Unlocking Lease Financing: Canada's Business Advantage

CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8

How Lease Financing is Redefining Business Growth in Canada

Discover the art of strategic lease financing in Canada because it's the key to gaining an unparalleled competitive advantage in your industry.

The Value of Lease Financing in Canada

Lease financing needs in Canada, more than ever today, meaning you don't have to settle for 'average'. A multitude of solutions for new, used, and even sale leaseback equipment loan strategies for existing equipment are available. Let's dig in.

Why Home Team Advantage Matters in Business

Wouldn't it be great to have what the sports guys call 'home team advantage'? Advantages in business are great, especially when your competitor is on the other side of that advantage! That's why we feel the right equipment financing company in effect becomes your home team advantage, for leases/equipment loans, as it becomes a partner and solution provider for your business related lease and equipment financing needs.

Reasons Companies Opt for Lease over Purchase

You probably have already decided why you are going to lease, rather than buy and purchase outright.

We start telling clients about things like the tax advantages of equipment financing for most equipment leases in Canada, depreciation strategies that follow tax benefits, their ability to manage obsolescence, adding in install warranty and maintenance into the lease, etc.. But. Know what? All those benefits are great, but firms such as yours more often than not are mostly concerned about cash flow and the concern of drawing down on bank credit lines, etc. for equipment that ultimately depreciates or has to be replaced.

The Core Benefit: Cash Flow Management

So yes, you do need to know all those advantages and focus on the ones that make the most sense for your company, so you can maximize them. The bottom line? Lease financing is mostly regarded as a cash flow tool. The textbooks call it the most efficient use of your resources when you have limited capital - we simply call it a great way to conserve cash flow. That's probably why 80% of North American businesses at some time or another lease.

Diverse Equipment Financing Opportunities

One of the advantages of lease financing via equipment financing companies is simply clear it covers you from low-tech to hi-tech. Meaning? Simply all assets can be properly financed if you partner with the right equipment financing company. That goes from computers and technology that seems to depreciate one second after you purchase it, to your shop floor and office equipment that might give you useful economic benefits for years.

The Benefits of Leasing Technology Assets:

In an era where technological advancements occur at a breakneck pace, leasing technology assets offers companies a strategic advantage for ongoing equipment needs.

First and foremost, it provides businesses the flexibility to stay updated with the latest technology without the financial burden of outright purchases. As technology rapidly evolves in many industries, assets can quickly become obsolete.

Leasing mitigates the risks associated with this rapid obsolescence, allowing firms to upgrade or swap out equipment in line with technological advancements. This ensures that businesses always operate with cutting-edge tools, fostering efficiency and competitiveness. Moreover, leasing provides a structured and predictable payment plan with tailored repayment terms, which can be more cash-flow-friendly than sporadic, large capital expenditures.

It also offers the possibility to include maintenance, support, and upgrade clauses in the lease contract, ensuring the technology's optimal performance throughout its lifecycle. In essence, leasing technology assets is a proactive approach, positioning businesses at the forefront of innovation while maintaining financial agility.

Green Leasing Initiatives:

With the growing emphasis on sustainable business practices globally, there's potential for "Green Leasing" to gain traction in Canada via equipment financing options.

Equipment lease financing could prioritize environmentally friendly or energy-efficient equipment, giving businesses not only financial advantages but also a green footprint. This aligns with Canada's emphasis on sustainable development and positions businesses as environmentally responsible, potentially attracting a different clientele or even qualifying for specific green incentives or rebates.

Understanding Lease Types

Also, make sure you understand the concept of leasing to own & leasing to use. That's important! Many clients aren't aware they can structure what’s known as an operating lease / fair market value lease, whereby they use the asset, minimize their cash flow outflows, and have maximum flexibility at the end of the lease financing transaction.

Flexibility at the End of the Lease

What is that flexibility in equipment leasing? They can utilize one of three options at the end of the term - they can buy the unit, return it, or upgrade/extend the transaction. Tell us that's not flexibility!

So how in fact do you find the right equipment financing company partner? Clients are surprised to hear that there are hundreds of lease finance firms in Canada - some are huge, some are small, some are geographic, some don't want your type of business, and some are dying to find you and get your business and provide you with great rates, terms, and structures. Fund the equipment your business needs today!

Key Takeaways

Importance of Lease Financing: Lease financing is becoming increasingly popular in Canada due to its benefits. Instead of buying equipment outright, businesses can lease it, allowing for more financial flexibility. A range of lease options, including new, used, and sale-leaseback strategies, are available to businesses.

Cash Flow Management: The primary advantage of lease financing for most businesses is cash flow management around monthly lease payments. By leasing equipment, companies can conserve cash flow and avoid drawing down on bank credit lines for depreciating assets. Essentially, lease financing is a tool for efficient resource allocation, especially when capital is limited. Monthly payments are tailored to your cash flow budget. Little or no down payment solutions are a party of the lease finance benefit.

Diverse Equipment Financing Opportunities: Lease financing for the business owner covers a vast range of assets, from rapidly depreciating tech equipment to long-term assets like shop floor and office equipment. Partnering with the right equipment financing company ensures proper financing across all these assets.

Types of Leases and Flexibility: Understanding the difference between leasing to own versus leasing to use is crucial. The "operating lease" option allows businesses to use the asset with minimal cash flow outflow and offers flexibility at the end of the lease term, including options to buy, return, or extend the lease.

Selecting the Right Financing Partner: The landscape of equipment finance companies in Canada is diverse. To maximize benefits, it's crucial for businesses to find the right partner tailored to their needs, which might involve consulting with a trusted financial advisor for business funding.

Conclusion

FAQ

Why is lease financing gaining traction in Canada?

Lease financing for new equipment/business equipment offers businesses financial flexibility, allowing them to conserve cash flow via a manageable lease payment, manage depreciating assets, and strategically allocate limited capital.

How does lease financing affect cash flow?

Lease financing via equipment leases is primarily seen as a cash flow tool. Leasing solutions allow businesses to utilize the equipment without the heavy upfront costs, leading to better cash flow management.

What types of equipment can be financed through leasing?

Almost everything, from rapidly depreciating technology to long-term assets like office equipment. The key is partnering with the right financing company. Traditional financing for assets can also be accessed via equipment term loan structures from traditional financial institutions such as banks.

What's the difference between leasing to own and leasing to use?

Leasing to own typically ends in the lessee owning the asset at the end, while leasing to use, like an operating lease, focuses on using the asset with maximum flexibility at the lease term's end.

How do businesses choose the right equipment financing partner in Canada?

The landscape of equipment finance companies is diverse. It's crucial to find a partner and equipment finance specialist tailored to your needs, possibly with the help of a trusted financial advisor.

How does lease financing impact a company's balance sheet?

Typically, operating leases don't appear as a liability on the balance sheet, keeping it off-balance-sheet. However, recent accounting changes may require leases to be recognized as assets and liabilities.

Are there any tax benefits associated with lease financing?

Yes, lease payments are almost always tax deductible as a business expense, which might provide tax benefits. It's always best to consult with a tax advisor for specifics.

How do interest rates on lease financing compare to traditional loans?

Interest rates vary based on several factors, including the lessor, the lessee's creditworthiness, and market conditions. Generally, lease financing can be competitive with traditional loan rates.

Can startups or new businesses avail of lease financing?

Yes, many financing companies offer Canadian businesses solutions for credit approval that are tailored to startups or newer businesses, understanding that they might not have extensive credit histories.

Is it possible to terminate a lease agreement early?

It depends on the lease agreement. Some leases might have early termination clauses or penalties. It's essential to understand the terms before entering an agreement.

' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil

Mastering Lease Financing: Canada's Path to Business Success | 7 Park Avenue Financial

The Canadian Business Advantage: Why Lease Financing Reigns Supreme