Tweet

Financing for Equipment Three Things You Need to Know About Canadian Equipment Leasing

Guest post by: Stan Prokop

Article Overview: What do you need to know to make sensible options around equipment leasing.Information on what Canadian business owners need to know to make proper equipment financing decision for asset acquisition .

Financing for Equipment Three Things You Need to Know About Canadian Equipment Leasing

Financing for equipment is sometimes a challenge for Canadian business owners and financial managers. What if you had a solid understanding of 3 key elements of Canadian equipment leasing and financing. Let’s explore some key information around three critical elements of lease financing –

1. What can be financed?

2. What are the type of leases and rates available to my firm?

3. What is the best way to obtain a prompt approval at the best rate, terms and structures for my business asset acquisition?

So what assets can be financed in Canada? The reality of that answer is that almost every business asset can be financed, and moreover, two other key points need to be made. In many cases even intangible assets can be financed – a solid example is software for your business, or even the additional add on requirements that come with many asset acquisitions – these might include installation, warranties, maintenance, shipping/delivery, etc. And, furthermore asset financing in Canada definitely includes the financing of used equipment, which is a major part of the Canadian equipment financing industry.

Millions of dollars of used equipment, purchased here or in the U.S. or other international locations are financed annually. We add two critical cautionary items of note here – in certain cases and appraisal or asset valuation or inspection might be required if the asset is new , and in many cases a down payment might be required on a used piece of equipment . These two points would still clearly not negate the major benefits of financing a piece of used equipment. Why used? Simply because many assets in many industries still have a very useful economic life after a typical usage of 3-5 years, for example thing production equipment, etc. In many instances, especially with the use of the internet and auction sites pricing on used equipment might be exceptionally favorable.

One other solid tip is to get your lease financing approved in advanced, as this might allow you to negotiate a better price with the vendor given you are pre approved and the vendor knows they will be paid directly from the leasing company.

Let’s move on to our second point, which is simply that there are some critical technical aspects to lease financing that are very important for business owners to be aware of . First of all you should ensure that you understand there are two types of lease financing available – to keep it simply we will simply call them, as the industry does:

Capital leases

Operating Leases

Which one is best for your firm?

We always dislike saying to our clients ‘it depends ‘but the reality is that the choice of lease type should be driven by your final motivation with the asset. By that we simply mean that you need to determine, in advance! , if you intend to own the asset at the end of the lease, or if you simply want to use and return it after an agreed upon amount of time, usually 2- 5 years, although shorter and longer terms might apply (that’s the flexibility of lease financing).

Choosing the type of lease you pick will significantly impact how the lease is carried on your books, and also it is a critical factor in driving pricing. Operating leases will always be priced with a lower monthly payment as the asset is returned to the lessor at the end of the lease. Clients ask us ‘what if we later determine the asset still has a useful economic life and we wish to keep it? Again, here is where the flexibility of lease financing comes in, because you are allowed in an operating lease to pick one of three options at end of term – you can return, purchase, or upgrade. Actually there’s a fourth option, which is simply to agree to extend the lease for a pre agreed upon amount of time.

Let’s move on to our final point, which is simply – You have made the decision to acquire an asset through lease financing. How do you go about that in Canada? We advised clients to work with a credible, experienced, and trusted lease financing advisor - even basic assistance around the final rate, term, and structure could save you many thousands of dollars in payments. Or at the same time, negotiating on your behalf any critical areas such as down payment, limited personal guarantees, or end of lease options can all be the make or break point in Canadian lease financing success. Additionally, the lease financing industry in Canada is very fragmented and consists of captive firms tied to manufacturers, independent Canadian and U.S. firms, and very specialized firms that only do or finance certain things.

In summary , arm yourself with some critical knowledge of lease financing and you will be rewarded with the knowledge that you have chosen the best financing method for the acquisition of used equipment']);"> new and used equipment and business assets in Canada

Related Articles
  Equipment Financing Specialist – Canadian Leasing Solutions
  Guaranteed Powerful Equipment Leasing Tips For Canadian Companies Financing Large and Small Assets
  Considering Canadian equipment leasing ? What Leasing Companies Offer The Best Equipment financing
  The Evolution of Equipment Financing and Leasing in Canada - an Overview
  Lease Equipment Financing – Canadian Solutions
  Essential Information For Equipment Leasing And Finance
  Equipment Leasing
  Canadian Leasing - Your best equipment financing option!
  Equipment Financing in Canada – 2010 – Optimism for your Business Financing Prospects !
  How Financing Options In The Canadian Equipment Leasing Industry Can Benefit or Harm Your Overall Profitability When You Lease Equipment !
  Medical Equipment Leasing Canada
  Why Leasing and Equipment Financing are more important than ever in the Canadian economy
  Breakthrough The Canadian Equipment leasing And Financing Barrier - Business Leasing Strategies That Work!
  Lease Equipment
  How To Work With The Best Canadian Leasing Companies In Business Financing and Financial Services ?
  Equipment Financing - Capital Leasing Options That Make Sense
  How to Acquire Equipment Finance Leasing and the Best Leasing Services and Rates
  Reasons for Leasing for Business - Why Equipment Financing Works!
  Why Your Competition Is Stampeding To Business Equipment Leasing Financing – Canadian Commercial Finance Advice
  Why Canadian Lease Finance Is ‘ Business Appropriate ‘ – Use Equipment Leasing Companies To Acquire Your Business Assets

Article Tags: Canadian equipment leasing, financing for equipment



Related Forum Posts
Equipment leasing - Equipment leasing has many benefits, such as tax benefits, conserving money and always having up to date equipment to stay competative to name a few. Obviously, it's partially dependent upon what type of business you have as to whether you will benefit more than someone else but... Do you think it's worth leasing your equipment rather than purchasing it? Can you think of any other reasons you can benefit from it or any reasons this is not a good idea?
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).
Small Business Seminar Presenters Required Across Canada - In March 2007 BizLaunch we will start presenting small business seminars across Canada. I am in the process of recruiting experienced business owners with good presentation skills and a passion for small business to present these seminars. 1. The seminars will be 90 minutes long 2. The seminars will start at 6.30pm 3. The seminars will be held in convenient locations 4. The subjects will include business planning, marketing, sales, website marketing, taxes etc. 5. The audience will be new business owners(0 - 5 years) 6. The presenters will be supplied with the presentation slides required 7. The seminars will be free to small business owners attending 8. Presenters will be evaluated on their presentation by the audience 9. Equipment will be supplied by BizLaunch 10. Presenters will be compensated for the presentations $250 per seminar 11. Seminar marketing will be done by BizLaunch and its partners 12. These seminars will be a great addition to what is already being offered to small business If you're interested send me one page about yourself and why I should use you to andrew@bizlaunch.ca
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
Re: Meltdown in the Financial Markets - [quote="Kevin":3lnvm7h2]If the US is simply creating fake/"funny" money with their bailout, then I wonder why the Canadian dollar has dropped so badly? One Canadian dollar is suddenly worth only about $0.84 US now. It doesn't make sense to me.[/quote:3lnvm7h2] The Canadian dollar has dropped to about $0.80 USD... what kind of holiday shopping season will it be this year if this trend continues?


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 Sell to the Price Driven Customer

Marketing & Sales tools – going back to basics

••••••>SEO Tip Of The Day: HTML Validation

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.