What You Need To Know About Equipment Lease Rates and Interest Finance Charges In Canadian Lease Finance

Are You Getting The Best Lease Finance Rates ?


Information on equipment lease rates and finance interest charges in Canadian leasing and financing . Factors and issues to consider for a transaction that makes sense for your business .



Although the Canadian equipment finance industry is very competitive many Canadian business owners and financial mangers don’t fully understand how equipment lease rates and interest finance charges are calculated... how they can be managed, and what issues affect your ultimate monthly pricing. Let's examine some ' need to know ‘points that will allow you to fully maximize the benefits of lease financing assets in Canada.

We don't blame clients for always wanting ' the best deal ‘... the ' lowest rate '... the ' smallest monthly payment ‘. Some of the variables that go into those issues are controlled by the lessor; some can easily be managed by you.

Asset quality is often a factor in Canadian lease finance. The ability of either yourself of the lessor to understand the ongoing value and the final residual value of the asset you are financing plays a key role in equipment finance pricing in the Canadian marketplace. A win win situation exists of course when both you and the lessor have a transaction that meets both of your needs.

Lessors refer to their profit on a transaction as their ' yield '. Many lease finance firms strive to earn a certain constant yield on their lease transaction they finance for Canadian business. It’s simply their ultimate profit for putting funds out on your transaction.

Canadian business mangers choose from only two basic lease types when acquiring and asset via a lease finance strategy. Its as simple as that, you are either selecting a capital lease, which is a ' lease to own ' strategy, or alternatively you are choosing and operating lease .The operating lease is a transaction wherein you have a stated intention to return or upgrade the asset during or at the end of the lease term . The true beauty of the operating lease is that it also gives you still the right to purchase the asset, even though that might not have been your original intention.

Put yourself in the eyes of the lease company, and let’s use a simple example of a 1000.00 transaction. If the final residua value of the asset at the end of the term of the operating lease is 100.00 and the lease firm estimated this as , lets say 50.00 then they have just realized a further 50.00 profit on the asset .

So who is the best to understand the actual true value of the lease at the end of the term? Quite frankly, sometimes its you, who understand your business only too well. Alternatively many lease equipment finance firms have significant expertise also. It depends,

The type of lease company you choose to work with also has a significant effect on your interest finance charges. Bottom line, your lease firms borrow funds also. In Canada that’s typically done through insurance companies and banks. So a general rule of thumb is that if your lease finance firm is larger, well funded, and well managed... the bottom line is that your chances of more aggressive lease rates increases.


We hate calling them ' games ' but the industry uses many nuances in pricing and structure and terms that significantly affect your overall finance charges . What are some of these?

A good example is advance payments you are asked to make, or security deposits. If you are asked me make a significant security deposit ensure interest accrues to your security deposit, at a rate commensurate with the size of the deposit.

Many assets are acquired on an interim rent basis... that has the lessor outlaying cash before you actually sign off on the final acceptance of the asset. It could be a complicated computer project that is being funded, or perhaps a production asset that is being assembled by your vendor in stages.

We've highlighted just a few of the basic issues that should come into consideration by your firm when you are concerned about getting those ' best ' equpment lease rates' in the Canadian marketplace . There are others.

If there is a bottom line here it simply that it’s worth it to take some time and understand how some up front knowledge and consideration at the start of your lease finance process can positively impact interest finance charges in your favor as the lessee. Speak to a trusted, credible and experienced Canadian business financing advisor who can guide you to the appropriate lease finance pricing for your ongoing equipment 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 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_rates_finance_charges_interest.html

Not Your Imagination ! It’s Possible To Finance A Franchise In Canada – A Franchising Loan ‘ How To’ !

Canadian franchise Financing Decisions You Need To Make


Information on how a franchising loan works in Canada. What are Options for business entrepreneurs who wish to purchase and finance a franchise?





One of the main reasons clients tell us that they wish to purchase a franchise is their belief that this type of business opportunity in essence gives them a head start in owning and successfully running a business... and we couldn’t agree more. But that life decision, and a big one at that, comes with the challenge of how to pay for, or finance a franchise. A franchising loan properly structured can make or break your business opportunity.

There really are 4 key categories or areas that you should focus on in both selecting and financing your franchise. They are the actual type of business you wish to be associated with... ie big, small, service based, asset based, hospitality based, etc. After that comes the all important analysis part of your decision. what we could call ' running the numbers.

Those numbers must then be translated into an effective financing plan to finance a franchise. i.e. getting a franchising loan that makes sense from a viewpoint of debt load, your own equity, and the right rates, term and structure that make business and financial sense, without putting you at risk.

Finally the 4th major consideration topic is simply ensuring you have weighed the pros and cons of owning an independent business under the franchise mode. The reality is though that you are in good company, as thousands have gone before you successfully, and a huge part of the Canadian economy (you’d be surprised how much) relies on the franchising industry for its products and services. And God knows the economy needs all the help it can get these days.

We tell clients that when they look to purchase a franchise they need to do a total... lets call it ' sanity check' on the numbers. Key questions need to be answered, including whether the investment will provide you with the proper return on your own investment. That’s an important concept when you think of it, and easily overlooked by franchisees that don’t have a strong financial background.

In essence you are simply asking yourself if the amount of money that you have to put into the business personally is going to be rewarded over time with a return. That makes total sense, don’t you think? In today’s Canadian franchising environment business owners can be expected to put anywhere from 10- 50% into their business. That amount varies with the size and type of franchise that you purchase.

In assessing your financial needs you need to take into account funds you need to open and purchase the business, as well as what type of working capital you need to maintain and grow the business - quite frankly that’s the same challenge that any business purchaser faces, whether or not its a franchise .

That ' pros and cons' analysis we spoke of is also critical at this point in your decision - you need to evaluate the cost of buying and financing a franchise against using that capital or debt to start a business . However, the concept of proven business models and branding is key, so that makes the assistance you get when you want to finance a franchise easier.

In Canada franchises are financed via one or two specialty finance firms, which tend to focus on the major players and names in the industry. Thousands of others are financed under the auspices of the government BIL /CSBF program. The attractiveness here relates to great terms, rates, structures, low personal guarantees, and flexible repayments.

Want help on making one of the most important financial decisions in your business life? Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the right decision and facilitating a franchising loan that works... for you !


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/franchising_loan_finance_a_franchise.html

If Things Are So Bad Why Is a Canadian ABL Facility Business Line Of Credit So Good ? How Asset based Lenders Work

The Worse Your Financing Challenges The More An Asset Based Line Of Credit Should Appeal To Your Company

Information on why and ABL facility from Canadian asset based lenders and why this type of business line of credit is extraordinary in terms of delivering more financing to Canadian business .



Does it every get easy? It's probably just us but doesn’t it seem like there’s never a time when there isn’t some major economic turmoil these days that simply add to the constant challenge of being able to be successful in business financing for your firm.

That’s why an ABL facility... a business line of credit from asset based lenders is very much a total breath of fresh air. With the Canadian economy see sawing back and forth between good news and bad news the likelihood of your company getting the business credit it needs is never 100%.So is there a way to improve those odds? We think there is, and it’s an asset based line of credit, the technical term being ABL.

It is somewhat ironic that the asset based lender actually tends to do better in more difficult times - that’s easy to understand because the unique facility it offers has a much higher chance of approval for firms such as yours. And, as always, it’s about the assets, not the ratios. Coupled with the fact that the industry in Canada, relatively speaking is still quite new and somewhat fragmented , well , bottom line, its just seems to get more traction everyday.

Stats in other countries , and we think they are reflective of Canada also , show that 80-90 % of the firms that utilize asset based lending for their business line of credit are in fact small to medium sized corporations . It is sometimes overlooked that some of the biggest corporations in Canada also use this type of financing, abandoning the traditional Canadian chartered bank line of credit.


When we meet with clients to discuss their needs for an ABL facility it's often necessary to spend a bit of time explaining some of the mis information that exists with this type of facility. That is partly because this type of lending has some subsets, they include receivable financing, and in some cases purchase order financing.

The key benefit of an ABL business line of credit always comes back to one word - ' margining '. Typically this type of revolving facility margins 90% of receivables and anywhere from 30-75% of inventory, depending on the type of inventory your firm carries/requires.

Additionally, the key difference in the facility is the fact that your business access to working capital and cash flow grows with your needs, pretty well automatically! Now that’s the type of borrowing facility that every business owner dreams about!

So, when the bank is not the solution, (those hoops keep getting more difficult to jump all the time!) and your company is either reluctant or unable to raise additional equity speak to a trusted, credible and experienced Canadian business financing advisor on the benefits and requirements for an ABL business line of credit.






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/abl_facility_asset_based_lenders_line_of_credit.html

Starved For Cash ? Dying For Business Loan Debt Financing Or Working Capital Solutions ?

Is Your Business Growing – Need Funding ? What’s The Best Solution


Information on working capital and debt financing for Canadian business owners . What type of business loan or asset monetization makes sense for your firm, and why.





At one point or another all business owners and financials managers find they have to focus on either working capital or debt financing business loan type solutions for the growth or perhaps even the survival of their firm.

The ' go to ' solution seems intuitively always to consider additional debt for the company - part of the reason is that the leverage that business loans via debt provide and pay off in higher returns on equity . Larger firms consider this as a potential means to obtain a higher valuation.

But is debt always the way to go ... not necessarily as there can be some troubling side effects for the starving patient! Working capital and debt financing are of course, when considered as a whole, the alternative to raising additional equity, bringing in a partner, having to consider the sale of your firm, etc.

So is there ways to consider ' sensible' business financing that actually make sense to the business owner of financial managers of a firm? We think there are.

Certainly there is nothing wrong with debt per se... It’s just that we hope in business that its ' good debt '. Business people recognize that as debt grows on your balance sheet (and assuming you can make the payments) your return on equity increases considerably. That’s a good thing! Higher sales will increase profits under that strategy. But again, at the end of the day it’s all about not pushing your firm to the brink with that increased debt.

The challenge also is that when firms use debt in an aggressive fashion they often have challenges in raising funding quickly, at rates that make sense and they are deserving of. At the extreme end of the curve debt will of course force a company to miss out on lost opportunities, competitors also seem to have a keen knack of sensing your weaknesses!... and in general day to day operating is often affected by the focus on debt repayments .

So are there some key management points and techniques to asses whether you should be taking on more debt. Here are some issues to consider.

Look at your financing needs from a longer term perspective; that’s often difficult to do and disregarded by many. Look at it from the viewpoint of can you defer financing additional debt without missing out on opportunities for growth.

At the same time, are you aware of the types of debt financing that might work for your firm. In Canada that consists of term loans, asset financing, cash flow loans, and other subordinated debt scenarios. Ensure you are comfortable with the rates and structures of each type of financing - more importantly from a time wasting point of view ensure you are aware of the requirements that each type of lender has for all those different debt scenarios.

This is of course the time to do some keen financial planning around your ability to meet any debt payments - and it’s a good time to consider worst case scenarios of not being able to make payments.

When debt financing isn’t the answer a working capital solution often can work. That could involve monetization of current assets via an asset based line of credit, receivable financing, securitization, or financing of tax credits or an asset sale leaseback for working capital purposes.

The best time to address finance needs is often when things are going well for your firm; consider speaking to a trusted credible and experienced Canadian business financing advisor who can assist you in business loan or working capital finance.



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/working_capital_business_loan_debt_financing.html

How to Successfully Avoid 6 Risks in Business Equipment Leasing in Canada – Make Lease Financing Work!

Managing Risk in Equipment Financing For Canadian Business Owners and Managers


Information on how to successfully work through and manage 6 potentially overlooked risks in business equipment leasing and lease financing in Canada .




It's not always just about the benefits of adopting a business strategy such as business equipment leasing and lease financing... sometimes it is about ensuring no undue risks are also taken.

So let’s examine 6 risks that Canadian business owners and financial managers can manage if properly understood at the outset of any lease transaction.

First of all it’s always great to understand that leasing equpment is all about two things, your rights and your obligations. Your ability to assess those at the start of your transaction is critical.

Our first risk management issue is the concept of addressing the end value of your asset at the end of the term. While most business equipment leasing in Canada is done on 3 -5 years terms shorter terms are possible (generally 2 years is the shortest) and assets that have long economic lives are often lease for in excess of the 5 year norm. If you are entering into an operating lease you must clearly understand that you have the obligation to return, buy, or re - lease the asset at the end of term.

That’s when knowing the potential value of the asset is important. If in fact you feel it has value why pass that value on to your finance partner without some sort of participation or negotiated benefit to your firm. In fact many leasing companies make a tremendous amount of profit by placing bets on the value to you, of the asset, at the end of the lease term. So make sure it’s an equal fight, so to speak. Discuss things such as early buyout or fixing a price at the end of the lease term that is mutually acceptable to both parties.

Our second issue on risk avoidance is the concept of maintaining your asset. While some assets, perhaps such as computers for example require little maintenance many other assets (think plant machinery or rolling stock) require some level of care. Lessors recognize this and often, if not always, write this into the lease. So understand your maintenance obligations.

It’s a ' taxing ' matter. Taxes! That’s our third risk element. Ensure that you and your management or financial team understands all the correct depreciation and tax issues surrounding your lease transaction. This is clearly a time, especially on larger transactions to invest a bit of time in speaking to your accountant or tax expert .The many benefits of equipment financing can sometimes be swept away by your inability to properly address tax, deprecation, how you account for the lease, etc.

Our fourth issue is the concept of upgrading during or at the end of term. Understand here that lessors are incented to keep leasing you assets in Canadian lease financing. Understand your upgrade options at the start of your transaction, and ensure they are properly document in your lease, whether it’s a capital or an operating lease transaction.

Our 5th risk avoidance tip is to properly reflect on indemnification. If any sort of indemnification is required in your lease ensure it is within reasonable risk and control. Issues such as title, transfer, operation of the asset should all be properly documented to your satisfaction

Our final item is in fact the insurance issues revolving around your lease. Ensure you insure am I guessing what we are trying to say, allowing for your insurance firm to cover the risk of any loss, damage or theft to your assets. In fact most lessors, who are in effect purchasing the asset for you and ‘renting’ it back to you, actually require you to provide a certificate of insurance on your transaction.

So, is there a bottom line? As always there is in business, and in this case it’s simply to view each business equipment leasing and lease financing transaction you undertake not only from a benefits point of view but from a risk avoidance perspective. Speak to a trusted, credible and experienced Canadian business financing advisor for additional assistance.



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/business_equipment_leasing_lease_financing.html

# 2 And Trying Harder ! Why Canadian Business Accounts Receivable Financing Is Your Cash Flow Solution

Why Canada’s 2nd Alternative To Cash Flow Financing Just Got Better

Information on Canadian business accounts receivable financing . Why a confidential A/R finance strategy is a solution to cash flow and growth challenges .




We probably all remember the car rental company commercial... they were ‘ # 2 and trying harder ' ... that certainly could describe business accounts receivable financing in Canada - your company's 2nd alternative to cash flow financing after the bank.

So why is # 2 and trying harder gaining so much momentum from Canadian business owners and financial managers? Its pretty simple, it becomes the de facto alternative for businesses that can't achieve the financing they need from what the industry terms ' traditional sources '.

So let’s examine some key basics around how the financing works, and also let’s differentiate it from bank working capital financing... the proverbial business line of credit.

What drives an approval and the ongoing operation of a bank line of credit that is collateralized by your receivables? Of course it’s the size of your A/R base, but at the same time other key factors must come into play. The onus is on your firm to show profitability, debt and equity ratios that work for the bank, as well as more often than not emphasis on personal guarantees and even outside collateral.

However, business accounts receivable financing (aka ' invoice discounting ' ' factoring’) focuses solely on one thing - your receivables. The size of your A/R as well as its general quality essentially determines the size of your new accounts receivable financing facility.

The second key difference in comparing the two is that the bank in effect collateralizes your receivables by registering a security agreement against them. They are in effect ' assigned ' to the bank in the event of a default by your firm.

Business receivable financing however works differently, and that’s quite often mis understood by many Canadian business owners and financial mangers. Under this process you derive cash flow, on a daily basis if you choose, by selling your receivables to the finance firm, in whole, or in part, on an ongoing basis.

That A/R is sold at a discounted price, which in effect becomes your financing fee. (Many customers view this as the interest rate - the industry views it as a discounted purchase from you at a pre determine rate, usually 2-3% per month. So we can also make the statement that the a/r financing process, non bank in nature is a three way agreement, its between yourself, your customer, and your a/r finance partner firm .

Because Canadian banks are highly regulated and generally risk averse they cannot provide the amount of financing that thousands of small to medium sized firms need for working capital. But since the business A/R financing firm is focusing solely on the assets, i.e. your A/R, they can generally advance up to 90% of all your A/R at any given time. So, bottom line, your company doesn’t have to have the capital structure that is required for traditional Canadian chartered bank financing.

In many cases clients are please to hear that their inventory can also be combined into a one stop revolving credit facility by your non bank partner firm. This provides a revolving line of credit with much more liquidity than your firm may have experienced in the past - bottom line - more access to cash flow and day to day working capital for operations and growth.

Clients are generally mystified by the number of firms out there that offer this financing, what they charge, how they work on a daily basis, etc. We recommend they consider a confidential invoice financing facility, one that allows them to bill and collect their own receivables without any third party knowledge, including your customers! Speak to a trusted, credible and experienced Canadian business financing advisor on how business A/R financing can enhance your company’s cash flow today.





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/business_accounts_receivable_financing_cash_flow.html

The Ten Advantages Of Using Canadian Business Equipment Leasing Companies For Commercial Asset Financing

What Are The Key Benefits Of Lease Financing & Funding For Canadian Business ?


Information on Canadian business equipment leasing companies and the advantages and benefits of commercial equipment funding and financing strategies.



One of favorite U.S. Business equipment leasing publications recently published a ' TOP TEN ‘advantages of leasing finance. But hey, isn’t this Canada? So we thought we'd address those top ten advantages in terms of the Canadian perspective of commercial leasing companies that provide Canadian owners and business financial managers with hundreds of millions of dollars in asset finance.

So let’s try and ' Canadianize ' those advantages in terms of business leasing in Canada. Here we go.

#1 - Cash - You'd prefer to keep it, but unfortunately you need to spend in on new or upgraded assets to your business. And that includes everything from plant assets to new computing power. Utilizing lease financing lowers your cash outflow and often lowers the requirement that other lenders such a as a bank might demand for you with respect to additional equity in the transaction.

# 2- Cash flow management - Many Canadian business owners and managers don’t often realize the flexibility they have in structuring a transaction with respect to the tax aspects of the lease, as well as your ability to structure seasonal, quarterly, or some other form of payment structure that makes sense for... you guessed it, your firm.

# 3 Your ability to decrease financing costs with commercial equipment leasing allows you to utilize those savings for other things - a good example is your potential new found ability to take discounts on vendor payments to your valued suppliers . Using cash to take 2%10 type discounts could save you thousands of dollars every year, depending on the size of course of your company .

4. Our U.S. example that we are referring to listed ‘bank hassles’ as another great reason to consider lease asset financing. We're certainly not sure that going to a Canadian bank is really a ' hassle ' but we are the first to admit that many of our clients can meet stricter bank credit covenants and criteria - As a result Canadian business owners and their financial managers find that there are hundreds of aggressive lease finance firms who actively solicit their asset financing business - And that’s a good thing!

#5 - Leasing productive assets improves productivity and can assist in lowering general overhead costs. Although technology investments in plant, rolling stock, software (yes, software can be fully financed!) and computing can be huge competitive drivers in your business.

# 6 - Leasing epitomizes your ability to upgrade and be flexible and acquiring assets. Using such strategies as an operating lease allows you the benefit to return, upgrade, and purchase or extend key assets in your business.

#7 - Debt may be expensive, but anyone will tell you equity is even more expensive. Leasing assets can often help you avoid equity dilution in considerations such as bring in other ownership capital or partners in the business?

#8 We’ve observed that many small and medium sized businesses finance their businesses in part by business credit cards and small lines of credit. Utilizing asset lease finance allows you to keep those arrangements intact and current.

#9 There are a number of significant depreciation and tax benefits that Canadian accounting allows when you consider business equipment leasing companies for your commercial asset needs.

# 10 - It works - most of our clients have determined that their bank won’t lease the assets they need to run and grow their business. It’s easier to apply for and in many cases vendors and distributors offer preferred financing for customer choosing to utilize commercial lease strategies.

So there you have it, our Canadian TOP TEN ADVANTAGES of equipment leasing in Canada, with due respect to our U.S. counterparts. Want to maximize on any or all of these advantages? Speak to a trusted, credible an experienced Canadian business financing advisor who can help you with commercial lease financing.



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