Scientifically Proven ? An Asset Lease Whether Operating Or Capital Works For Financial Bridging of Canadian Business Financing

This Day in Canadian Business History - April 4 :

Canada agrees to acquire the Canadian section of the Alaska Highway, including telephone systems, buildings and other assets, for $108 million (1,221 miles at $88,000 a mile); 2,450-kilometre highway originally cost US$140 million to build, as a wartime supply route in case of Japanese invasion of North America.

Our thoughts ? ' What a Deal from a financial perspective! ' Ultimately of course there was a supply route invasion of Canada but it consisted mainly of LCD screens .... Stan Prokop



Conducting Lease Transactions in Canada – Bridging the Asset Gap



Information on asset lease financing in Canada . Capital and operating financial solutions provide the bridging you need for short term and long term fixed asset finance needs .



Scientifically proven? It's defined as a ' body of techniques’ for acquiring new knowledge. Unless we're missing something an asset lease is a trusted financial solution, bridging your operating capital needs to your long term financing solutions.

Whether it’s an operating lease versus a capital lease your company still benefits from the appropriate combination of use and to a certain degree, ownership.

So why does a lease finance solution allow you to reduce the consumption of capital. Simply speaking you can direct funds required to buy assets towards more important things, such as growing your business, expanding your products and services, etc.

When you choose between an operating lease ( using ) versus a capital lease ( owning ) it comes down to two basic criteria for final approval - the value and quality of the asset , as well as of course your firm's general credit worthiness.

The great news for Canadian business owners and financial managers is that leasing companies and solutions abound! They are provided by bank subsidiaries, independent commercial finance firms, and captive finance organizations of larger manufacturers. (In general you can’t beat vendor/captive financing for rates, terms and structures - simply because the finance arm is incented to approve and finance your asset based on the sales focus of the mfr itself).

Depending on what industry you are in you might well find that certain lease firms and solutions are more appropriate than others. Technology, computer, software, and telecom type assets lend themselves perfectly to be financed via firms with that special tech experience. More often than not you will, or in fact should, consider an operating lease for these types of assets.

What then are the key questions or issues that you should address when considering an asset lease, or utilizing this financing tool as a bridging solution... for example a sale leaseback ?

The key considerations are your expected term under which you believe you will use the asset. (3 and 5 year terms are most typical - however 2-7 year terms are available depending on asset type).

Capital or operating leases work best when they are part of an overall strategy. Your company will derive maximum benefits when you consider several issues around your asset or bridging needs - they include tax implications, how you will account for your lease, your future needs for the type of equipment you are acquiring, etc.

The Sale leaseback scenario is a great bridging strategy for financial solutions. It takes your current investment in assets and monetizes them, giving you critically needed capital.

Can leasing ever be a poor choice? Perhaps, but certainly not often. The weight of evidence, scientific or otherwise! suggests that this financing tool gives you maximum leverage in asset lease finance. If you're looking for more information and expert advice on lease concepts speak to a trusted, credible and experienced Canadian business financing advisor.







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/asset_lease_operating_capital_financial_bridging.html

Hard To Believe – Lease Finance Tips for Operational Financing of Assets – A Financial Win!

Isn't it all really about growing your business? That is why lease finance, utilized properly becomes a solid competitive strategy for your Canadian business financing needs.

Whether it’s operating leases (some owners call them ' operational ‘) or lease to own capital leases your ability to match the financial solution to your asset acquisition needs can create a viable option to complete your financial strategy.

But solid insights into how Canadian equipment and lease finance works sure can help, as the market is fragmented and has numerous players , all promising you different things, and all trying to fit you into their ' box ' - which you might find won't fit once you're inside!

A frequent term utilized in lease financing is ' lifecycle '. Let's look at that in a number of ways. In its most common use it refers to two things - matching the financing you utilize to your useful asset life, and at the same time choosing the type of lease that works best for that particular asset, and your balance sheet.

Utilizing the right type of lease will end us satisfying owners of the firm, and its creditors, relative to new debt being acquired. We talked about those ' operational ' leases, more commonly called off balance sheet operating leases. They have the ability to eliminate additional debt on the balance sheet ( trust us its still there, just not on the balance sheet !) as well as keep your ratios intact if you're operating within bank guidelines around debt to equity, cash flow, etc.

Those operating leases tend to work really well when you are in a technological environment, a good example being computing and telecom.

Quick example - let's say you are doing a major computer upgrade and total cost of all hardware and software is $1,000,000.00. Getting back to our lifecycle comment you typically would finance this over 3 years (given the fast changes in technology). A capital lease at today’s competitive rates would typically generate a monthly payment obligation of approx $30,000.00 - and at the end of the lease term your firm is the ‘proud owner ' of 1 Million dollars of computer hardware and related items. We'll come back to the word 'proud '.

However, that same transaction, utilizing a lease financing operating (operational) strategy would yield a payment obligation of only $24,000.00.
And oh yes, would you really feel that 'proud' about owning a 3 year old computer system - we think not, that’s why that same operating lease can provide you with lifecycle management flexibility, allowing you to return, extend, upgrade, or purchase if you choose . It’s a right though, not an obligation, and that’s important.

All clients, whether we like it or not, focus on rates. Of course they are important, but we caution you that you can have the best rate and monthly payment in town and pay dearly for being in the wrong type of lease financing strategy with the wrong options available to your firm.

And do you want to know the true reality of ' rates ‘. It’s that you get to pick you own. Surprised? You shouldn’t be, because in effect your own credit quality actually drives your final rate - as it’s a competitive world out there. We can usually tell within minutes what a competitive rate band you might find yourself if, if you'll share some key financial disclosure on your firm.

Finally, industry knowledge. Is there a way you can navigate Canadian equipment financing waters successfully, in a manner that makes sense from a time and cost perspective. There are hundreds of lease finance firms, all have different criteria, some do large complex deals, some only small ticket deals and all have varying levels of financial disclosure required by your firm.

The solution? Seek a trusted, credible and experienced Canadian business financing advisor who is independent and focuses on financing the type of transaction you need at rates, terms, and structures that you deserve. Expertise and service that will be guaranteed.




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.parkavenuefinancial.com/lease_finance_financial_financing_operational.html