Lease Financing For Success

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Lease Financing: Canada continues to view this aspect of asset financing as critical to Canadian business success. Lease financing provides a large number of ways in which Canadian business owners can acquire plant equipment, technology, software, and rolling stock. These assets enhance your business and allow you to use precious working capital in other aspects of your business.

Canadian business owners and financial managers more often than not know the key benefits of lease financing – the challenge in Canada simply becomes:

-What lease financing product is best suited to my firm's needs?

-Who do I talk with to understand how I can achieve my equipment financing goals?

Proper utilization of lease financing allows your firm to access capital that otherwise might be unavailable or difficult to obtain.

Is leasing a simple, basic business transaction? Well yes, kind of – but it requires that you understand what risks come with structuring a proper lease transaction, and ensuring you maximize the benefits of this ‘smart' financing.

No one can be expected to understand all aspects of business financing. Equipment leasing and financing is specialized. We urge clients to ensure they work with a trusted, credible and experienced lease advisor – by doing that they will streamline approval times, save you hundreds of many thousands of dollars in rate and structure, and ensure that you get the approval you deserve re final amount approved, a competitive rate, etc.

Want some great advice on getting your lease approved? It’s as simple as:

    Presenting your company properly in the correct financial light

    Understand what equipment you want to buy and why

    Work out what a desirable monthly payment might be for the asset, including your estimate of its useful life

Clients are always happy to hear that 99% of the time lease financing has no restrictive covenants. A proper lease application will ensure that it covers your long term goals re the particular asset you are financing.

Canadian firms lease for the following inherent reasons –

    Leasing is an alternative financing option that leaves other sources of capital alone

    It is convenient when measured against bank or term loan financing requirements

    It allows you to control risk in asset acquisition

    It has significant tax advantages

We have focused very clearly on the fact that as a business owner you need to understand the full lease offering, and determine which benefits you wish to maximize, and what risks you wish to control. A benefit might be a simple payment structuring that suits your cash flow seasonality - a ‘risk’ avoidance might be employing an operating lease structure for a new computer acquisition … Why? Because you want to use a computer, you definitely don’t want to own it. (Computers depreciate quickly!)

Will lease financing always be the ‘lowest cost' method of acquiring assets? Not always, but many times it will – you simply need to know how to analyze those costs by taking into account the right comparison – i.e. lease versus loan, your cost of capital, and having a general knowledge of what market rates are for your firm's overall credit quality.

In summary, lease financing is a growth stimulator for your firm and in fact the overall economy. Lease financing can be complex only if you don’t understand the offerings, benefits, and some of the associated risks. Work with an experienced and credible advisor in this area to maximize the true benefit of lease financing in Canada.

' 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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