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Equipment financing companies in Canada. We maintain that when it comes to a business lease for asset financing there is certain information on this subject is ' nice to know ', while in other situations its absolutely critical to your asset finance success - i.e. you need to know this ! Let's dig in. Business owners and financial managers should always understand that just about any asset, even intangibles such as computer software as an example, can be lease financed. When it comes to the asset financing decision its all about short and long term decision and that timeframe can be all important to your financing success. More often than not the majority of equipment leases in Canada tend to be in the 3-5 year range. These are typical terms when it comes to plant and equipment. It might, but should not, come as a surprise that some of the largest asset lessors in Canada are manufacturers themselves. They compete with independent commercial finance companies to finance their own equipment - bring incremental profit and additional sales opportunities into their picture. While we are big proponents of equipment finance we're the first to admit that on occasion terms such as ' 100% financing ', etc are somewhat over used by the industry . More often than not down payments of security deposits of some sort are required, especially if your firm is not ' investment grade ' when it comes to credit quality. Canadian business owners and finance managers like leasing because it's a simplified process when it comes to asset acquisition. Your firm simply negotiates the type and price of a business asset and the leasing company buys the asset, on your behalf, from the manufacture or distributor. It's, as we have said, a solid alternative to equity financing or long term debt on your balance sheet in the form of term loans. Not all acquirers of business assets are familiar with operating leases. A simplified way of looking at these transactions is simply that you should consider them as ' service ' type leases. What then are the advantages of operating leases? There are several , they include the fact that the leases are not fully amortized so even with interest built into the transaction you quite often are not paying even the full amount of the value of the asset . How can that be, ask our clients? Simply speaking it's that the lessor is making a bet on the useful economic life of the asset when you return operating lease assets at the end of the term. The lessor hopes to sell or release the assets under your operating business lease. So there, the secret is out! If there is one both beneficial and creative aspect to equipment financing companies offering operating type leases it's that they allow you a lot of flexibility during and at the end of term of the transaction. Your firm has the ability to return, upgrade or even buy the asset at mid or end of term. Now that's flexibility! Capital leases are the opposite. They are fully amortized, cannot be cancelled, and the interest rate clearly defines the lessor profit to which they are entitled. (Hopefully it's a ' reasonable ' profit!) Equipment financing companies will also consider sale leaseback transaction. You take assets you already own and sell them to the lease firm, typically to enhance your working capital or cash flow needs. We have even seen our own chartered banks sell their bank towers in downtown cores, freeing up millions in capital for the banks themselves.
As we have said, there's 'nice to have 'and 'need to know 'when it comes to business lease finance via Canadian equipment financing companies. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in completing a transaction that benefits your company. Stan Prokop - founder of 7 Park Avenue Financial – http://www.7parkavenuefinancial.com Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info re: Canadian business financing & contact details : http://www.7parkavenuefinancial.com/equipment-financing-companies-business-lease.html
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