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One of our favourite U.S. Business equipment leasing publications recently published a 'TOP TEN' advantages of leasing finance. But hey, isn’t this Canada? So we thought we'd address those top ten advantages in terms of the Canadian perspective of commercial leasing companies that provide Canadian owners and business financial managers with hundreds of millions of dollars in asset finance. When bank loans for small business asset acquisition needs are difficult to access, leasing companies in Canada do the job!
IS IT BETTER TO LEASE OR BUY NEW EQUIPMENT?
So let’s try and 'Canadianize' those advantages in terms of the offer of business leasing and getting a great equipment lease in place for your asset acquisition needs. Here we go.
#1 - Cash - You'd prefer to keep it, but unfortunately, you need to spend it on new or upgraded assets to your business. And that includes everything from plant assets to new computing power. Utilizing lease financing improves and increases cash flow and lowers your cash outflows, often lowering the requirement that other lenders, such as a bank, might demand you additional equity in the transaction. The application process or lease financing is straightforward. Many transactions can actually be approved online or very quickly based on standard business information about your firm - i.e. length of time in business, etc.
#2 - Cash flow management - Many Canadian business owners and managers don’t often realize the flexibility they have in structuring a transaction concerning the tax aspects of equipment leases, as well as your ability to structure seasonal, quarterly, or some other form of payment structure that makes sense for... you guessed it, your firm.
#3 - Your ability to decrease financing costs with commercial equipment leasing allows you to utilize those savings for other things - a good example is your potential newfound ability to take discounts on vendor payments to your valued suppliers. Using cash to take 2%10 type discounts could save you thousands of dollars every year, depending on your company's course size.
#4. Our U.S. example refers to listed ‘bank hassles’ as another great reason to consider lease asset financing. We're certainly not sure that going to a Canadian bank is really a 'hassle.' Still, we are the first to admit that many of our clients can meet stricter bank credit covenants and criteria - As a result, Canadian business owners and their financial managers find that there are hundreds of aggressive lease finance firms who actively solicit their asset financing business - And that’s a good thing!
#5 - Leasing productive assets improves productivity and can assist in lowering general overhead costs. Although technology investments in plant, rolling stock, software (yes, software can be fully financed!), and computing can be huge competitive drivers in your business.
Can You Lease Used Equipment Via Lease Companies?
Used equipment can be financed under either a capital finance lease or an operating lease. Used assets must be part of a commercial transaction, not a private sale. The operating lease vs capital lease is always a consideration that business owners and financial managers should address as the off balance sheet financing issue will sometimes be considered via an operating lease structure versus the lease to own equipment financing structure of a capital lease - aka ' finance lease.'
#6 - Leasing epitomizes your ability to upgrade and be flexible, and acquiring assets. Using such strategies as an operating lease allows you the benefit to return, upgrade, and purchase or extend key assets in your business. Understanding the types of equipment leasing options is key to successful asset acquistion.
#7 - Debt may be expensive, but anyone will tell you equity is even more expensive. Leasing assets can often help you avoid equity dilution in considerations such as bring in other ownership capital or partners in the business? Your lease term, i.e. the amortization or length of the lease, is a key aspect of any transaction. Careful attention should be given to the asset's useful economic life. Small business equipment loan interest rates are the best given the current 2021 economic environment in the current environment.
#8 We’ve observed that many small and medium-sized businesses finance their businesses partly by business credit cards and small lines of credit. Utilizing asset lease finance allows you to keep those arrangements intact and current.
#9 There are several significant depreciation and tax benefits that Canadian accounting allows when considering business equipment leasing companies for your commercial asset needs.
# 10 - It works - most of our clients have determined that their bank won’t lease the assets they need to run and grow their business. It’s easier to apply for, and in many cases, vendors and distributors offer preferred financing for customers choosing to utilize commercial lease strategies.
CONCLUSION - COMMERCIAL EQUIPMENT LEASING CANADA
The bottom line? Every small business will need new business equipment at some time. In many cases acquiring new assets for industrial equipment leasing needs or technology will keep your company more competitive.
Leasing construction equipment is also a trendy way of acquiring heavy equipment.
Healthcare leasing and the ability to finance medical equipment is another key segment of the asset financing industry. Fleet leasing is easily accomplished via a lease solution. Commercial truck leasing/trucking loans are a large part of the industry served by truck leasing companies.
Click here for more info on information technology finance and software finance.
Don't forget that your company can take advantage of a leaseback agreement and bring valuable capital back on the balance sheet for assets you already own.
There you have it, our Canadian TOP TEN ADVANTAGES of the business equipment leasing company solution in Canada, with due respect to our U.S. counterparts. Want to maximize on any or all of these advantages?
Speak to 7 Park Avenue Financial; a trusted, credible and experienced Canadian business financing advisor who can help you with commercial lease financing for all your equipment leasing company business needs, both new and used - Whether you are looking for start up equipment leasing or you're an esta blished firm that's expanding ... Let's grow your business now via leasing equipment for small business at competitive commercial equipment leasing rates.
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Stan Prokop
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