Tweet

Canadian Business Financing Challenges ? Let The Expert Lease Of Equpment Lending Be Your Guide!

Guest post by: Stan Prokop

Article Overview: Information on the lease of equipment in Canada . Don’t let business financing challenges stop your company from getting the asset lending facilities it deserves.

Canadian Business Financing Challenges ? Let The Expert Lease Of Equpment Lending Be Your Guide!

No one said it was easy, that's for sure. We're talking about the challenges Canadian business owners and financial managers face in business financing, specifically asset acquisition. So why does 80% of Canadian business utilize the lease of equipment as the solution to that challenge? Let's look at equipment financing and lending as your stop gap to acquiring those new (or used) assets.

When you make the investment decision to purchase any asset for your business the ability to put together a lease agreement to match the useful life of that asset becomes puzzling sometimes. What type of lease and term is best?

Probably the best advice we can give clients is simply to make a reasonable assumption on the useful life of the asset and match the lease term to that same assumption. The quick example is of course not to use a 7 year lease to own scenario if you are financing a computer system. (Unless you're buying your computers at a better place than ours, we don't seem to have generated 7 years from our last system!).

The other part of that equation is simply two worlds, ownership, or use. By focusing on those two elements you now have the ability to choose either a capital lease (ownership at end), or an operating lease (return or upgrade at end of term).

And those same two lease decisions can yield cash flow benefits, as well as accounting and tax implications that will work best for your firm.

It's probably just us, but we sometime intuitively feel that 99% of client looking to lease make that decision to conserve working capital. The lease of equipment is simply the answer to the lending question you've been facing - 'How can we acquire the most amount of asset for the smallest amount of cash?".

The variety of assets in asset lending and leasing finance is endless. From a small photocopier of lap top to a major piece of production equipment on your shop floor, they all can be financed.

It's not unusual to view client thoughts on the lease of equipment as simply short term or temporary. But what is the shortest term you can lease an asset for? In the Canadian environment that term tends to be 2 years. Why 24 months. The honest answer is simply that it's not really economical or profitable in the lending environment to lease an asset for a period less than two years. So now you know!

Many clients further enhance a shorter lease term by choosing an operating lease - recall that it is our lease to ' use ' strategy, which works best with assets not ultimately required by your firm, or those that have a lot of technological obsolescence attached to them. There are some accounting rules that need to be met when you are trying to achieve a pure operating lease, so it's often best to talk to your accountant when structuring such a transaction.

At the end of the day the lease of equipment as your business financing strategy has to make sense from an overall viewpoint of rate, term and structure. Your firms own credit worthiness already determines your rate- you just have to ensure the lessor has the same opinion on credit worthiness as do you! And we've given you the ammunition on how to focus on term and type of lease already, so you're set.

So is equipment leasing the ' holy grail ' of business financing in Canada. We're not saying that. but, remember, 80% of all business is doing it, so that has to mean something. For expert advice, guidance and solutions on business financing via equipment lending consider speaking to a trusted, credible and experienced Canadian business financing advisor who can provide you with guidance for a proper asset finance solution.

Related Articles
  5 Things You Need To Know About Equipment Financing In Canada – Why The Old Rules Don’t Apply Anymore In Heavy Machinery Loans
  Guess What Canadian Business Financing Equipment Company Has The Best Finance Lease For You ?
  3 Obvious And 1 Not So Obvious Reasons To Consider Canadian Lease Equipment Financing For A Capital Asset Loan
  Is a Leasing Company Your Best Choice For Business Equipment Financing – Choose Business Leasing That Makes Sense !
  The Advantage of Lease Financing When You Have the Right Equipment financing Company As A Partner
  Canadian Lease Financing - Maximizing the Benefits!
  7 Reasons Why Lease Financing Companies Offer Advantages Of Leasing Equipment In Canada
  Guaranteed Powerful Equipment Leasing Tips For Canadian Companies Financing Large and Small Assets
  A Shortcut To Leasing Equipment And Business Finance Lease Solutions & Services In Canada
  Cash Flow Restricting Your Growth? Let business Equipment Financing And Leasing Of Industrial Assets Do The Job!
  Canadian Do It Yourself Equipment Lease And Loan Advice – Commercial Business Financing
  How Financing Options In The Canadian Equipment Leasing Industry Can Benefit or Harm Your Overall Profitability When You Lease Equipment !
  Equipment Loans And Leases In Canada ! Which One Of Three Options in Business Leasing And Financing Works For Your Firm?
  Guilty As Charged ! It’s OK To Be Accused Of Exploiting Commercial Equipment Lease Companies In Canadian Business Financing
  Equipment Financing Specialist – Canadian Leasing Solutions
  Why Canadian Lease Finance Is ‘ Business Appropriate ‘ – Use Equipment Leasing Companies To Acquire Your Business Assets
  The New Shape of Business Financing and Commercial Lending Options in Canada .
  Asset Based Lines Of Credit – Canadian Solutions
  What You Need To Know About Equipment Lease Rates and Interest Finance Charges In Canadian Lease Finance
  Leasing Equipment in Canada

Article Tags: business financing, lease of equipment, lending



Related Forum Posts
re: restaurant start-up - I'm not sure about government grants for restaurants, but my recommendation would be to approach a lender that offers loans under the Canadian Small Business Financing Loan program where the government will guarantee 85% of the loan. You can borrow up to $250,000 to finance equipment and renovations under this program. Restaurants are very risky business, however some of the Chartered Banks will look at restaurants if there is enough of an initial equity investment and you have a solid business plan (experienced management team, good concept and strategic location).
Securities - Lending guru: I assume your securities offering has been registered - since you appear to making a general public solication
Re: Service Or Product? - I agree with starting a Service-based Business in the economy. Here is what I think is critical: 1. Researching that your Service business has a market. 2. Marketing the Service with as much leverage as possible. 3. Product-izing the Service (aka Package Expert Knowledge). This will only help elevate you as "the" expert in your niche and make you accessible to people in different price points.
Canadian Entrepreneurs...let's chat.... - I thought it would be nice to gather up all the Canadian entrepreneurs on one topic to discuss how everyone is getting along. I just realized Evan is Canadian as well! Hope he's able to join the conversation. Look forward to the chat. By the way, I'm in BC. Phil
My entry - 1. The Best Business Books Ever: The 100 Most Influential Business Books You'll Never Have Time to Read - this is a fascinating book about the history of Business theory, and I'd recommend it to anybody. 2. The Big Book of Small Business: You Don't Have to Run Your Business by the Seat of Your Pants, by Tom Gegax. Ditto. 3. PADI: The Business of Diving Book Okay, so this book won't be of use to anyone who doesn't want to start a scuba store, but I did, and this book was of course invaluable to me in reaching that goal.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

How to Ask for a Flexible Work Arrangement

Are You My Mentor

The Basics Of A Home Based Internet Business

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.