YOUR COMPANY IS LOOKING FOR BUSINESS FINANCING!
EQUIPMENT FINANCING AND LEASING SOLUTIONS IN CANADA
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Equipment loans and leases for business equipment in Canada, as offered by leasing companies and other commercial finance firms, are at an all-time high in popularity. The bottom line - all types of equipment can be financed.
TAKING ADVANTAGE OF EQUIPMENT LEASE FINANCING SOLUTIONS
When the business owner/ financial manager understands why this is the case, they can take advantage of benefits and advantages reserved for all. It's one time when following the crowd is a must! Any type of equipment or asset can be financed - even technology requirements. When you purchase the equipment the leasing company pays your vendor directly. Alternatively, a sale and leaseback can be structured. Let's dig in.
WHAT CONSIDERATIONS ARE MADE IN ACQUIRING ASSETS FOR A BUSINESS
The acquisition of assets in business always comes down to several key decision points - the asset's use and benefits and the cost and cash flow outflow ramifications. More and more, the owner/manager is focusing on using an asset, not necessarily owning it. With all respect to those ' pride of ownership,' folks preserving cash flow is almost always king.
4 FACTORS TO CONSIDER IN FINANCING BUSINESS EQUIPMENT
Equipment financing sometimes by necessity can get a little complex - more often than not, it’s a simple process. Still, it’s critical to understand that some of the factors you must also consider in financing equipment include:
1.Tax ramifications
2.Accounting Treatment
3.Effects on your balance sheet / Debt load
4.impact on credit line facilities / line of credit
DO CANADIAN BANKS PROVIDE EQUIPMENT FINANCE
It's interesting to note that almost all the Canadian chartered banks today offer specialized leasing services via separate entities within the bank. Typically these transactions are reserved for bank clients and those that have substantial credit. Deal size is typically larger here also. The lease term can be anywhere from 2-7 years depending on the type of asset financed and overall credit quality of the lessee. A good credit score/credit report and personal credit history is a key requirement of bank leasing solutions around financed equipment.
Independent Canadian commercial finance companies cover the balance of industry. These firms typically have set credit profiles they are looking for and deal size and asset mix for leasing equipment to their client base.
WHAT ASSETS CAN BE LEASED?
In Canada, almost any asset can be financed. That includes technological needs also - such as computers, software, telecom equipment, etc - Care and thought should always be given to end of the lease issues and what types of lease funding you utilize - which can also be a business equipment loan of course as an alternative to the lease option. Leasing companies offer a wide variety of structures around asset acquisition and a lease period that meets your needs.
Interest rates are very competitive on any type of or piece of equipment you wish to finance.
WHAT ARE THE 2 TYPES OF BUSINESS EQUIPMENT LEASES
While the majority of the industry is focused on what is known as the ' Capital lease, ‘aka ' lease to own, 'it's important to know that another choice exists - that’s the ' Operating lease ' or ' lease to use ' so to speak, which is more of a short term transaction - an example being renting tools or renting machinery. In a capital lease, you make a decision to own the equipment outright at end of lease term. Monthly payments may be able to be structured around the use of the asset over the best term that suits your needs. While the interest rate is one factor to consider in the cost of the equipment lease term and final residual value should be assessed also.
4 KEY FACTORS TO CONSIDER IN EQUIPMENT LEASING / EQUIPMENT LOANS
Factors that business owners must take into account when considering leasing or the type of lease they will choose include -
Estimated life of the asset - what is the value and use to your firm of the equipment at the end of the lease
The desire to own or return the asset
Leasing structure relative to rate, term,
Cash flow impact - pros and cons of capital outflows and credit facility conservation - its important to make sure lease payments meet your cash flow budget - Some options available might require some restructuring such as a down payment
FINANCING YOUR TECHNOLOGY NEEDS
Computer leases are probably the best way to describe the benefits of operating leases. That’s because technology changes so quickly. Owners wish to upgrade often, replace or refresh, and assets can be efficiently returned with no obligation to buy.
CONSIDER A SALE LEASEBACK SOLUTION
Assets you own can also be leased, by the way! That’s essentially called a sale-leaseback and allows you to keep assets in the business and take advantage of those assets' equity. The process is relatively simple and includes ensuring the asset is lien-free, has value (typically via an appraisal) and providing a proper lease or loan structure is in place. The lease can be, in this case, substituted for a ' bridge loan' of sorts.
WHAT ARE THE BENEFITS OF EQUIPMENT LEASING
Have we forgotten anything? Oh yes. If your business offers a product that can be leased, you can benefit from offering a customer financing program. By partnering with the right firm, you can offer all the benefits of equipment loans and leases to your clients.
Key benefits include:
Immediate cash flow for the vendor
Removal of budget and price constraints in your products
Creating a strategic advantage via your client’s perception, you offer a one-stop solution.
CONCLUSION
Small business will always have business needs around the acquisition of assets. Financing and leasing of assets and expensive equipment can help your firm grow in its revenues around products and services. So, if 80% of Canadian business is ' HOOKED ' on Canadian leasing companies and the solutions they provide, the choice seems pretty straightforward.
Leasing companies are the solution to the equipment you need to run and grow your company. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your business financing needs.
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Stan Prokop
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