YOUR COMPANY IS LOOKING FOR BUSINESS EQUIPMENT LEASING!
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today.
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Asset finance for equipment requires that business owners and financial managers look down the road at both the use of the asset or assets in question and the cash flow pressures that the need for new assets demands.
WHY DO THE MAJORITY OF COMPANIES UTILIZE BUSINESS EQUIPMENT LEASING?
It seems only common sense for owners and managers to take a strong look at why 80% of Canadian business utilizes lease financing at one time or another, or ... in some cases all the time! But hand in hand with that task requires looking at several issues, any of which could dramatically impact equipment finance's true benefits.
KEY ISSUES IN LEASE FINANCE
Those issues? They include cash flow, impact on current credit lines and other lending agreements you have in place, depreciation, taxes, and the asset's timing and ultimate disposition.
THE POWER OF LEASING ASSETS
The true power of leasing emerges when owners/managers acquire assets to produce revenues and profits. On the other hand, these days, key assets such as technology must stay competitive. The good news? Technology is made for financing these days, for everything up to and including software.
WHAT IS THE PROPER LEASE TERM FOR THE ASSET?
The term or ' amortization of the lease is an important consideration. Typical lease terms tend to be in the 2-5 year range - anything less than 2 years is quite frankly considered a ' rental. ' By the way, while we are focusing on leasing, assets can, of course, be acquired via term loans also. In some cases, short-term bridge loans of a year can aid a company in refinancing assets. Talk to your accountant concerning financial accounting issues around a purchase option, etc. They are easily explained.
THE LEASE VERSUS BUY DECISION
Some accountants and financial analysts argue on occasion that leasing is more expensive than term loans. While that might be the case based on factors such as rate, term, down payment etc., the reality is that leasing assets becomes a much more simple process - and certainly, credit approvals are typically 1-2 business days - often the same day for smaller transactions.
Companies have a choice when it comes to a finance lease / aka capital lease versus an operating lease - Let's explain! In a capital lease, ownership of the asset is transferred to the lessee at the end of the lease term.
HAS YOUR COMPANY CONSIDERED OPERATING LEASES
Operating leases are less commonly used but provide tremendous benefits when you are considering financing tech assets. Changes, i.e. ' upgrades,' can very easily be made mid-term, and options at the end of these transactions include return, extend, upgrade, purchase options at the end of the lease based upon the estimated useful life of the asset. Due to the residual value financed by the lessor, lease payments will always be lower and will have a lower interest expense. That is flexibility. It would help if you talked to your accountants about how capital leases and other types of leases affect your balance sheet regarding ownership of the asset, etc., during the lease period.
The option to purchase in the lease agreement gives your firm, as lessee, flexibility to buy the leased asset based on your estimate of useful economic life. You can buy the assets at lease term for fair market value in an operating lease as determined by you and the lessor. Many businesses while choosing that option offered by the finance company.
OTHER ITEMS THAT CAN BE BUNDLED INTO A LEASE
Your business acquires' many assets include miscellaneous costs such as delivery, taxes, warranty, maintenance, installation, etc. Those can almost always be included in your transaction. Remember also that if cash can not be expensed in your business (with leasing it does), it negatively impacts your owner equity.
TALK TO 7 PARK AVENUE FINANCIAL WHEN LOOKING FOR THE BEST LEASING COMPANY
In Canada, the true popularity of leasing actually creates a problem. Who to deal with. Lessors are U.S.-based, Canadian, divisions of banks, small tick oriented, or in some cases requires minimum deal size in the millions!
CONCLUSION
The risks and rewards of lease funding? Sometimes business needs are directly related to accounting rules regarding tax benefits, use of the asset. Additionally, lessors tend to be asset or industry-focused and even geographically challenged vis a vis where they can do business. A solution to that? Seek out and speak to a trusted, credible and experienced Canadian business financing manager who can assist you with your asset finance needs.
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Stan Prokop
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