let's elaborate a bit on those points. Because banks are in the position of having the lowest cost of capital in Canada for business financing rates on bank leasing, deals tend to be excellent. On average we would observe that rates on larger deals tend to be 3-4% over the Canadian prime rate. This is excellent pricing, as independent firms tend to price at 4 to 5 to 6% over the Canadian prime rate. That is on average of course because every customer's credit quality and situation is unique.

Business customers have bank lines and term loan arrangements with their banks. So it is a natural logical extension that they would discuss their needs with their banker, who may or may not be able to offer a lease financing solution. We indicated that only two of Canada's chartered banks have full-fledged lease entities. Some of the other banks have leasing divisions, which are much smaller and more specialized in size, and some banks choose to 'partner' with third party independent finance firms that are both Canadian and U.S. owned.

We also referenced dollar size as a key factor in a customer choosing a banking lease arrangement. Banks in Canada have virtually unlimited capital, so they certainly can choose to finance any amount they choose. We say unlimited capital, which is a bit of an exaggeration, but Canadian banks are currently viewed as some of the strongest in the world re their own credit ratings and capital ratios.

Banks are traditionally a bit slower to enter into the lease financing area, and banks use the function in some respects to develop new corporate banking relationships. In fact, we have observed that in the 2009 and 2010 banking environment in Canada the bank lessor in fact attempts to develop a full corporate banking relationship with customers who approach them for lease financing needs.

Leasing is a good source of profit for the banks - the banks tend to make solid credit decisions on assets and corporate credit quality, and lease pricing provides some nice yields compared to some other parts of their business.

Some banks in Canada have, in the past, purchased some of the private independent Canadian lease companies that were getting large and successful or had a specialized market or geographical niche... Banks are often quick to sell portfolios and eliminate leasing divisions when they feel that market conditions suggest that.

In summary, the Canadian equipment leasing and commercial lease finance landscape is made up of a number of market participants. Banks play a key role, but not a dominant role in the industry. Lease financing via a bank is often a relationship-driven arrangement with the business customer's current incumbent bank. Banks that participate in equipment leasing finance have excellent rates but higher credit and asset requirements.

Business owners looking for the best rates, terms and structures are cautioned to source the assistance of an experienced, trusted, and credible Canadian business financing advisor to determine which leasing arrangement (bank or non-bank) is best for their needs.

Click here for the business finance track record of 7 Park Avenue Financial

Stan Prokop 7 Park Avenue Financial/Copyright/2020