5 Things You Need To Know About Equipment Financing In Canada – Why The Old Rules Don’t Apply Anymore In Heavy Machinery Loans

Forget What You Thought You Knew About Lease Financing After Reading This Information on equipment financing in Canada .

Focus on these 5 issues for lease finance success in heavy machinery loans and leases.



Are the ' old ways' in business always the best ways? We're not always sure about that - let’s examine 5 key areas you need to focus on when arranging equipment financing for heavy machinery loans and leases in Canada in our current economic environment.

When we speak to clients whats the one thing they are always looking for in lease finance for the financing of heavy machinery and other types of assets from business equipment, computers, and plant assets. You guessed it. Approval! Let's drill down on 5 needs to know areas of lease financing in Canada.

In equpment financing its all about approval, our # 1 topic today. Although lease financing is on a tremendous roll in the 2011 Canadian economic environment its safe to say getting approved for the asset financing you need, within rates and terms and structures you feel you deserve is .. Well... let’s say, still a challenge! If you have solid financials and a strong history of cash flow and repayment to a lessor you naturally will have not a large problem.

But what if all of the ' credit boxes ' the lessor puts you in don’t quite match up. The good news is that lease and equpment financing in Canada for heavy machinery loans is often a ' story credit' situation. That might mean you can expect a higher rate inherent in the lease, and the good news is that heavy machinery type assets have significant asset and residual value which will help with a structured approval. That approval might include outside collateral, a shorter term, etc. Bottom line, there is a ' credit box ' for every type of asset and business credit quality in Canada.

Point # 2 today - you've go choices. It's not always about price. Focus instead on the many other parts of the equipment financing decision such as where you will get the fastest approval. The hundreds of lessors in Canada that will provide you with financing are most focused on firms with whom they can build a longer term relationship.

Point # 3 today - Do you consider yourself the best lease equipment financing specialist in Canada. Someone who knows all the players understands current rates and structures, and who knows the in’s and outs of lease finance lingo? It's rare that any Canadian business owner or financial manager can feel 100% comfortable in knowing he or she has made the best financing decision for the asset they are acquiring.

The solution - Consider help and assistance from an experienced Canadian business leasing and financing advisor. That help should be free and the cost of your financing might go down significantly when you have expert assistance in negotiating terms, rates, and types of equipment financing leases and loans that make sense for your firm.

Point # 4 today - Simply put - the devils in the details! In small and medium sized transactions in Canada there isn’t a lot you need to know about standard documentation. However in larger ticket heavy machinery loans pay particular attention to types of leases you enter into, final pricing, and documents that make sense around your obligations, and rights in your transaction.

Item # 5 - In Canada your primary two choices for lease equpment financing are full payout lease to own transactions, known as capital leases, and the more complex operating lease transaction. Operating leases can have a significantly lower cost, but you need to understand end of term issues around extending, buying, upgrading, or returning the asset you have financed. Again, here is where some expert assistance comes in very, very handily.

In Canada there is solid competition for your lease finance business when you're acquiring heavy machinery loans and leases. Take time to understand the players, maximize the benefits, and above all seek the help of an Canadian business financing advisor who is expert in Canadian lease finance to assist you to arrange the best leases for your firm.



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/equipment_financing_heavy_machinery_loans.html

5 Dangers of Financing Equipment - From Technology to Machinery - Avoid These Mistakes With your finance company or leasing firm.

You've seen the sign - it reads ' Danger Ahead ' !No we're not talking about a curve in the road but rather discussing 5 key areas where Canadian Business makes thousands ( or millions ?) of dollars in poor judgment around critical areas of financing equipment via a third party finance company - and our discussion covers all assets from machinery to technology .

Let's review 5 key dangers areas in equipment financing in Canada and provide you with solid real world tips on how to successfully navigate these areas to better enhance your company’s ability to maximize on lease finance company benefits.

Item 1 - Structure - Lease financing is all about structure. Unfortunately most clients we deal with only always focus on 1 of the 5 elements of a lease transaction. (By the way, those are: term of lease, lender interest rate, value of transaction, payment, and obligation at end of term)

Let's use a quick example - we'll take a sample 100,000$ transaction. On a 3 year capital lease to own scenario your monthly payment at an assumed rate of 8% is 3112$. However, if you chose an operating lease (i.e. use equipment and not own it) your payment would come in at around 2490$/mo. And if you took our first example, and either were required, or voluntarily put down 10% the monthly payment is now 2801$. Same deal, different payments. Which one is best? That is only for you to decide based upon your unique asset acquisition situation.

So interesting calcs, but what’s our point you say? Simply that by understanding how the finance company utilizes structure to provide you with a ' monthly payment ' can arm you with knowledge that will ultimately translate into a payment scenario that works for your firm. Bottom line - understand how the lender views and utilizes the five elements of your final lease calculation.

Danger Item # 2- Pricing! We suppose that the late famous Vince Lombardi might say ' Lease pricing isn’t everything, it’s the only thing!' Sorry Vince, we couldn’t disagree with you more. Your ability to match the right term of the lease with the right finance company and type of lease you choose (there are several) can pay for itself many times over . Its now always about rate and pricing because if it was always about price we would all be driving low end compact cars - many of us dont , because we have financial options and alternatives . And by the way, its a competitive market , so by positioning your firms credit quality properly you will always receive a competitive rate .

Danger - Item 3- Credit approval . Most clients simply aren’t aware of how to position their financials properly in financing equipment . Whether you are acquiring heavy machinery, construction equipment, or high end software applications you need to understand what drives credit approval . Those factors are the asset you are financing, your historical cash flow, your current and sustainable cash flow, and your ability to work with your finance company to structure a deal via down payments, outside collateral, etc that make the transaction a win win for yourself and the finance company .

Danger - Item # 4- Conditions . Its all about the fine print, but many customers don't read the fine print, As a result they are subject to thousands of dollars in misc admin fees, renewal fees, possible appraisal requirements, and most importantly early pay or termination fees . Ask your finance company or Canadian business financing advisor to ensure you understand who is paying what .

Item # 5- Our last danger point ! What is it ? Simply that financing equipment is great, but in many cases are you sure you understand all your alternatives to this type of financing . They might include an asset based loan, or even a temporary bridge loan on the asset .

In summary, financing equipment in Canada occurs everyday, from assets from 5k to 50 Million dollars . Understand the hot points of what a finance company focuses on when they are leasing machinery , business equipment, or any type of business asset you need to acquire . Unsure of that Danger Sign in the road ahead ? Speak to a trusted, credible and experienced Canadian business financing advisor for navigational assistance!

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Stan Prokop is founder 7 Park Avenue Financial ; see

http://www.7parkavenuefinancial.com
Originating financing for Canadian companies,specializing: working capital, cash flow, and asset based financing , the 6 year old firm has completed in excess of 45 Million $ of financing for companies . For info / free consultation on Canadian business financing / contact details see:

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