YOUR COMPANY IS LOOKING FOR EQUIPMENT LEASING!
EQUIPMENT LEASE FINANCING FOR YOUR EQUIPMENT PURCHASES
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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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UNDERSTANDING EQUIPMENT LEASING AND FINANCING IN CANADA
Equipment leasing in Canada. Is it safe for us to assume you potentially feel you're in an ' unhappy relationship ' with this method of financing business assets?
The finance lease and related financial solutions are a tremendous way to grow your business properly if you are, in fact, in a ' good relationship ‘ with a leasing company when you are purchasing equipment or technology. Equipment leasing enables you to acquire the assets you need to run... and grow! your business. Let's dig in.
5 SIGNS YOUR EQUIPMENT LEASES AREN'T WORKING
What then would some of those warning signs be that your asset financing relationship currently isn’t working when buying a piece of equipment? Some of them might be as follows -
1. You don't understand what works and what doesn't in different types of leases - What types of leases work best for your firm/industry? What lease term or rental agreement do you require regarding expected asset life over the fixed term of the lease?
2. Everything seems a little too complex sometimes around certain terms and including how the monthly lease payment is calculated ( Not all small businesses have a tax advisor )
3. You're not coping successfully with tax/ accounting/interest rate/credit issues of long-term financing and are looking for a fast turnaround on your transaction.
4.You don't know what the other party is, in fact, offering when it comes to choices - should a business loan be considered instead for a specific period. If the lease term for the asset is a long period of time, the asset may become obsolescent
5.You're seeking credit approval but don't know how to get it as it relates to the cost of the equipment or technology you are purchasing - Business owners want market value pricing for their financing needs and if upfront costs or down payment is required ( Spoiler alert - in the vast majority of times down payments are not required.
Let's address some of those issues, in effect mending that your firm's relationship in striving to be successful.
MATCHING YOUR EQUIPMENT LEASING SOLUTION TO THE ASSET IS KEY
When choosing leasing companies for a finance lease, the business owner / financial manager needs to assess which type of transaction best suits the asset that you are acquiring. That might be a lease to own / capital lease type solution, or an operating lease, in effect a ' lease to use. ' Lease payments differ significantly depending on the type of lease you choose when it comes to flexible terms of a lease agreement.
In an operating lease scenario, you need to assess the asset's fair market value at the end of the lease, allowing you to return, purchase or upgrade.
Under that operating lease, you have a tremendous amount of flexibility when returning the asset, upgrading it, and lowering the overall cost, given the asset reverts back to the lessor if you so choose.
The ' end of the lease' choices you have to make should always be considered and reviewed at the start of your lease financing decision when you purchase the equipment. The Financial Accounting Standards Account Board, aka the' FASB, 'has diminished some of the off-balance sheet aspects of operating leases in recent times. Capital lease payments help minimize the liability for the lease and interest, which is deductible as a business expense for the lease period.
Understanding the differences and benefits of capital and operating leases is what a good asset acquisition decision is all about when it comes to the equipment purchase by the lessee.
The useful life of the equipment at the end of your transaction should be reviewed in the context of the term of the lease and cash flow implications. The majority of capital leases tend to be 3-5 years from a term perspective. In a capital lease, your ownership of the equipment outright at the end of the lease transfers to your firm.
DOES A SALE-LEASEBACK SOLUTION MAKE SENSE
While finance and operating leases are the mainstays of business asset financing, also remember that many businesses choose a sale-leaseback equipment loan scenario on assets you already own, bringing invaluable working capital when you need it.
Also, assets already owned can also be structured under a non-lease transaction, aka a ' bridge loan ' when traditional financing can't be accessed. Real estate is a typical asset refinanced under the lease back process. We advise clients that it might make sense to pay for an appraisal in order to maximize value .
DON'T FORGET YOUR TAX AND ACCOUNTING ISSUES AROUND LEASE SOLUTIONS AND THE PURCHASE PRICE WHEN YOU LEASE EQUIPMENT
While it's important to understand the tax and accounting and credit implications of equipment loans and leased equipment and equipment lease payments in Canada, one also has to remember that you've got tremendous resources to assist you - that could be your accountant, a lawyer, or business advisor- depending on the complexity of the lease the business owner may be able to assess possible implications around issues such as being tax-deductible, etc.
HOW TO QUALIFY FOR & OBTAIN CREDIT APPROVAL / FAST APPLICATION AND FAST FUNDING!
Approval for a finance lease transaction contract by the lessor/lender has never been quicker than in these modern times - as well as more accessible than bank financing. Electronic credit reports allow you and your lessor to exchange key financial documentation needed for approval almost instantly, and credit approvals for your transaction can often take place in a day.
Larger transactions might involve meetings with your lessor/lenders or negotiations around rate, terms, and structure. A business credit report and credit history/credit profile are a part of the lease approval process. A business plan for substantial purchases might be a good idea in some cases, outlining the needs and benefits of the asset or technology acquisition and how it may free up cash flow.
Remember also that equipment finance solutions conserve your line of credit options as you fund your business on a day-to-day basis and budget for the lease payment - allowing you to match cash outflow to the monthly payments on your transaction in the short term.
The ability to lease expensive equipment / other assets that you might normally not be able to afford is a key aspect of proper utilization of asset financing. In some circumstances, you may wish to consult with a lease broker, vendor partners, or an equipment dealer/equipment vendor on a specialized equipment / medical equipment/technology purchase. In some cases, an existing lease may need to be refinanced.
CONCLUSION - EQUIPMENT LEASING FINANCE LEASE SOLUTIONS IN CANADA
Our bottom line? When it comes to leasing or buying equipment, you need informed decisions for making sizeable investments in the total cost of expensive equipment , allowing you to stretch your money to the max!
Simply that an investment in understanding how equipment lease finance works and how it can benefit your firm will surely mend that strained relationship you're feeling when acquiring assets for your firm.
Small business can effectively utilize leases for the purchase of assets you need to run your business. Interest rates around a lease payment have never been lower or more competitive.
Speak to 7 Park Avenue Financial , a trusted, credible and experienced Canadian business financing advisor who can assist you with your finance lease needs and who will provide the best ' need to know ' advice and customer service around your asset acquisition business needs.
FAQ: FREQUENTLY ASKED QUESTIONS
What is equipment lease financing?
Equipment lease financing is a form of financing where business owners lease or rent the equipment as opposed to an outright purchase of the asset. The ability to acquire expensive assets rather than purchasing them provides flexibility in running and growing a business.
How do equipment leases work?
Equipment leases are similar to equipment loans, but in the case of equipment leases solution the lessor or lender acquires the equipment and then rents or leases it back to the company at a fixed monthly payment - Payment flexibility and cash flow conservation is a key part of finance lease solutions.
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