How To Get Best Lease Rate On Equipment Financing And How Approvals With Leasing Rates Are Calculated In Canada

‘What’s my lease rate? ‘is a question I am often asked by customers when they work with us with respect to equipment financing approvals

They are surprised when I tell them that they get to pick their own rate! (All customers want the lowest rate!)
I am not trying to be facetious when we make that statement. What we are saying is that the over all credit quality of a customer, as perceived by the lender (that’s important!) is in fact set by the customer, thereby driving a final approval on rate, term and structure of the proposed financing request.

The role of the customer or their trusted advisor acquiring lease rates for asset acquisition is to understand the basic credit information requirements and how the overall risk to the customer and their industry will be perceived by the lender. The irony of a lot of leasing rates in the business of leasing is that the industry for the most part used historical analysis to project future ability to pay. That is a difficult concept for the customer to handle more often than not - as an example the customer may have lost some money last year, driving a negative cash flow figure. Prospects have improved, new orders are coming in, and yet the business has a problem in getting new financing.

The customer needs to ensure that the information and ' story ' make the equipment financing transaction become more ' approvable'.

Critical categories in the information submission by the company are as follows:

Length of time in business
Personal credit history of the owners
Relationships with other financial institutions
Quality of the financials (Some customers submit balance sheets that don’t balance!)
Additional collateral available if necessary
Summary of key financial info such as depreciation, cash flows
Positive focus on management and its background and experience

It's these factors that affect lease rates in Canada.

If the customer is qualified to make such a submission a solid package as per our list noted above should lend itself towards an approval at current market rates and structures . If the customer feels they are not properly qualified to make such a submission they are strongly encouraged to use a qualified intermediary who knows the industry and, more importantly, knows the specific weighting given by a lender to the above noted submission requirements.

The amount of information required around each component is more often than not determined by the size of the transaction or the lenders total exposure to that customer. In many cases small ticket transactions (those under $ 25,000.00) are adjudicated via a credit application and public reporting sources such as Equifax or Dun and Bradstreet. Typically 60-70% of all small ticket transactions are approved.

In summary, customers who want to get a prompt and of course positive lease approval should focus on providing a clean package of required information that will ensure a prompt approval based on specific industry requirements around the transaction size and asset type.

Knowing that the lender will focus on future potential of the firm, the management experience, and the collateral asset are the valuable data points regarding lease rate approvals for any business seeking a business equipment financing lease. Speak to a trusted, credible an experienced Canadian business financing advisor for the help you need for great lease finance rates and prompt approvals .


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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Computer Leasing and Financing in Canada

Many companies are not aware of the significant benefits related to Computer Leasing and Financing in Canada .

Let's discuss acquisition financing in computers and technology segments . The proper term for this type of financing is ' Technology lifecycle management '. Most business owners simply consider the following question : ' Should I buy or lease my firms new computers and software and related products and services ? '

Two old adages related to leasing still ring true when it comes to the technological aspect. That is that one should finance something and depreciates, and one should buy something that appreciates in value. Most business owners and consumers as well know very well that computers depreciate in value. Systems we paid thousands of dollars for years ago are now hundreds of dollars. Walk into any ' big box ' retailer and see the dramatic moves in technology.

Business owners who finance technology demonstrate a higher level of cost effectiveness. The company wants to reap the benefits of the technology over the useful life of the asset, and, importantly, more evenly match the cash outflows with the benefits. Leasing and financing your technology allows you to stay ahead of the technology curve; that is to say you are always using the latest technology as it relates to your firms needs.

Businesses that lease and finance their technology needs are often working better within their capital budgets. Simply speaking they can buy more and buy smarter.

Many companies that are larger in size have balance sheet issues and ROA (‘return on assets ' ) issues that are compelling. They must stay within bank credit covenants and are measure often on their ability to generate income on the total level of assets being deployed in the company. Lease financing allows those firms to address both of those issues. Companies can choose to employ an ' operating lease ' structure for their technology financing. This is more prevalent in larger firms, but works almost equally as well in small organizations. Operating leases are ' off balance sheet ‘. The firm adopts the stance of using technology, not owning technology. The lessor/lender owns the equipment, and has a stake in the residual value of the technology. The main benefit for the company is that the debt associated with the technology acquisition is not directly held on the balance sheet. This optimizes debt levels and profitability ratios.

At the end of those operating leases, which are usually 36 months long, the customer has the option of:

1. Returning the equipment
2. Buying the equipment (not likely though)
3. Negotiating an extension of the financing for continued use of the computers, technology, etc.

Companies that have recently acquired computers and technology can in fact negotiate a' sale leaseback ' on those same assets. This financing strategy brings cash back into the company , as the firm has employed a leasing and financing strategy building on our above noted them - using technology, not owning technology .

In summary, the key benefits of computer and technology lease financing are:

* The company can stay ahead of the technology curve
* Computer leasing and financing has significant balance sheet and income statement benefits
* The firm has flexibility with respect to buying new product, returning existing technology, and generating cash flow for purchases already made

Many of the benefits we have discussed relate to leasing in general. However, technology and lease financing are very perfectly suited to the business financing strategy of leasing

Working capital saved on computer leasing and equipment leasing in general allows a company to use that capital to grow revenues. Depending on which types of leases are utilized there are also tax benefits associated to leasing.

With the current focus on the environment customers can work with their vendor to return unused equipment at the end of the lease for proper ' green' disposition. Speak to a trusted, credible and experienced Canadian business financing advisor who can provide you with the best strategies on computer leasing and financing in Canada .

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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Let Canadian Film Tax Credit Financing In Ontario And BC Finance Your Productions!

It's no mystery to us, that’s for sure. Canadian and U.S. content owners and producers are taking the 'flight to safety' , using Canadian film tax credit financing for Ontario , BC, and quite frankly all Canadian geographies for their financing needs .

Why that flight to safety? Why is Canada so under consideration these days when it comes to the film tax credit? (Film, television and digital animation) Well, just this week we caught three separate headlines out of U.S. states such as Michigan hinting strongly that tax credits will be pulled back, repealed, diminished, etc. Bottom line, less!

That certainly isn't the case in Canada, where a proper filing and certification of your claim (that is key) can net you anywhere for 30- 45% of your total production budget expenses. Help us understand, but isn’t that amount of assistance very valuable in allowing you to obtain the balance of your financing, through debt, equity, pre sales, product exposure, distribution, etc,.

The tax credit, furthermore, can be cash flowed to help monetize your project for working capital and cash flow as you go through your production spend.

Canada, similar to other geographies such as Australia, firmly seems to believe the payback in revenues, taxes, and general economic activity justifies the investments being made in your project.

Co - productions, when they qualify are eligible for the same sort of financing and assist you in attracting and finalizing the additional finance you need to complete your project.

When you finance the tax credit naturally the credit itself is the collateral for the loan - it’s in effect a bridge loan to get you the funding you need now or at the completion of your project. You do have the choice to simply wait for your non repayable cheque, but most independent producers prefer the pay me now to pay me later approach!

From a structuring viewpoint the tax credits sit kind of in the middle of your equity and senior financing, although if you borrow against the credit the credit it must be collateralized properly.

So how does payment work on a Canadian film tax credit financing for your Ontario and BC productions? Payments are great, generally there are none! That is to say that your advance on the tax credit - typically anywhere from 50-70% (sometimes more) is simply netted against your final cheque from the government, less the financing costs. Almost always no additional collateral is required, although the promise to pay of your Special Purpose Vehicle for the project is of course required.

Use Canadian film tax credit financing to enhance your overall profit potential on your project - don't give up additional equity or future profits you don't need to. Speak to a trusted, credible and experienced Canadian business financing adviser who can steer you through the film tax credit funding process, quickly, efficiently, adding profit potential to your venture.

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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/canadian_film_tax_credit_financing_bc_ontario.html

Pitfalls And Solutions When You Finance A Franchise With Franchise Financing Companies In Canada

When you want to finance a franchise in Canada the type of financing companies you work with and how you address your new business acquisition as an entrepreneur is as important we think as the time and research you spent on choosing your new business.

Let’s examine how you can make it much easier process from a viewpoint of time, cost, and ultimate success.

Is franchise financing in Canada viewed as an excepted and positive method of acquiring a business. The facts certainly point to that. The Canadian franchise association has hundreds of franchisor members, and most financial institutions that participate in franchise finance advertise aggressively on their support of this type of Canadian business financing.

Once you have made that decision and chosen your franchise type you want to be in a position to spend the minimum amount of time in securing financing for your business, while at the same time doing it right. That’s when you need to understand the basics of a complete package that will virtually guarantee you success and full approval for the funding you need.

Are there some pitfalls along the way? There sure can be. Time and time again we meet with clients who either have little or no experience in the business they are getting into, and coupled with that, don’t have any financial support or cushion that allows them to properly finance a franchise without full depleting their personal financial resources.

We all read about companies that fail because they have too much debt and are unable to meet loan obligations - that’s the pitfall you want to avoid in franchise finance. The reality is, and this is a surprise to many clients... that you dont want to borrow 100% of the funds you need, but at the same time you dont want to cash in your RRSP savings or fully mortgage your house either. The optimal blend of debt and equity in your franchise tends to be 2 or 3: 1. By that we simply mean that for every dollar you put into your new business you should plan to have only 2 or 3 dollars of debt. And quite frankly that applies to most businesses in corporate life.

You absolutely need a business plan for your franchise, as franchise financing companies and banks want to ensure that you have properly thought out how the business will generate sales, and hopefully profits.

The pitfall we see many times in client plans is that their plan is very marketing oriented, and in reality all the lender wants to see is some financial logic that will demonstrate how the franchise loan will be repaid .

Lenders call that debt service, and you want to be able to demonstrate that you will have cash flow coverage that allows you to both run the business and repay your franchise loan.

If you want a one stop solution for the majority of franchises in Canada, from a finance perspective it’s a customized loan called the BIL/CSBF program. It's underwritten by the government, has fabulous rates, terms and structures, and provides you in most cases with the majority of financing you need. Reasonable personal credit history is a requisite for this type of financing. Some private independent firms also offer franchise solutions when it comes to financing, including leasing of equipment.

Speak to a trusted, credible and experienced Canadian business financing advisor on what solutions you can effectively and properly implement to achieve financing success.

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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Benefit of IT Technology Financing From a Laptop To Your Server Farm !

The greatest obstacle you have in realizing IT technology financing benefits its balancing your largest obstacles to innovation - cost and obsolescence.

From one laptop to your server farm and cloud computing its a constant risk and challenge to balance the investments you make in technology and computer against your cash outflows and the need to constantly upgrade to stay completive .

Many traditional financing options are available to meet your tech finance needs, but where we think you really attain maximum benefits with lowest risk is in highly specialized areas such as off balance sheet financing and residual risk partnering and sharing.

Should you be financing your technology or buying it. The age old adage in equipment financing, whether it be technology IT financing or plant equipment leases is that if it appreciates, buy it, if it depreciates, lease it!

We can categorically assure you that the largest, smartest, most cash rich, and successful companies utilize the benefits of lease finance, whether it’s one laptop, a fleet of laptops, or a server farm upgrade. (A server farm is simply a group of computers in a data center that run your business data - for reasons of balance usage, scale and security).

The most sophisticated approach to technology IT financing in the past has been the use of off balance sheet leases - these still are a very cost effective way of running your tech finance programs. The challenge is working with the right partner that allows you fairly, and seamlessly, to invoke your three rights as a lessee under this lease. Those rights are the ability to purchase when you want, upgrade, or return. Extending also plays into those rights - for example - you enter into a 36 mo fmv lease with the option of returning, but you need to use the equipment 5 more months, perhaps for a special project, or to run a new system in parallel, etc .

Fortunately, or unfortunately, depending on what side of the fence you are on a lot of the pure tax and accounting treatment historically recognized by FMV type finance are going away with new internationally accepted accountant standards changes . However, let’s be clear on this - your ability to secure lower payments, plus invoke your 3 rights under the benefits of IT operating lease financing still favor you, the lessee.

Speak to a trusted, credible, and experienced Canadian business financing advisor in the area of IT financing - whether it’s your server farm, 1 laptop, or 2000 laptops your financial decisions make save or impact you by thousands of dollars.



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Stan Prokop is founder 7 Park Avenue Financial ; 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/technology_it_financing_benefit_laptop_server_farm.html

Requirements for a Business Line Of Credit in Asset Finance and ABL Lending in Canada .

Let's cut rate to the chase, that’s often the best strategy in assessing a business decision. You are in the process of investigating ABL lending under and asset finance scenario as a replacement for your business line of credit.

More of than not you are either self financing currently (that’s not a perfect growth strategy by the way) or your ability to secure the business credit you need simply is not happening with your current banking or financing partner.

So lets look at whats required to bring you the full advantages of an ABL facility, that term being the acronym for ‘asset based lending' . The reason you are contemplating this type of business financing is simply, you want to maximize your borrowing power based on receivables, your inventory, and other potential assets which can actually be margined for temporarily liquidity. Think unencumbered equipment as an example.

Let's examine some of the key requirements for this type of facility. That will allow you to determine your overall success in securing a facility that meets all your needs, and comes at a cost that is commensurate with your situation. We mention cost briefly here in the context of our subject because many firms experience varying degrees of cost of financing in an ABL lending facility for their new business line of credit.

That is because asset finance pricing is based on criteria such as the overall financial health of your company. However, don’t despair because ABL lending actually works even if your company is in bankruptcy proceedings, because it always comes back to the same issue - if you have assets then an asset finance solution is possible!

So lets get back to those requirements - they include receivables that are under 90 days, which typically are margined at 90% of their value. Next comes inventory, and here is where it can get tricky. Although your new ABL facility and business line of credit margins your inventory you must be able to demonstrate that the goods are saleable in some form - whether that be work in process, raw materials, or finished goods . Most companies usually have a combo of all three types.

Asset finance often doubles your borrowing power under this type of business line of credit. That’s because the firms that offer it are experts in their business - typically, more often than not, they are not banks, but private boutique type firms that specialize in business asset financing. But, and here is the ' but ' you need to demonstrate proper accounting and regular financial statements - i.e. on a monthly basis, and you should be able to provide accurate reporting on things such as aged receivables, perpetual inventory reporting , and, in some cases, an appraisal on your other business assets - since these are temporarily margined for liquidity .

What we are simply saying of course is that in order to borrow in an ABL lending environment you have to have solid business records and demonstrate you are in control of your key assets. That quite frankly should be your goal whether or not you are borrowing at all, don’t you think?

Speak to a trusted, credible, and experienced Canadian business financing advisor who can help you maximize the benefits of asset finance and assist you in achieving full success in this non bank business line of credit facility that is becoming more common everyday.
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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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/abl_lending_asset_finance_business_line_of_credit.html

Save thousands (or Millions ! ) Via Smart Technology And IT Financing Via Finance Benefits

We probably couldn't come up with the exact number but wouldn’t you agree it’s safe to say that Billions of dollars are spent annually on IT (that’s information technology by the way!) and technology financing. Can you really save thousands, or those millions?! by smart acquisition strategies . We're sure you can and we will show you how.


The acquisition of computer, it, and other technology assets is without a doubt one of the largest Capex spends any medium or large sized business makes. Your make those investments because you are optimistic about the future of your firm, coupled by the need to stay ahead of the competition in the ever changing technology curve.

If your are the owner, chief financial officer, or chief information officer of any firm you want to know what your alternatives are in the areas of IT and Technology finance. Those alternatives comes with different costs, different outcomes, and different risks, all of which make it often a daunting decision when you are at the proverbial fork in the road .

The author of this article spent over 20 years in technology financing and saw trends come and go. The largest trend by far, we think, was the desire of firms to go off balance sheet when acquiring computer, technology and telecom assets. That probably is still a good decision today for many reasons - the main ones being lower monthly payments due to the residual taken by the lessors, the ability to invoke your three rights at the end of the term of the lease, as well as the constant availability of upgrading during the term.

Having said all that there are of course some new international accounting rules that will bring those off balance sheet liabilities back onto the balance sheet. Is that a good thing? We won’t weigh in on that one today... it’s probably good for lenders to your firm as all that debt is now front and center on the balance sheet. Anyway, that’s a discussion for another day.

So how are smart decisions made in technology financing - whether its computers, phone systems, software (yes software can be financed!) etc.

It all comes down to a couple key areas - first of all, if you aren’t proficient in lease calcs work with an expert who will help you assume residuals, interest rates, and proper economic life cycles . If you could afford it (some can’t... some can) the smartest thing to do would be to finance technology and IT on a 2 year FMV lease. That way the residual value established by the lessors would be high, you would be able to flip into new technology in 24 months.

Let's use a 2 million dollar major technology finance acquisition as an example - Using smart financing via an FMV lease a monthly payment on our 24 month term would be approx 71k per month.

Your firm would be the beneficiary of a 400,000 residual investment by the part on the other side of the lease. Your monthly payments to acquire 2 million dollars of technology for 24 months would be only 1.7 Million dollars. If you chose the lease to own route or loan on your technology financing your payments on a typical 36 month transaction would be over 2.2 Million dollars, almost 400k more than in our ' smart finance ' scenario.

So, what’s smart IT and technology financing all about? Its knowing the use of your equipment, its expected useful life, how lessors can play the interest and residual game and how some very basic expert information can put you back into the driving seat on those thousands (or millions) that Canada spends on IT finance for technology .Speak to a trusted, credible, and experienced expert to assist you in your benefit recapture in this critical area of business.
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Stan Prokop is founder 7 Park Avenue Financial ;

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/it_financing_technology_benefits_finance.html