YOUR COMPANY IS LOOKING FOR EQUIPMENT LOANS AND LEASES!
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Financing & Cash flow are the biggest issues facing business today
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The need is often there, but the solution might not be always as obvious as it seems. We're talking about equipment loans and leases in Canada - those unique structures that allow business leasing strategies used by your firm to acquire financing for the assets it needs... to operate, survive, and grow!
When Canadian business owners and financial managers are faced with the challenge of fixed asset finance their oft immediate option is the traditional business loan. This might be a bank term loan for example. The criteria, we in the industry call it 'the credit bar' might often be fairly high to achieve the types of term financing you need on structures that make sense for your firm.
So, if that was Plan A, and Plan A doesn’t work, what's left? The answer quite simply is equipment leases for business financing. Rates and terms are quite competitive to the bank, and Canadian business, in general, we feel, seems to think that lease financing proceeds with less of a 'hassle'.
Your equipment needs might be from several aspects of your business, computing, machinery, office equipment, etc. All of those assets of course run your company; they're important.
We spoke of the bank term loan as an option, the other more obvious one might have been a cash purchase, using the funds (if they are there!) to acquire the equipment outright. However, using that capital in this manner is often a classic 'mismatch' of funds; your firm, incorrectly so, is using short term cash for long term asset acquisition. Bottom line, not a good thing. The reality is you want to use those funds for operating and revenue growth.
That then brings us to what we feel what might be the optimal solution in business financing for assets, 'leasing'. Your new found ability to acquire assets with little or no down payment, bundle in other costs such as shipping, installation, warranty, etc. becomes a solid new strategy for asset finance for Canadian business owners.
When utilizing lease finance you are in effect leveraging your cash flow, getting the most out of it, all the same time matching outflows of cash with future inflows of sales and profits arising out of the use of those operating fixed assets you are financing. Our strategy clearly works best for companies who find they need to constantly refresh assets such as computing, or shop floor equipment.
Oh, and by the way, thousands of businesses that don't qualify for bank term loans for assets do in fact always qualify for lease financing. Transactions are structured on a combination focus on the value and use of the asset, your current and future cash flows, etc. Oh, and by the way, your lease payments can generally be expenses and set off against tax obligations.
We spoke of three options in Canada under equipment loans and leases financing scenarios. Those three options are capital leases, operating leases and sale leaseback of assets you own already. Each of these options has different benefits and gives your firm different rights and obligations. Speak to a trusted, credible and experienced Canadian business financing advisor to identify which of these 3 options make sense for your firm.
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