Is ‘Good enough’ acceptable to your firm when you are looking at equipment leasing and arranging a business equipment loan or lease in Canada. We don’t think so and we’ll share some fundamental info and strategies that take your business financing to the next level when it comes to benefits.
You have arrived at the lease or buy decision base on your need for new fixed assets for your business. Financing those assets out of regular cash flow, or entering into cumbersome bank loan arrangements isn’t an option.
The use of the asset over the long term should be what drives your financing decisions. Longer term assets require long term financing, and that’s what equipment leasing is all about – matching the useful economic life of your asset to your cash flow and financing structure.
We encourage clients to take a hard look at lease term. Don’t let our ‘good enough’ statement overtake your decision to properly match he asset term. Many lease firms that are focused on offering one type of term, or one type of lease (there are two types) are going to try to sway you towards their product or service offering. If there were only one lease company in Canada that would be problematic – fortunately there are hundreds!
Business owners and financial managers need to separate. What do we mean by that? We mean that you must separate the manufacturer and the price of the equipment from the financing. If you are dealing with a MFR that is also the financier of your asset make sure you maximize the benefits of that type of financing, known as ‘captive financing’ as its often the best available in terms of rate term, and structure.
The lease financing industry preaches ‘100%’ financing for your business equipment lease and loan needs. The reality is though that often times a down payment of security deposit is required. Make sure that request is reasonable, and competitive, don’t fall into our ‘good enough’ scenario of having to accept every term or down payment that is specified in your finance offer.
Structuring is what lease financing is all about. Be armed with a cash flow analysis that makes sense for the type of asset you are acquiring. Remember, if you don’t ask or request a ‘vanilla’ or typical lease solution will be offered up – you don’t have to accept that if your cash flow needs, business seasonality, or term of the lease are particular to how you want to benefit from lease financing.
Let’s take a quick example – let’s say you are leasing a 100k computer system. The lessor offers you a 5 year lease based on your firms overall credit quality, and requests a 20% down payment. and specifies payments of 1685/mo. Did you know that in many cases you could get the same lease payment for a 3 year term, saving you two years in payments? That’s by utilizing an operating lease and shortening the term. Again, back to our point, don’t let ‘good enough’ be your only choice in asset financing.
In summary, every firm in Canada has unique financial needs, and you need lease financing payments, terms, and structures that work for you. Don’t accept ‘good enough’ in business financing. Speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success on how you can truly maximize financial benefits of a business equipment loan or lease.
7 Park Avenue Financial : http://www.7parkavenuefinancial.com
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 100 Million $ of financing for Canadian corporations . Info /Contact :
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Office = 905 829 2653
‘ Canadian Business Financing With The Intelligent Use Of Experience ‘
ABOUT THE AUTHORStan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
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7 Park Avenue Financial
Canadian Business Financing