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It's always a little easier to consider the obvious in business and business financing in Canada. Occasionally though we think it’s prudent for clients to ensure they consider all the benefits of certain methods of financing, some of which might not be so obvious. Let's clarify with respect to lease equipment financing in Canada, and why and asset loan or lease for capital financing purposes is often head and shoulders above any other financing alternative.
It's a given that you want to ensure any financing decision has solid reasons and benefits prior to entering into the transaction. In Canadian equipment finance the ability to finance between 90 - 100% of the asset, as well as additional miscellaneous costs is clearly a huge, and obvious benefit.
In the past, we have often referred to lease equipment strategies with a phrase we always thought was quite powerful... it’s simply as follows - Asset loan and capital lease financing help you overcome 'obstacles to innovation'.
Because quite often when we sit with a client the cost of an asset acquisition is, in fact, the largest obstacle to innovation and growth within their firm. Simply put, if we had all the capital we needed we probably would always by the best (most expensive) fixed assets for our business.
Let’s get back to that 90-100% financing. Although many lessors tout the fact that lease finance in Canada is 100% financing the reality is that on many occasions clients are asked to put down a down payment of security deposit on the lease finance transaction. We would point out though if your firm has very good commercial credit and financials and cash flow that support your transaction you should in fact focus, if not demand! 100% financing.
So, on to our 2nd obvious reason to focus on lease equipment financing asset loan/lease. It’s all about the term. The term of course refers to the length of your lease... it can be long to ensure lower payments and reflect the assets useful economic life, or it can be shorter it means getting an approval vs. not getting one. We point out to clients that, on balance, lease terms of less than 2 years to not make sense for the lessor... so don’t focus on too short a term!
We heard a rumour the other day... that being that 'cash is king’! If you subscribe to that rumour then equipment financing is for your firm, reducing cash flow drain and be adjusted for seasonality, delivery issues, or simply staggering payments to ensure your match benefits of the asset with cash outflows.
Those all 3 very obvious, and often discussed, are benefits of asset financing via leasing in Canada. We have focused on who you are dealing with, which is one of the hundreds of equipment finance firms in Canada. So our 'not so obvious' point today is simply that by not dealing with banks, insurance companies, hedge funds, etc., all of which might hold other security over your firm you are in effect freeing up the business credit than any firm so badly requires these days. And you can further expand that business credit by considering off balance sheet financing via operating leases, which make perfect sense for larger ticket items such as computers, aircraft, etc.
So as we have said, there are a number of 'economic' benefits to leasing equipment in Canada. To further explore some of these obvious (and not so obvious!) benefits to your firm consider talking to an experienced Canadian business financing advisor who has a trustworthy, credible and experienced reputation in Canadian equipment finance.
lease equipment financing asset loan capital