Business Leasing . It Seems To Always Be The Future Of Equipment Asset Financing And Here’s Why

Mystery Of The Universe? Not Quite But Business Leasing For Asset Acquisition Seems To Work All The Time


OVERVIEW – Information on business leasing in Canada. Asset Financing Via The Equipment Lease continues to be a proven business finance solution





Business leasing in Canada. Day in, and day out it seems that Canadian business owners and managers gravitate to equipment asset financing solutions as their preferred method of funding capital expenditures. Why is that? While we might not unlock the secret of the universe along the way we can sure provide some powerful insights into what makes lease finance tick! Let's dig in.

Let's take a look first at how clients typically approach the asset acquisition question. Typically it seems to be always driven from a ‘cash flow ' perspective. Companies determine over the course of the time that they need to acquire or replace assets. In many cases the cost of new asset acquisition (technology is a good example) is significantly covered off by savings in costs as well as opportunities in growth and profit. That's a good thing!

More sophisticated users of lease finance take a look at the cost of the asset, the savings and profits they will generate , and bench mark those against the actual lease, tax and accounting benefits that come with lease finance. Smaller firms in the SME sector might not actually do that level of analysis - but smart owners and managers seem to intuitively know that a solid alternative to taking on long term debt or depleting cash resources often comes via the lease finance solution.

In the old days many firms actually used operating lease to in effect hide debt on their balance sheet. The accounting rules have dramatically changed in recent times and most lenders and owners recognize that quite certainly the equipment lease is a liability The bottom line is that any firm, in any business financing decision has to ensure they are watching their debt to equity relationships and the cash flow that suffers and benefits from any financing decision.


Where business leasing is similar to secured lending is that at the end of the term (in a capital ' lease to own ') your firm owns the asset. Remember though that in a secured term loan situation your lender, typically the bank might have restrictive covenants around how much you can borrow now or borrow in the future. Leasing tends to place less or no focus on this issue - the focus is on the asset and the cash flow.

Remember also that today’s equipment finance markets are ultra competitive. The industry is on a total rebound and that drives interest rates and credit approvals to a positive convergence of ' goodness' for the Canadian lessee.

By properly negotiating leases in an upfront manner, either from a capital or operating lease perspective the Canadian business owner /manager is in a position to have a say in the ultimate value and use of the asset at end of the lease term. So your company benefits in knowing your fixed financing costs on the asset as well as having a say in its useful economic life .Talk about eliminating uncertainty.

Yes, you do have to pay attention to claims of ' 100% financing ' and other claims sometimes, but not always, not true in lease finance,

But, on balance, as we said, we're not quire sure lease financing is one part of the mystery of the universe solution, but we do know that 80% of the crowd cant be wrong, and that's how many companies utilize lease asset finance in Canada . Seek out and speak to a
trusted, credible and experienced Canadian business financing advisor who can assist you with your business lease 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 = BUSINESS LEASING AND EQUIPMENT FINANCING IN CANADA




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

Can Leasing Companies Solve All Your Asset Finance Needs ? Making The Right Equipment Financing Choices In Canada

Canadian Equipment Financing


OVERVIEW – Information on leasing companies in Canada . How asset finance solutions for equipment assist Canadian businesses .



Absolutely not. That's the short answer to the question of leasing companies in Canada solving ' all ' your equipment asset finance challenges. But we're pretty sure that 90% of the time they can, and those aren't bad odds, right?

In Canada there are currently hundreds of providers of equipment financing for asset acquisition needs of Canadian business. In a way that’s one of the challenges for the business owner / financial manager - namely who exactly do you turn to? The industry is certainly robust these days with larger corporations, brokerages, and small niche firms providing lease finance solutions from items we could call ' micro ticket ' to multi million dollar acquisitions of technology, airplanes, heavy equipment ... well .. you get the picture!

Many manufactures and distributors have formal or informal relationships with firms that will help you get the financing you need. Major players in a number of industries actually have full blown captive finance firms that are strongly incented and chartered with providing you with flexible financial solutions.

One of the advantages of dealing with a captive finance firm ( i.e. one that is related to the manufacturer ) is that your flexibility typically increases substantially, with various lease schemes ( schemes ?) offering your firm lease to own, lease to use, rental, or short term financing . Typically the shortest lease term in Canada tends to be 24 months, and longest terms are in the 5-7year range. That's of course unless you require a lower monthly payment for your new corporate jet!

If there is one key advantage of equipment asset finance in Canada it’s simply that the emphasis on the ' collateral ' to your transaction is, more often than not, just the equipment you are financing.

One of the alternatives to using leasing companies for financing needs is of course Canadian chartered banks. However here is where credit criteria are somewhat higher when it comes to balance sheets, income statements, and cash flows that meet bank requirements. We don’t mean to infer that the Canadian leasing industry is populated by drunken cowboys!

But we are definitely saying that overall credit flexibility is significantly greater when you use a non bank commercial leasing entity.

Also, most leasing companies will entertain the refinancing of an asset you already own to generate additional cash flow for your firm. This is of course the ' sale leaseback'. After you have reconciled with the fact that you might have to pay the sales tax twice this option still makes a lot of sense.

We encourage business owners to understand the key differences between lease to own and lease to use. That’s the capital lease and operating lease respectively, and there are significant differences to each of those lease solutions.

When cash flow and financial flexibility are important to Canadian business working with the right leasing companies can solve, not all, but a lot of your problems! Speak to a trusted, credible and experienced Canadian business financing advisor for assistance in asset finance solutions.


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_companies_equipment_asset_finance.html

7 PARK AVENUE FINANCIAL
CANADIAN LEASE FINANCE EXPERTISE

Looking For Best Equipment Lease Rates In Canada . It’ About ‘How ‘to Get Them, Not ‘ Where’ When It Comes to Leasing Companies

Expecting The Best Lease Finance Rates In Canada . Here’s How!


OVERVIEW – Information on how the Canadian business owner/manager can achieve best lease rates from leasing companies in Canada when arranging equipment and asset acquisitions.



Here's where you are going wrong. When Canadian business owners and financial managers focus on getting the best lease rates from equipment leasing companies, they are focusing on ' where ‘... not ' how'!

The reality is that the current Canadian landscape is very competitive when it comes to delivering solid asset financing solutions to your firm and industry. So ‘creditworthy’ firms (hopefully yours?!) can expect and demand solid interest rates based on their own particular credit quality. So the thing you are probably working hardest to find is already there.

What is critical though, and often missed by the business owner/ manager is in fact how that rate is delivered in terms of structure, documentation, hidden fees, and the quality of the firm you are dealing with . When you master those you have achieved leasing Nirvana in Canada!

We continually remind clients that in fact your lessor has actually borrowed the money also, so they are focused, and it’s reasonable to assume- all the time, on maximizing the mark up in your transaction. Because that mark up is your profit.

Many lessees (that’s you!)don't know they can easily calculate the lessors profit on your transaction. How? Because the elements of any equipment lease in Canada are term, interest rate, monthly payment, value of the deal, and end of term obligation. Typically you are given all of those, except the rate! So by simply using a financial calculator you're in a position to determine the actual rate you are charged.

Often the most important part of your equipment lease is in fact the final payment. Why? Because it is at that time that it is determine what you signed up for in the documentation of the lease. And if you have entered into the wrong type of transaction (yes ' IT' happens) the actual residual value of the asset becomes the largest part of the profit component of your lease.

The above scenario is particularly true when it comes to your choice of type of lease, capital or operation. If you have chosen a fair market value, aka ' operating lease ' you is in fact obligated to return the asset to the lessor. And they then sell it to further increase their profit on a transaction.

Many business owners are to say least, surprised, you may say dumbfounded when it comes to being told they either have a very low or even 'negative' interest rate in their operating lease overall rate. Why? As we said the lessor is banking on making their profit a few years from now when you are obligated to return the asset.

By the way, don’t get us wrong, in many environments the operating lease is one of the best solutions in town when it comes to financing technology assets such as computers, telecom assets, etc. That’s because those assets are traditionally worth a lot less, sometimes even close to zero, when it comes to economic life/value. So if the lessor wants to take that risk off your back... let them!

One final point on operating leases - if you know what you are doing you'll construct your obligation so that the choice at the end of the term allows you to make the decision to buy, return, or extend the lease. All of those options are available to you, you just didn’t know it. Even worse, you weren’t told. Must have been a slip up, right?!

Our point today, simply that your credit quality and actual interest rate are pretty well predetermined in today’s competitive equipment leasing marketplace. Dealing with the right firm, and understanding the documentation you enter into is key to asset financing success. Focus on ' how' not ' where '!

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor on equipment finance solutions that work... in your favor!

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_companies_best_lease_rates_equipment.html

Are There Disadvantages To Lease Financing Assets In Canada ? Equipment Finance Pro’s And Con’s

Comparing the Disadvantages of Equipment Finance to Benefits Of That Same Strategy


Information on potential disadvantages of lease financing equipment asset in Canada and how business owners can address these to maximize benefits .



Disadvantages to equipment lease financing in Canada? Say it isn’t so Joe!
It's not really ' disadvantages' we're talking about, perhaps the better choice of words are ' things to be on the lookout for '.

No one is more bullish on lease finance in Canada then us when it comes to financing business assets. When we talk to clients about the pros of lease of this popular method of asset acquisition we probably sound like a broken record.

It's all about cash flow preservation, 100% financing capability, leaving your other sources of credit undisturbed, tax and accounting benefits, and ownership rights along with the obligations. Anyway, suffice to say you can put us in the bullish column when it comes to recommending this method of Canadian business financing.

But, back to those ' disadvantages', or as we said, things to properly look out for. As much as we hate to say it, we don’t think we'll ever get our customers focused off of the issue of the rates and cost inherent in lease finance. Customers who perform a lease vs. buy analysis may well find that purchasing an asset with cash, or entering into a bank term loan may in fact some cost advantages. For the record we have never seen a big disparity in any lease vs. buy analysis when it comes to that decision at the fork in the road.

However, as we said, Canadian business owners and financial managers do often focus just on cost, rate, low monthly payment, etc. All we say is simply it's never ' just' about the rate; it's also about the flexibility, ease of acquisition, etc.

Another thing you have to look out for is the loss of ' salvage ' value when it comes to the end of the term of your business equipment lease... At the expiration of your term in a business lease, unless you have properly addressed the issue the equipment may belong to the lease company. That's clearly a disadvantage, IF ... you don’t address the issue by properly constructing a lease that mirrors your choice of ownership at the end of the term.

How can that be done? Pretty simply actually. You can eliminate the loss of ownership ' disadvantage ' by simply ensuring you have a purchase option at the end of your lease term, or , alternatively, you can opt for a true operating lease and invoke on of the rights you have at the end of that transaction . Those rights are buy, extend, or purchase at a fair market value or pre agreed amount.

One of the most popular again types of equipment lease financing in Canada continues to be the sale leaseback. It's a case of monetizing assets you own already by leasing them back to your firm. However if the tax base of the asset is below its sale price you might have to pay or record some sort of capital gain. Talk to your accountant guy about that one! Just in case.

Other disadvantages? Well, as we said, we're not necessarily pitching them as disadvantages, just things to look out for. So other areas you want to focus on are your obligations in the lease, which pays the insurance, are there any restrictive covenants, etc.

Finally, who to deal with? In Canada lease finance can be accomplished via a number of partners. They include bank lease co, specialized commercial finance firms, captive manufacturers, insurance companies, etc. To wade through any potential confusion disadvantages consider seeking and speaking to a trusted, credible and experienced Canadian business financing advisor who can ensure you're ' accentuating the positive ' when it comes to lease financing of equipment assets in Canada.

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/lease_financing_equipment_canada_assets.html

Still Not Leasing For Business ? Commercial Equipment Financing In Canada (Small or Large ) Will Change Your Mind

We want to know. What would make you change your mind about a Canadian business financing strategy or policy that works for 80% of all companies in Canada? We’re talking about leasing for business... commercial equipment financing for small business or large corporations.

Lets explore some reasons and advantages by the way, that would allow you to discover or re discover equipment finance in the Canadian marketplace.

Traditionally it comes down to your money, or theirs. Your money is of course the equity or operating funds that you have in the company already. ‘Theirs ' is of course funds you borrow. When it comes to acquiring a commercial asset of any type, from photocopier, computers, plant equipment, or corporate jets it's going to always come down to that proverbial lease or buy situation.

However, like and business owner or financial manager you have criteria to fulfill when it comes down to that finance decision. And boy has commercial equipment financing in Canada changed over the years. It has become a viable finance tool providing competitive rates and structures to every size of firm in Canada, from a 1 person start up to firms the size of General Motors.

There are a number of fundamental reasons why leasing for business makes sense - one good one is simply that it becomes in effect a partnership with your lessor lease firm, who typically have a lot of expertise in asset acquisition and disposition. (Don’t forget that all leases have an end of term, and that’s where some sophisticated help on purchasing, refinancing, or disposing of the asset can really help.

But do the key tools that equipment financing provide you with always make sense for your firm. We are fairly sure they more often than not will, but let’s examine some of those key features and benefits.

Not the lease of which is of course the concept of 100% financing .Oh yes, on occasion this might mean a down payment or a security deposit, etc but in general you are being offered a commercial equipment financing mechanism that will take care of 100% of your asset acquisition. But that’s not it... many of what the industry calls soft costs can also be bundled into this same financing solution. Typically some of these costs are installation, shipment, consulting or training, etc.

We spoke of all types of assets that can be financed. Technological type assets are the ones that make the most sense to finance - we're talking items such as computers or telecom equipment, which tend to be larger in size, and also subject to technological obsolescence.

By budgeting your cash flow today at a fixed rate, and estimating the useful life of your asset you are creating a perfect hedge against the risk of assets depreciating, becoming obsolescent, etc. In effect you've created a transaction whereby you have effectively transferred the risk of asset deprecation to your lease firm.

Other key benefits of leasing for business include management of cash flow and working capital, and if you utilize an off balance sheet operating lease both payments can be lowered and flexibility enhanced.

So... have we changed your mind? We hope so; at least we're sure we have given you some ' food for thought ' on a commercial equipment financing philosophy that should make sense for your firm.
Want to know more in what can sometimes be a complex business asset financing acquisition? Seek and speak to a trusted, credible, and experienced Canadian business financing advisor who can give you peace of mind in business asset acquisition.

Looking For Finance For Lease Equipment ? Which Canadian Business Lease Companies You Should Use

It's probably a common decision that you have to make all the time in business . First of all you have to choose between purchasing an asset and alternatively looking for business finance for lease solution... one that works for your firm.

Let's examine why you should consider and equipment lease as a Canadian business financing solution, and then, as importantly , how do you find the right lease companies to work with . (We’re assuming you don’t have all the time in the world to do this).

If capital was scarce in the past, boy did it become a lot scarcer in the last couple years with all our recessions and global financial implosions. So therefore for that reason alone it probably makes sense to lease business equipment and other assets.

But lets be clear first on ensuring you understand how the benefits of leasing clearly at the same time restrict you in a certain manner - simply speaking it will probably cost you a bit more ,and while an owned asset can be sold you clearly cant sell a leased asset . But we always seem to come back to ' cash is king, and your ability to acquire an expensive, yet revenue and profit producing asset via a monthly payment you can afford makes sense most of the time.

What factors should you consider when you assess your lease vs. buy transaction, even way before you determine which business lease companies you will utilize? You should focus on the following: what will the asset be worth and will it be still useful at the end of a lease term, what the best pricing is and overalls structure you can achieve, and finally, what tax and balance sheet benefits might come out of your finance for lease decision.

Let's use a real world example - Computers. They certainly have very short productive lives based on changing technology. So your decision is really as follows : If you think a 100k computer system will last 5 years should you pay cash or would it be better to pay 2000/mo or 24k per annum to lease this type of asset .

First of all we haven't met a computer that’s lasted 5 years !!,, but putting that aside you can see how cash outflows and monthly payment analysis play a key role in your overall decision .In our case the computer doesn’t really generate profits or cash flow . Remember the old saying ‘the bottom line is on the bottom of the income statement, not at the top of the balance sheet!

So let’s agree you have made the decision to finance business equipment or assets. Now what?

In Canada your choices are significant - that’s a double edged sword though. You can investigate captive finance firms, independent lease companies, bank leasing firms, and specialized niche lessors. If you started tomorrow you'd probably have a thorough decision made in a year from now. What's that...? Not a good use of your time? We agree, so consider speaking to a trusted, credible and experienced Canadian business financing advisor. You'll be guided very quickly to an equipment business lease financing solution that maximizes benefits of lease finance specifically for your situation - at rates terms and structures that match your credit quality and the nature of the asset you're financing.

P.S. Remember what famed investor Harold Geneen once said ‘the only irreparable mistake in business is to run out of cash '. Use a finance for lease solution that won’t take you out of the cash flow and working capital game.



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 .Info re: Canadian business financing & contact details :

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