Asset Finance In Canada : The Not So Secret Continuing Rise Of Equipment Lease Financing

Want To Lose That ‘ Being Held Ransom’ Feeling When Acquiring Business Assets In Canada ?

OVERVIEW – Information on the continued rise of equipment lease financing in Canada . When it comes to asset finance choices leasing continues to provide options and solutions for Canadian business










Asset finance decisions don't always come easy for the Canadian business owner / financial manager. How then do equipment lease financing solutions allow your company to escape that ' being held ransom' feeling when it comes to getting the equipment and technologies you require to run and grow your business? Let's dig in.

It shouldn’t be a secret that asset leasing strategies have been around for centuries in Canada. While some forms of business financing have either become outmoded or simply don't really work well anymore leasing assets continues to offer the same benefits it always has, and makes sense all the way along.

What are some of the key advantages then if your choose to lease assets? There are other ways to finance those same assets, the most common being term loans, bank debt, etc. Business owners therefore have options, but experts tell us that close to 80% of all businesses gravitate towards leasing simply because it's one other external source of business credit.

And, effectively structured it allows your company to access the capital it needs typically on a 100% financing basis. To be fair, many asset leases do require a first payment in advance, or a down payment, but once you're past that your purchase is simply fully financed.

A prime concept here is also the fact that equipt. finance allows you to match the benefits of the asset or assets you are financing to cash outflows over that same period of time. And if the asset in question is an operating asset that helps your company generate revenue all the better giving that matching of cash outflows. We could call this ' self funding' as the asset pays for itself over the period of the term of the lease.

While we are talking about paying a lot of attention at the start of your asset financing journey it makes as much sense to consider what the industry calls ' end of term options’. Simply speaking many assets still have a residual value of use and properly structured you can take advantage of that value by arranging a lease that takes that estimated final value into consideration.

Business owners/managers spend a lot of time chasing capital these days. Equipment lease financing approvals are much easier to obtain compare to bank financing which often revolves around annual bank reviews, heavier credit diligence, etc. While most Canadian banks now offer leasing as an additional service it’s important to remember they do that in the context of their entire relationship with yourself.

The bottom line - once your company is approved for a lease and you're making your payments on time no changes are going to be made to your deal. That allows you to source your working capital and other debt financing needs from other lenders or institutions. The prime collateral of the leasing solution is simply the assets under that lease, and typically no other collateral is required.

Many manufacturers of the assets you require to run your business over captive or specially tailored programs to enhance their sales. Take advantage of them because no one is more incented to help you finance your needs than the vendor itself.

While we are primarily talking about ' ease of acquisition' for assets your business needs you'll find there are a number of tax and accounting benefits to asset leasing.

If you want to escape the feeling of limited options and that desire to not be held ransom in your asset financing needs seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success in equipment lease financing.



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 :

http://www.7parkavenuefinancial.com/asset-financing-equipment-lease-financing.html




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

Equipment Lease Financing In Canada . Why Its Better Than Just Average

Equipment Lease Financing In Canada . A Real HOUSE OF WONDERS Financing Solution for Canadian Business

OVERVIEW – Information on equipment lease financing in Canada . Here’s one key advantage of utilizing this method of asset financing that you probably didn’t know about










Equipment Lease Financing in Canada .When companies borrow from banks and other asset based lending firms there is, almost always, certain covenants that are put in place to ensure the lenders comfort with the financing. These covenants tend to be financial ratios (we can call them 'number relationships') that would allow a lender to get some sense of early warning that their loan may not be repaid.
The most typical covenants the lenders place on borrowings tend to be:

- Working capital guidelines
- Total debt versus total equity in the company
- Cash flow coverage - i.e. the company's ability to generate cash to pay the loans.


When these covenants are broken discussions ensue with the bank and the company!


Leasing and equipment financing, as a borrowing strategy, 99% of the time we feel, eliminates the additional risk a company takes when borrowing on equipment. That is to say that lease companies, in general, to not insist on those same restrictive covenants that the bank does. We can therefore make a statement that the company has a greater feeling of independence when it enters into a lease financing arrangement.


Why does the lease company not require those restrictive covenants? That is probably for two reasons - the first is the fact that leasing rates are, in general, higher than bank rates, so the lease company reflects their risk in pricing. Many times the lease firm will also ask for a deposit or advance payment to further augment our above point.


And at the core of why the lease company does not insist on restrictive covenants is the fact that most lease firms have very strong asset experience and are generally comfortable with collateral. As we can all imagine, banker can't be expected to have a strong sense of equipment valuation and remarketing - they are of course more 'numbers' oriented - relying on the balance sheet and income statement to predict payment, not the value of the asset.


In summary, leasing as an alternative form of finance allows a firm to acquire equipment without additional concern over lender covenants and ratios more commonly associated with banks. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your asset finance needs.


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 = EQUIPMENT LEASE FINANCING EXPERTISE IN CANADA




CONTACT:

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

Here’s Your 7 Objections To Equipment Lease Financing And Why You Just Might Be Wrong About Leasing Companies In Canada !

Canadian Business Financing With The Intelligent Use of Experience

Canadian Equipment Leasing – You’ve Waited Long Enough


Information on common objections and misunderstanding regarding equipment lease financing and leasing companies in Canada .


Equipment lease financing and leasing companies in Canada. For almost too long that we remember we've heard objections from Canadian business owners and financial managers around whey they don't use or recognize the benefits of lease finance.

One of our old mentors in this segment of Canadian finance actually tabled these objections in a work he published. We thought we would dissect those objections with an emphasis on the Canadian leasing business, as his comments originally were general in nature; by we're Canadian, eh?

Objection # 1- Cash is king, and you like to pay cash and have pride in ownership. Well as our mentor noted, lease payments are made in cash also, it’s just that we've always felt that a smaller outlay of cash is better than a larger one in business. And if you've got ' pride of ownership ' in a depreciating asset, well .. that's your right!


Objection # 2- Lease pricing. The reality is that lease pricing in Canada is credit driven and that your rates are commensurate with your overall credit quality. In fact if you have bank quality financials you can actually receive lower rates than a bank term loan, certainly for larger transactions of good credit quality. We've been on the record that the overall structure and flexibility offered by leasing companies often far exceeds any rate differential in lease finance.

Objection # 3- You prefer loans. Well that may well be, but you are of course adding debt to the balance sheet under that scenario. Oh and by the way, when you choose a capital lease full payout scenario you are very close if not at the loan scenario. The true finance lease is essentially a loan for the full amount of the asset.

Objection # 4- You have had what our mentor called a ' bad experience '. Our point on this one is that you also may have a bad experience with a lawyer, accountant, or business or personal financial advisor. The reality is that you need to focus on partnering with a firm or individual that you trust when it comes to equipment lease financing in Canada. That goes for choosing a supplier, banker, etc. It's only common sense.

Objection # 5- Hell or high water. What? A Hell or high water clause in commercial leasing indicates that you are obligated to pay the full amount of all remaining payments in your transaction .What that, you want to change that clause. The reality is that with the proper negotiation a good lessor or leasing advisor has the ability to include in your transaction features that make sense to you when it comes to cancellation and pre-payment.

Objection # 6 - the proverbial down payment. You don't like it. Down payments with good credit quality are minimal or non existent when it comes to equipment lease financing as well as choosing the proper lessor.

Objection # 7 - The lockdown . Many clients tell us that are unable to extricate themselves from their current lease transaction in order to move on to a more appropriate one. A variety of tactics can be utilized to refinance and move on .They include at the very lease refinancing the existing lease combined with the new one.

Most lessees, your firm probably included feel their company and industry is unique. That may well be true, but ensure you speak to a trusted, credible and experienced Canadian business financing advisor. You may well find those 7 objections to leasing companies and equipment lease financing in Canada are somewhat... unfounded!

7 PARK AVENUE FINANCIAL IS AN EXPERT IN CANADIAN EQUIPMENT LEASING



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_lease_financing_leasing_companies.html