Solving Your Equipment Leasing Business Finance Needs

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How To Effectively Lease Equipment and Technology In Canada

How could thousands of companies be that wrong? We are pretty sure the weight of evidence suggests equipment leases for your firm's business finance needs are a solid financial solution.

WHAT IS EQUIPMENT LEASING?

Let's examine a couple of key basics around leasing company equipment financing and why asset acquisition under this method of financing is a solid cash flow management solution when it comes to paying your equipment vendor partners or technology supplier.

So, why do firms utilize an equipment lease, including of course your competitors? Yes, arguably it’s for tax reasons, as well as the whole issue of obsolescence, but we find it always comes back to cash flow management and your equipment lease payments, not using your valuable day to day working capital, as well as the difficulties perceived by many businesses in arranging a loan or bank financing.

All in all, some pretty powerful reasons we think! Competitive pricing and lease programs with lower monthly payments or payment flexibility are always available when using this method of asset finance. Don't forget to check out the advantages of a master lease as well as your payment being tax-deductible - talk to your accountant or tax advisor for larger transactions around implications around financial statements and equipment at the end of the lease obligation.

Many industry finance trade associations provide data that sooner or later almost 80% of all companies in Canada use equipment leasing in some manner for their business finance needs. And there’s no discrimination, from the largest firms in Canada to small start-ups, all types of companies use this financing.

THE APPROVAL PROCESS TO OBTAIN APPROVAL IS EASY AND FAST / CAN YOU GET A LEASE FOR YOUR EQUIPMENT AND TECH NEEDS?

In the case of small businesses it’s more often than not because of limited capital, and in the largest of corporation’s issues such as depreciation, off-balance sheet needs, and budget cycles all play key roles in equipment financing and leased equipment solutions. No down payment is usually required, and credit score and credit report issues are always handled quickly. A business plan is not required but may be helpful if your firm is a start-up.

We use the term equipment financing because it’s an all-encompassing term, but in reality, every type of asset can be financed, and that includes technology, software, plant equipment, office equipment, we think you get the idea - anything can be leased based on the overall credit quality of your firm, credit history, etc

The business owner will usually choose capital leases when addressing the balance sheet financing they need but businesses love 'options' for their equipment financing needs - business owners and financial managers want to know they have flexibility. That’s where lease options such as a capital lease / full payout lease to own leases, or an operating lease offers maximum flexibility, based on your business needs or changing an existing lease.

HOW DOES AN EQUIPMENT LEASE WORK?

Using financial leases for long term capital equipment needs is a daily strategy for Canadian business financing, as well of course being a legitimate business expense for accounting purposes when it comes to the rental expense.

The costs to lease are varied. The factors that play a role in the ultimate interest rate and payment factor depend on key issues such as your firm’s credit quality, potential outside collateral if that’s required, the willingness of the owners to provide a guarantee, as well as the lessor's opinion of your historical and projected cash flow. Quite frankly the main question lessors always ask themselves is simply - 'Will this asset produce profit for the lessee?'

In summary, the key advantages of equipment leasing are its ultimate 'convenience', the flexibility around lease payments and the types of leasing you require (lease to own or just rental, use and return), tax and accounting advantages, and, oh yes, the ease of getting approved! Although a business loan is also a consideration for financing assets over 80% of assets financed are done through equipment financing via a lease for the lease period of the asset. The ability to lease expensive equipment when purchasing equipment and when upgrading is required - well that is always top of mind for business owners.

CONCLUSION - EQUIPMENT LEASE FINANCING IN CANADA

If you a small business, or business of any size for that matter, and want to maximize those leasing equipment advantages then seek equipment leasing specialists like 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can guide you through key issues such as what benefits work best for your firm, what type of lease company best suits your asset acquisition needs, as well as the ability to save time in today’s faster-paced business environment. The leasing market is competitive and solutions are available for all assets and all types of credit quality.

FAQ: FREQUENTLY ASKED QUESTIONS

What are the benefits of equipment leasing?

One of the most important decisions you'll make as a small business owner is what type of equipment to buy. You can lease or finance your purchase, and leasing will often have many advantages including low down payments with ease-of upgrading options that are impossible for some buyers without their own funds available.

Equipment leasing vs other financing options / Purchase vs. Leasing

Loans, line of credit and factoring services provide popular ways to finance and fund equipment. Under a lease the lessor owns the property each time it is used- but you can buy out your contract at any point. Loans give more ownership than leases.

What are lessee responsibilities?

Leases usually charge fees for maintenance and repair and return of gear. Leases also charge extra fees for insurance and repairs. A lease may also charge additional fees for the return of the equipment. In a lease agreement lenders often charge a higher rental rate.

' 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

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