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Lease Financing - Canada business financing

Guest post by: Stan Prokop

Article Overview: The article highlights the benefits of lease financing - Canada - with respect to features and benefits of this alternative financial strategy .

Lease Financing - Canada business financing

Lease Financing - Canada continues to be challenged, as is the rest of the world, for financing options and alternatives for asset financing and acquisition. Every Canadian firm has probably examined all their financing options over the last year or so., which have been particularly difficult re obtaining proper business credit and financing.

Prudent business owners will examine all their financing options in the Canadian market place. Naturally they are looking for solid rates, terms, and structures for every aspect of their business financing needs. For equipment acquisition that often is a lease financing scenario. The very positive aspect of equipment lease financing in Canada is that is can serve the financing needs of Canadian business at every stage of the business cycle, start up, growth and expansion, and special project needs .

Most leases for business financing of assets in Canada tend to have three to five year terms. The quick questions for asset financing in Canada is ' so what can't be financed ' because currently almost every type of asst is financeable based on proper credit and structuring of a transaction. That of course means vehicles, machinery, plant equipment, computer technology and software, etc!

The smartest thing a business owner can do if they are not ' lease savvy ' is to work with a trusted financing advisor or intermediary who has credibility and experience in this area of finance.

Leasing works best and is most applicable to Canadian business financing when your company has high capital requirements in excess of your ongoing cash and credit lines. In many cases leases represent 100% financing, sometimes it is 100%+ financing as leases can cover delivery, installation, maintenance, etc.

Preservation of working capital is top of mind for most business owners, and leasing fits that challenge nicely.

The general rule of thumb in leasing is the old adage, ' if it appreciates buy it - if it depreciates lease it!' When your asset and capital expenditure items will need replacement or will have depreciated significantly in a three to five year period - well... thats the time to consider lease financing .

We believe strongly that leasing is best provided in Canada by independent third party firms who specialize in this type of financing. What the leasing industry likes is that equipment financed via lease earns profit and generates revenues for Canadian firms.

As you contemplate a business financing lease you should ensure that you are addressing and thinking about some key issues - They are basic but important -

1. Your lease term should generally match the estimated life of the asset - bottom line? Don't enter into a 5 year lease for a personal computer upgrade... they might not last that long.

2. Ensure your monthly payments reflect your repayment and cash flow budget and request seasonal or quarterly payments if applicable

3. Determine what type of lease you need - capital lease to own, operating lease to use and return, it's that simple

Properly structured leases (we recommend using a lease advisor) can impact in a positive way your financial statements and tax issues. These should be discussed with your accountant, or as noted, lease advisor.

Some equipment leases can float, most quite frankly are fixed rate - Rates currently in Canada are very low and competitive in the 2010 business environment.

In general lease approval in Canada is solely based on your ability to pay, so a proper package should be put together demonstrating you're historical and future cash flows, etc. Naturally that type of info is required in almost any business financing.

Leasing in Canada - examine the possibilities!

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Article Tags: canada business financing, equipment financing Canada, financial strategy, lease financing canada



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Re: Women and Financing - It's Difficult! - I found this paragraph of interest (in the article from Nana's link: [quote="Nana":3r7womqv]Other studies show that women operate more service and retail establishments than men, which might explain their difficulty in getting financing since financial institutions often consider these two sectors more risky. However, although women are generally less inclined than men to apply for financing, when they do, they are more likely to get it. According to a study by Industry Canada on SME financing in Canada, in 2000 majority female-owned SMEs obtained a loan approval rate of 82%, which is slightly higher than the approval rate for majority male-owned businesses (80%). This suggests that when they do apply for financing, businesswomen submit excellent applications. [/quote:3r7womqv] They say, "Women are more likely to get [financing]." But the difference is only 2 percentage points! Big deal! And, that was only for one year, 2000. I'd like to know what the 10-year average is. Numbers can be manipulated to mean anything you want them to mean...it all depends on what you want to show.
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Re: SEEKING PRIVATE OR ANGEL INVESTOR - Definitely have a thorough and accurate business plan. In the US, you can get help at SCORE - their website is full of great information and you can check for local chapters. If you would like a book that has all kinds of great information about financing options - this one is very good --- HOW TO GET THE FINANCING FOR YOUR NEW SMALL BUSINESS: INNOVATIVE SOLUTIONS FROM THE EXPERTS WHO DO IT EVERY DAY—WITH CD-ROM This new book will provide you with a road map to securing the financing. The book goes into traditional financing methods and assists the reader in setting up proper financial statements and a proper business plan. It details the differences between debt and equity financing and how and why to use each. Valuation techniques are explained for determining what your business is truly worth. However, the book’s real strength is in explaining alternative and creative methods of financing, such as SBA financing, investor angels, IPOs, limited public offerings and venture capital. Essential resources for finding the detailed information you need are included throughout. Item # 9780910627559 $39.95 Shri
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