Lease Equipment Financing Canadian Solutions 7 Park Avenue Financial

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Canadian Lease Financing Solutions are available for Canadian business owners who are acquiring assets and business equipment.

When a Canadian business owner or financial manager considers a financing transaction he or she wants to understand the advantages and disadvantages of such financing. When we meet with clients we clearly explain that no one financing solution is a perfect solution when evaluated against other alternatives.  That certainly applies to leasing. 

Are there actually disadvantages to a lease financing strategy? Here are a couple of things for you to consider. Naturally a lease is a fixed payment arrangement, so you do have a constant obligation to meet the agreed-upon payments over the term of the lease. If you have chosen a ‘lease to own' strategy then clearly you own the equipment at the end of the lease – in some cases, certain equipment holds value and actually appreciates, but 99% of business assets, other than real estate, decline in value.

Your accountant may tell you that some of the tax advantages of a lease are less attractive. A lease versus buy strategy may point out that it is actually financially advantageous to purchase or take out a loan.

Well there, we have given you four or 5 reasons why Leasing ‘might ‘not be the best financing strategy. Now though, let’s talk about ten or more reasons why Canadian lease equipment financing solutions in fact might be very attractive and appealing to your asset acquisitions!

The most obvious benefit of leasing as perceived by Canadian business owners continues to be that it allows your firm to conserve working capital. We talked about how a lease versus by analysis by your accountant or financial team might show that leasing is not the best acquisition strategy – however in many cases, depending on criteria assumptions, it in fact may well prove to be a more profitable financing and cash flow strategy.

If your firm has bank loans or arrangements with any other lenders you are often, if not always subject to other covenants and restrictions they have imposed re collateral, personal guarantees, and ratio covenants. In a lease financing strategy the collateral is generally just the equipment, it’s a very stand-alone type of financing!  And naturally, those bank lines and arrangements that we just spoke of are not disturbed; you can still use them for day to day working capital and cash flow.

When clients ask how long it takes to get an approval and financing completed we generally indicate that it can be done in a week or so with their full cooperation. Generally that type of timeline cannot be met with other types of financing. And payments and cash flows can always be structured to meet your financing needs. In effect you have arranged an alternate source of financing for your firm, and all financial gurus will advise you to ensure you have multiple, not just one, source of business financing.

In May cases you are acquiring business equipment and assets because of budget issues and leasing certainly helps to eliminate what our firm calls the ‘obstacle to innovation. Certain assets your lease will ensure you have in effect created a hedge against obsolescence.

Bottom Line?  We’ve given you four or five reasons not to choose equipment financing in Canada as a financing strategy – hopefully you will weigh those against the ten or so great reasons to financing via leasing. Speak to a trusted credible an experienced advisor in this area if you wish more information.

Stan Prokop