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Looking For Uncomplicated Asset Financing For Your Business : We’ve Got It!
OVERVIEW – Information on lease equipment financing and asset financing solutions for the Canadian marketplace. How asset acquisition finance strategies work is key to success in growing your business
When a Canadian business owner or financial manager considers a financing transaction he or she wants to understand the advantages and disadvantages of such a financing. When we meet with clients we clearly explain that no one financing solution is a perfect solution when evaluated against other alternatives. That certainly applies to leasing.
Are there actually disadvantages to a lease financing strategy? Here are a couple of things for you to consider. Naturally a lease is a fixed payment arrangement, so you do have a constant obligation to meet the agreed upon payments over the term of the lease. If you have chose a ‘ lease to own strategy then clearly you own the equipment at the end of the lease – in some cases certain equipment holds value and actually appreciates, but 99% of business assets, other than real estate, decline in value .
Your accountant may tell you that some of the tax advantages of a lease are less attractive. A lease versus buy strategy may point out that it is actually financially advantageous to purchase or take out a loan.
Well there, we have given you four or 5 reasons why Leasing ‘might ‘not be the best financing strategy. Now though, let’s talk about ten or more reasons why Canadian lease equipment financing solutions in fact might be very attractive and appealing to your asset acquisitions!
The most obvious benefit of leasing as perceived by Canadian business owners continues to be that it allows your firm to conserve working capital. We talked about how a lease versus by analysis by your accountant or financial team might show that leasing is not the best acquisition strategy – however in many cases, depending on criteria assumptions, it in fact may well prove to be a more profitable financing and cash flow strategy.
If your firm has bank loan or arrangements with any other lenders you are often, if not always subject to other covenants and restrictions they have imposed re collateral, personal guarantees, and ratio covenants. In a lease financing strategy the collateral is generally just the equipment, it’s a very stand along type of financing! And naturally those bank lines and arrangements that we just spoke of are not disturbed; you can still use them for day to day working capital and cash flow.
When clients ask how long it takes to get an approval and financing completed we generally indicate that can be done in a week or so with their full co operation. Generally that type of time line cannot be met with other types of financing. And payments and cash flows can always be structured to meet your financing needs. In effect you have arranged an alternate source of financing for your firm, and all financial gurus will advise you to ensure you have multiple, not just one, source of business financing.
In May cases you are acquiring business equipment and assets because of budget issues and leasing certainly helps to eliminate what our firm calls the ‘obstacle to innovation. Certain assets your lease will ensure you have in effect created a hedge against obsolescence.
Bottom Line? We’ve given you four or five reasons not to choose equipment financing in Canada as a financing strategy – hopefully you will weigh those against the ten or so great reasons to financing via leasing. Speak to a trusted credible an experienced advisor in this area if you wish more information.
7 Park Avenue Financial :
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Office = 905 829 2653
Email = sprokop@7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations .
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
Stan Prokop
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