The Equipment Finance Lease In Canada : Eliminating Rough Waters In Asset Financing

You Can’t Handle The Truth About Equipment Leasing In Canada .. Or Can You

Information on asset financing in Canada. What are the advantages and manageable disadvantages of the equipment finance lease for Canadian business financing solutions

The equipment finance lease is by far the most popular method of asset financing in Canada. Although paying for an asset in this matter is ' cash going out ' vs. ' cash going in ' this method of finance allows businesses in Canada to acquire assets and technology needed to run and grow their business. ( Note – Businesses can achieve ‘ cash in’ status via a sale leaseback strategy )

While mostly positive, and we hesitate to use he word ' negative ' there are some issues that need to be understood by the owner/manager. It's all about handling the truth we suppose - let's dig in.

Unless your lease properly reflects the option to own the asset at the end of the term lease financing is all about ' using' an asset. Small to medium size lease financings have some fairly basic issues attached to the documentation; if you don't know the basics of these you can over pay / over spend on lease financing. And by the way, they are all negotiable!

And those basics?

They are:

Amortization term of the lease

Residual

Purchase Option

Termination abilities

For asset financings in the SME Commercial area documentation around lease contracts is fairly simple these days - lessors have strived to eliminate paperwork. Larger transactions and ' Master Lease ' agreements tend to be more complicated.

Many business owners and financial managers don't fully investigate ' operating leases. A good way to understand these is to think of it as a lease for an asset where the life of the lease term is almost always shorter than the expected life of the asset. One of the most common asset classes financed by operating leases is ' Technology / Computers’

While the appeal of the ' off balance sheet ' aspect of operating leases has pretty well bitten the dust it’s still a great way to upgrade, replace and add on to existing tech assets.

While lessors in Canada scream ' benefits ' (flexibility, cash flow, alternate credit sources, tax implications) a more balanced approach is to ensure the potential downside.

Those ' downside' issues include:

Potential non ownership of the asset

Termination costs if you are forced to exit a lease for business reasons

Cost (rates tied to leases are more often than not higher than pure bank loans/borrowings)

When we talk to clients about ' handling the truth ' in those downside issues it’s important to realize they are all manageable and hardly overwhelming if understood at inception.

If you're looking for ' smoother waters' in your equipment finance lease needs seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can assist you in matching proper asset financing solutions to your needs.


Stan Prokop - 7 Park Avenue Financial :

http://www.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 90 Million $ of financing for Canadian corporations . Info /Contact :


7 PARK AVENUE FINANCIAL = CANADIAN EQUIPMENT LEASE FINANCE EXPERTISE



Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop

Leasing Company Challenges ? 5 Simple Facts That Affect Your Equipment Finance Lease Success

These Habits Save You Money On Asset Acquisitions

Information on equipment lease finance in Canada. Ensuring you understand these points to effectively deal with a leasing company provides you with the comfort that you are achieving proper benefits and utilizing your rights in the asset finance transaction



Leasing Company challenges. There are some real basics you can cover off to ensure you're saving money, time, and most importantly, helping to guarantee you have a great deal on asset acquisitions in Canada . Let's dig in.

What we're talking about is simply understanding your rights and obligations in the type of lease structure you seek, and ensuring the paperwork and terms around the transaction meet your needs.

Naturally there are all types of lease sizes, you might be leasing a laptop or photocopier for the office, you might be investing in computer and telecom infrastructure, or at the high end of the scale it might be that corporate jet. Well we can dream can't we..?

First of all it’s important to understand the term and actual start date of your payments. Term, i.e. the actual amortization of your lease is important because it requires thought relative to the actual useful life of the asset. In certain cases you might be acquiring assets or part of the asset with the actual lease payment not starting yet. Make no mistake though, there is no free lunch in lease financing, so interest is accruing on your transaction.

Our second point is that you have a of choices in lease payment timing - you can request monthly, quarterly or in some cases annual lease payments depending on the size and quality of your overall transaction .

Our third point - simply to ensure you have the proper insurance on the asset being financed. In almost all cases anyway you will be asked by the lessor to provide a certificate of insurance. We should point out also that certain assets require they be proper maintained. While as a prudent and responsible business owner you want to do that anyway, suffice to say your lessor feels the same way.

Fourth point - understand where your assets are located, whether they be at a head office, a branch office, or in the field, so to speak. You will want to advise your lessor of any change in location of the asset. It's simply the right thing to do. Larger assets may in fact need to be inspected by your lender at certain points during the lease term.

Fifth point - Choices ! Don't forget that in Canada you have the option of picking a lease to own or a lease to use transaction. That is called capital and operating leases respectively. Tech type assets are perfect for operating leases because they give you the right to return, upgrade, extend or purchase assets depending on their obsolescence - which is one of the key points in asset finance - your ability to manage the economics and cash outflows.

What's our key point today ?Simply that for a multi million dollar transaction you might well want to have your lawyer look over documents and terms , but the reality is that the knowledgeable business owner has the ability to manage certain issues within an asset finance transaction that can save you thousands in time, dollars, and oh yes grief!

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in proper ' habits' in addressing a finance transaction.




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 10 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 :

7 PARK AVENUE FINANCIAL - CANADIAN EQUIPMENT LEASE FINANCE EXPERTISE


7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com


















Stan Prokop