Understanding And Getting Good Equipment Financing Rates In Canada – Don’t Get Fooled By The Lease Interest Rate Game!

The Real Deal On Canadian Lease Finance Rates and Calculations !



Information on equipment financing rates in the Canadian lease finance industry . What you need to know about your lease interest rate when financing equipment and other assets in Canada .



‘Won’t get fooled Again” ... wasn't that a great classic rock song by ' The Who '. It also might be a different sort of battle cry by Canadian business owners and financial managers who want to better understand equipment financing rates when financing assets in Canada. The ever elusive ' whats my lease interest rate ' will now be examined!

The actual rate in an equpment lease in Canada is determined by several factors. Knowing how it’s presented into your deal structure is critical. The actual cash flows that you pay out in the lease, and their timing also plays a key factor in who wins and who loses when it comes to yourself and your equipment lender . Oh, and by the way, we're on your side if you're a Canadian borrower in lease financing - although we recognize the need of course to for the lessor to make a reasonable profit.

In some cases it is of course important to assess the final rate impact of on some miscellaneous charges that you might incur to get a transaction completed. Things such as miscellaneous admin fees, legal fees, and even an appraisal if that is required can of course add up and impact that all important final lease rate .

In Canada we tend to keep things simple. Unlike the U.S. our two basic lease offerings are the full payout lease to own capital lease, as well as the lease to use, or operating lease, also called the Fair Market Value lease. Equipment financing rates differ significantly on those two transactions.

The easiest to understand transaction when it comes to equipment financing rates is the capital lease transaction. It has only 5 elements, term of the lease, interest rate, dollar size of your deal, monthly payment, and end of lease obligation or payment. If you can determine the other 4 you can very quickly and properly assess what your lessors requested final interest rate is. That’s done most efficiently with a financial calculator of course.

The operating lease is a little bit of a different beast when it comes to rate. We can actually make a case that you might never be able to figure out the lease interest rate on a fair market value lease. Why is that? Didn’t we say the interest rate calc was quite simple? Well, the reality is that in an operating lease transaction the lessor makes a decision to invest some of their own funds into your transaction. You won’t necessarily be told what that amount is, so it affects the amount being financing - in effect they have made a down payment for you on the deal.

The good news is that the operating lease transaction will always be a lower payment, and if you run the numbers sometime you might find that the interest rate might even be negative! Again, that’s simply because the down payment has been made for you.

But, as in all things in life, its pay me now or pay me later, because in FMV transaction your obligation is to return or purchase the asset at the end of the lease term.

Another nuance, often missed by Canadian borrowers, is to enquire if your payments are being calculated in arrears or in advance. You can understand that by using the analogy about how people pay their rents and mortgages - both are calculated differently.

Timing of cash flows is also critical in lease interest rate calculations. Adjusting payments to reflect perhaps quarterly or annual payments by your firm dramatically changes the lessors yield, or profit on the transaction.

Naturally all lease interest rates are driven by your over all credit quality. The better shape your firm is in financially allows you to negotiate a much better rate. The lessor borrows funds and marks them up depending on your firms credit quality and the size and nature of the asset.

So, our bottom line today? A lot of different factors go into equipment financing rates. They can dramatically affect the final outcome of your lease from a cost perspective. Consider talking to a trusted, credible and experienced Canadian business financing advisor on achieving the best equipment financing rates in Canada. Or as the song says... 'Won’t get fooled again'!




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_financing_rates_lease_interest_rate.html

Who Is Providing Sale Of Receivables Financing In Canada? Why Factoring Financial Funding Works !

Choosing the Best A/R Finance Partner ?



Information on who is offering sale of receivables funding in Canada and why factoring is a financial funding strategy that can work for your firm to enhance working capital and cash flow .





Hundreds, probably thousands of Canadian businesses are gravitating everyday to newer types of business financing in Canada. One of those is the sale of receivables as a financial funding tool. Otherwise known as receivable finance, or factoring, or invoice discounting ... the bottom line is that you want to know more about this form of business finance, and who is offering it. Similar to many situations we encounter in our personal and business lives it’s important to ensure you have assessed the proper information when making a major financial decision.


Cash flow shortages, fortunately or unfortunately, are an everyday fact of Canadian business. The typical first reaction of the Canadian business owner and financial manager is to turn thoughts to ' loans ‘... or ' the bank '. While those two ' alternatives', if we can call them that might be achievable the reality is that in many cases these solutions are limited, non existent, or not available to you based on your firms current financial position.

Enter sale of receivables financing! By utilizing an invoice discounting strategy you generate immediate cash for your firm. Yes, there are some technical nuances to this type of financing, but one you have those under your belt you have achieved a major business milestone - the freeing up of working capital! That new capital allows you to in most cases to invest in additional inventory and finance ongoing sales without the pressures of a cash flow shortage.

Let's get one key point out in the open right away - and that’s simply that we're keenly aware that the cost of this type of financing often is, rightly or wrongly foremost in our clients minds. The actual cost of factoring and financial funding in this manner is definitely higher than bank or term loan financing of a traditional sense.

First of all, the factoring industry is not regulated per se, that's what it's necessary to pick the right partner firm. Ensuring you get a competitive rate is critical, and even more critical is to ensure you are embarking on this type of business financing for the right reasons. And those reasons? They are growth, survival, expansion, etc. It’s important to also remember that this type of financing is viewed more often than not as a ' bridge' back to traditional financing.

So, the right partner. It's critical. The key factors that will allow you to get the best rate and day to day functionality of this type of financing are the size of your monthly a/r portfolio, its general quality, the actual size of the invoices themselves, as well as the amount of customers - i.e. a few large customers with large balances, or many customers with smaller balances. Those are driving factors in who you deal with and final approval. The best A/R financing rates in Canada tend to be in the 1.5 - 2% range per month - and proper utilization of these funds can reduce that cost significantly, almost getting you close to bank rates in select cases.

In Canada a variety of firms offer this type of service. Our recommendation to clients is to work with firms who offer confidential receivable financing, this sets you immediately apart from firms who offer such financing but impose the condition of notice to your clients on a one of or on going basis.

Common sense business fundamentals apply to this or any other business finance decision you make. Work with a trusted, credible and experienced Canadian business financing advisor who can assist you in partnering with the right firm, at competitive pricing, and under a facility which allows you achieve benefits with control of billing and collections still maintained by yourself.


ABOUT THE AUTHOR - STAN PROKOP - 7 PARK AVENUE FINANCIAL

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

Financing Equipment For Your Business? Canadian Leasing Options Demystified !

It’s Not Always About The Monthly Payment !


Information on financing equipment in Canada. Which leasing option is best for your business. Examining Finance alternatives for Canadian business owners who are acquiring assets.



Acquiring assets for your business, from plant equipment to the latest computing technology provides Canadian business owners and financial managers with growth and profit potential. But how much time do you spend on assessing the right business leasing options when financing equipment.

Let's examine the strengths, benefits, and yes, sometime drawbacks on your lease financing options.

We're of course assuming that you conquered the lease vs. buy decision and focused on leasing business assets for the obvious reasons we've discussed in the past: monthly payment flexibility, accessing business credit outside your established bank and other facilities, and using tax and accounting scenarios to your business advantage.

So that puts you there, at the fork in the road so to speak. Namely which type of business financing equipment lease works best, for you. It's actually not a large choice... it comes down to a capital lease or an operating lease. Understanding the make up of those two transactions makes you a winner when it comes to choosing which option works best for your firm.

Let's examine Capital Lease structures... and benefits. Prior to choosing a capital lease option you have a general sense that you wish to own the asset at the end of the lease term. The capital lease, aka ' lease to own ‘effectively transfers ownership to you at the end of the lease term. Hopefully you have picked the right term on your lease, matching use of the asset to a proper amortization. In Canada that typically is 2-5 years, sometimes longer depending on the asset type.

From an accounting perspective, since you have elected the lease to own strategy via a capital lease you are no win a position to both depreciate the asset as well as record it as an asset on your balance sheet. The equipment financing industry in Canada considers full payment of the rentals, i.e. the monthly payment as the full recovery of their cost plus profit, i.e. the interest rate on your lease.

As an aside clients are always asking us about rates on business equipment leasing. Rates vary widely in Canada. How widely? Anywhere from 5 - 25% per annum and boy is that a range. Clients are astounded when we advise them they get to pick their own rate! How can that be possible? Simply because your over all credit quality and the dollar size and type of asset dictates lease pricing. You have got to simply demonstrate that credit quality or address any concerns of the lessor.

But wait... didn’t we say there were two options for financing equipment. The other option is the FMV option, known as the operating lease. Payments will always be lower than a capital lease option, simply for one reason. That’s because the operating lease scenario assumes the opposite of ownership, and that’s ' use '. You want to use an asset, not acquire the responsibility, and risk, of ownership. The good news is that if it turns out you wish to purchase the asset that a properly constructed FMV lease will allow you to still exercise that right, at a fair price.

Confused about the right business leasing options available in Canada? Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in freeing up working capital and maximizing tax and accounting treatments for business asset finance in Canada.



ABOUT THE AUTHOR : STAN PROKOP - 7 Park Avenue Financial


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

Which Equipment Leasing And Lease Finance Options Suits Your Firm For Canadian Asset Financing? Does a Loan Make Sense?

Make The Right Asset Acquisition Decision

Information on equipment leasing in Canada . Canadian business owners have two lease finance choices when utilizing asset financing lease and loan strategies .




Did you hear the one about the Canadian business owner and financial manager who couldn't make a decision when it came to equipment leasing and lease finance options. Actually, we're quite sure that same conundrum faces hundreds, perhaps thousands of business owners in Canada when it comes to selecting an asset financing strategy that works... especially for their needs.

Let's examine some of those options and help you out in two clear phases of business financing decisions - the lease or buy decision, and of course picking the right lease finance option if in fact you have made that decision to move forward with one of Canada's most popular financing strategies.

So, lease..? Buy? Which one works for you? A good rule of thumb is to first consider what we can call the useful life of the asset when facing that decision. An even better rule of thumb is to think of purchasing outright if you have a strong level of confidence that the asset will last beyond a typical financing term. In Canada equipment leasing terms, (aka amortizations) are typically 2 to 5 years. (Make that 20 years if you are purchasing a corporate jet, but that isn’t really an everyday purchase!)

So that’s the ' buy ' decision. What factors can impact your decision to purse a lease finance strategy. Here our rule again is somewhat common sense oriented (we love common sense). If you think you wont use the equipment for the after a typical financing term, or if you think it might needed to have an upgrade or an add on then certainly consider an asset financing option via equipment finance leases.

Naturally there are advantages to each of our two lease and buy options. Let’s examine buying first. Purchase decisions, if done via a loan option, typically have blended payments of principal and interest and are simply spread over the life of a loan.

Although loan financing can in some cases be on a 100% basis you typically might be expected to make a down payment, in certain cases sizeable. That down payment of course lowers your monthly loan payment amount. Purchasing an asset outright, or using a term loan keeps the asset on your balance sheet, enhancing your overall fixed asset based. In many cases you can take advantage of depreciation and tax scenarios to enhance the ownership of an asset.

Lease financing. The benefits are somewhat ' classic ' in nature. In the majority of cases the asset is 100% financeable, with down payments being minimal. You have just completed a great obsolescence hedge, especially when acquiring tech type assets - think computers, servers, cloud financing, etc.
Don’t let the lease or buy decision confuse your asset acquisition strategies. Speak to a trusted credible and experience Canadian business financing advisor who can assist you with your business finance needs.




About the Author: Stan Prokop - 7 Park Avenue Financial


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

Start Up To Established Company – Who Qualifies for The Canadian SBL Government Loan - A Great Business Loan For Your Firm

Everything You Need To Know Re: SBL Financing


Informatiion on the Canadian SBL government loan program . Who qualifies and how to successful utilize this financing for your start up or established business . Business Loans For Your Firm.



Government ... Business Financing ... those two terms shouldn’t raise fear and apprehension in the minds of our clients. But... guess what? They often do! And that means they might be unable to access the Canadian government loan. SBL loans are quite simply, in our opinion, the absolute best method of financing your start up or small business venture .And the word ' small ' is relative, as our program pertains to businesses with revenues under 5 Million dollars. That’s not chump change, right??!

Canadian business owners looking to either start a business or expand their current business spend a lot of time seeking financing to complement those two goals. Ironically the one entity they often think can't or won't help or assist them in fact is the only entity that is set up to absolutely help them. Why, because it's actually Canadian chartered banks that take the hand off from Industry Canada to approve and administer the BIL/CSBF program in Canada. We'll keep things simple and refer to it as the SBL loan!



So who qualifies for these loans, financing things such as equipment, leaseholds, software, etc? Canadian citizens or those legally allowed to borrow in Canada are eligible to receive such financing. Naturally you can not have defaulted on a loan in the past, and you must be up to date with your income tax filings and any balances owing Canada Revenue Agency. That makes sense , doesn't it - receiving an SBL loan from the government and being in good standing with them re your personal tax filings, etc.

As we said, it’s the banks and a few other select institutions that administer and fund the government loan program. Over 7000 businesses just like yours received funding in the 2010 timeframe as an example.

So do banks ' like ' the program and recommend or steer clients toward the program. We have got our own opinions on that. While the government guarantees the majority of the loan to the bank we find that many bankers aren’t either fully up to speed with the loan approval process... and, heaven forbid...they feel it is ' a lot of paperwork '. Good commercial and small business bankers in Canada ( yes , they exist, trust us on that one please ) view SBL loans as a way to help you achieve business financing for a start up or relatively new business when they otherwise might be constrained to help you within normal bank confines .

The government loan program caps out at 500,000.00 for real estate, and 350,000.00 for equipment, leaseholds, software, etc. Loans are pegged to 3% over the current Canadian prime rate. Each loan is adjudicated for approval under the exact guidelines of the program.

We spoke earlier of clients having a fear of properly dealing with government, a business financing process, etc. Can that be avoided? It sure can. Seek an expert such as a trusted, credible and experienced Canadian business financing advisor who can literally fast track you through the entire process within a matter of days, with your co operation of course. Unlock the power of SBL loans to realize your business potential.





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/government_loan_sbl_loans_start_up.html

Looking For Business Financing For A Franchise ? Here’s How Franchising Financing Companies Work

Here’s How The Last Guy Financed His Franchise In Canada

Information on business financing for a franchise in Canada . What types of franchising finance companies can help you complete your purchase and how are most franchises financed in the Canadian marketplace.



It's often always about ' the other guy '. How did he, or she, get their franchise financed and completed so successfully? Let's examine business financing for a franchise in Canada. How do franchise financing companies or other institutions assist franchisees such as yourself to be successful in acquiring and growing a business?

It's of course ' the money ' i.e. the financing that is often the stumbling block to self employment, owning your own business, and financial success. And if you feel you are on 'the outside ' of business financing in Canada we can only assume that roadblock is quite formidable.

That’s when clients we talk to are quickly surprise that just a few key basics immediately puts you ' in the game ' with respect to completing a business franchise acquisition . A good place to start is ensuring you have a respectable personal credit history - it is pretty close to impossible for you to complete a franchise acquisition without being able to demonstrate that you have managed your own personal finances successfully.

At this point you only need two other things to be successful, the ability to prepare and present a finance proposal that makes sense, and, secondly, to ensure that proposal is in front of the right person.

The right person? That often is one of the biggest challenges faced by Canadian entrepreneurs looking for companies and organizations that offer true business financing for a franchise. In Canada there are only one or two specialized franchise finance firms that offer full service franchise financing. Those services might include acquiring a new franchise, refinancing a current business, acquiring real estate for the actual franchise, and of course financing equipment and potentially leaseholds to complete a purchase.

Thousands of entrepreneurs just like yourself seem to think that the Canadian chartered banks don’t fully support the financing of a new franchise. They are 100% right and 100% wrong! That's because the banks in Canada are the facilitators of the Government of Canada Small Business Loan. Over the years this business financing has been found to perfectly suit franchisee's such as yourself who are looking to acquire a new or existing franchise.

But why is the Government program so successful. 3 reasons. Great rates, terms and structures. Although the program is capped at 350,000.00 that amount certainly covers 90% of the franchises we see from a viewpoint of financing to a turnkey situation. Terms are typically 5-7 years, personal guarantees are nominal, and the best part, rates are very competitive.

To successfully complete business financing for a franchise, via an independent finance firm or the government program you need a clear business and financial plan. An experienced Canadian business financing advisor familiar with franchises can complete that for you quickly, and at a low cost. It’s a clear recap of you, the business, and the financial potential.

Franchisee's in Canada cant escape having to put their own investment into the business - that can range from 10-40% depending on a couple of key factors such as asset mix, size of transaction, and the proper execution of some clear financial projections .

Speak to a trusted, credible and experienced Canadian business financing advisor on the proper method to achieve franchise financing success. Do your homework, be properly prepared with your proposal, and get on track to independent business ownership via the franchise model in Canada.


About the Author - Stan Prokop
Canadian Business Financing
http://www.7parkavenuefinancial.com

Why A Canadian ABL Business Credit Line Is Your New Plan B For A Cash Flow Facility

Canadian Business Financing – Doing It Right The Second Time!



Information on why the ABL business credit line facility for cash flow and daily working capital needs if revitalizing Canadian business financing and providing a solid alternative to traditional financing .




Fortunately, or perhaps unfortunately .. most business owners and financial managers in Canada are familiar with Plan B. Thats the alternative when Plan A didn’t work! That's why we think this is an excellent analogy for consideration of an ABL business credit line for your daily operating line of credit and cash flow facility.

Frankly, things have never been hotter in the asset based finance industry ; ABL financing and its subsets ( receivable financing only, equipment financing only ) provide significantly more amounts of liquidity when they are benchmarked against their PLAN A competitor, Canada's chartered banks.

So how is this achieved, when both solutions, the asset based line of credit and the traditional commercial bank line of credit strives to do the same thing? It’s simple. Increased borrowing leverage on your assets .Typically this is 90% of your receivables, (not 75% you are getting now) and market value leverage on inventories based on raw materials, work in process and finished goods margins.

The other factor in PLAN B's success is simply that these facilities grow as your business grows, pretty well automatically, as the entire premise of and ABL cash flow business credit line facility is based on the business credit line growing lock step with your sales and assets. The bottom line - the financing decision is made on your sales and assets, not the overall strength and structure of your balance sheet and income statement.

Surprising to many, but not to us, is that some of the largest corporations in Canada are utilizing this type of financing, abandoning commercial bank credit facilities in the process. We don’t make any bones about it - if your firm feels its being served well by a commercial bank revolver borrowing facility then by all means stay with that low cost solution. If that isn’t the case, well you know the drill... consider PLAN B!

Let's also spend a minute on cost of ABL cash flow business lines of credit. We hate to sound wishy washy but rates are better than, equal to, or more costly than bank facilities. That kind of covers the bases, right? We simply mean to say that depending on the size of your facility, where your company is at in terms of success and failure, and most importantly, who you deal with ultimately determines your cost structure on an asset based line of credit.

The other interesting note to make about our PLAN B solution is that while we're specifically talking about an ABL as just a business credit line the reality is that it can be used for a management buy out, leveraged buy out, acquiring a competitor, etc. That’s true flexibility.

So why isn’t this type of business financing in Canada more well known? We ponder that pretty well every day. Part of the problem is that the actual players in the industry are limited, some are foreign owned, and some are highly specialized in deal size, industry appetite, etc. But we can assure you an ABL cash flow lender exists in Canada that is suited to your needs.

Current economic challenges in Canada and the world for that matter place a tremendous strain on business capital liquidity. Speak to a trusted, credible and experienced Canadian business financing advisor on why PLAN B can help your firm survive, and grow!



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_credit_line_abl_cash_flow.html