Leasing Assets ? Don’t Plead ‘ The Fifth ‘ When It Comes To Asset Financing And Using The Finance Lease !

Here’s Your ‘ Cheat Sheet ‘ On Canadian Lease Financing



Information on leasing assets in Canada . Asset Financing knowledge is key to a success finance lease strategy for acquisition of assets .




When it comes to leasing assets in Canada is it your turn to ' take the fifth '? We're talking about lease financing using such vehicles as the finance lease or operating lease to run and grow your business.

And oh yes, about ' taking the fifth '!

That's of course the U.S. term which invokes your right against self incrimination. When you do that you're simply saying you’re kind of guilty, don’t you think? But it doesn't have to be that way. Just spending some time in understanding some key lease finance basics will put you way ahead of the game. And here are some of those basics.

As a business owner or financial manager in Canada you have basically got three choices when acquiring a business asset - they are:

Purchasing the asset
Leasing the asset
Taking out a term or bridge loan on the asset

Typically our clients most often used excuse for considering lease financing is simply they would like to match cash outflows with the use of the asset over a specific period of time. In Canada lease terms tend to be from 3 to 5 years, but they can be shorter... or longer...depending on the asset and type of lease you enter into.

There are always some key accounting issues to consider when it comes to asset financing; most of those are quite positive when it comes to leasing - they include being able to depreciate the equipment and expense the interest.

Lease rates; unfortunately tend to be ' top of mind ' when it comes to client decisions to lease assets. The irony is that even when some owners/mangers don't even know how the lessor calculates those rates they still seem to be top of mind. We cringe every time we hear ' what’s my rate?' if only because there are so many other factors which determine a great lease. We sometimes think instead of asking ' what’s my rate ' the owner/manager should take ' I plead the fifth' because I am not 100% sure what I am talking about! But that’s a subject for another day.

One final point about the rate though and it’s simply that your credit quality is pretty well pre determined when it comes to credit approval for the asset in questions. Smaller ticket items in Canada, often up to 50k don’t even require financial statement disclosure, but you should be expected to provide full financial disclosure for the asset you are financing.

Because the industry is so competitive in Canada even if your firm’s credit quality has some issues the benefit of leasing is that your deal can be ' structured ' to ensure approval. Structuring simply might be a higher rate, a down payment, additional supplementary collateral, etc. The one downside of leasing is that it generally is not repayable without penalty, and the best you can hope to achieve here is some sort of negotiated lower buyout amount at the mercy of the lessor. So if you are entering into a 3 or 5 year lease... caveat emptor!

So, is the lease option for your firm when it comes to asset financing. Top experts in the field indicate that over 80% of all North American businesses utilize this method of asset acquisition. Spend some time understanding your options, and seek the services of a trusted, credible and experienced Canadian business financing advisor who can assist you with your ' lease vs. buy ' decision.

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCING EXPERTISE

Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/leasing_assets_asset_financing_finance_lease.html