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Lease Financing Proposals and Documentation for Canadian Firms - They count!

Guest post by: Stan Prokop

Article Overview: The article reviews keys aspects of Canadian lease financing processes and the importance of applications and committment letters and proposals . A solid understanding of the basics will ensure fast approvals at good rates, terms, and structures .

Lease Financing Proposals and Documentation for Canadian Firms - They count!

In a previous article we discussed the importance of Canadian business owners and financial managers understanding the lease documentation process in an effort to maximize the value of the lease transaction for their firm.

Let's look at additional key components of lease financing approvals and documentation. A solid understanding of issues relating to this area will assist the business owner in completing with surety a solid lease financing transaction.

After negotiations with the customer the lease company wills typically, on a larger transaction issue a proposal document. While in some cases you can view this as a 'marketing 'document there are so critical points to take away from this document.

Business owners should understand that 99% of the time this letter is not a final approval, but in effect an 'expression of interest '. In some ways you should consider it as a starting point for additional points of reference in your transaction that are of importance to your firm - example - rate, terms, special structuring requests, etc. You should ensure that the asset and asset amount to be financed are properly described.

You will also want to ensure you fully understand the extent of any other collateral the lease firm is requesting, as an example a personal guarantee, etc. If you are working with a leasing advisor or intermediary you should ensure they have a strong knowledge of the industry and are well suited to represent you in your financing needs.

At this point in time your firm may or may not have filled out a final application. This of course contains the basics about your firm and also should specifically identify the asset or assets your firm is contemplating financing. If the transaction is smaller in nature - i.e. under $ 25,000.00 for instance, then typically the application is short, the documentation is short, and your are good to go fairly quickly! We have referenced in other articles that Canadian lessors on transactions of this size use sophisticated technology based ' scoring ' models to ensure this size of transaction flows smoothly .

Typically you would want to also include as an attachment to this document your purchase order or quote from your vendor, as the lease firm will want to validate the vendor in some situations.

Depending on the size of your transaction you may or may not be requested to include your firm's financial statements with the application. If they are to be included then it is industry practice for you to include an interim year to date financial statement, as well as your last year end statement.

Many firms complete an application fairly hastily, and in effect they are impeding the sale to a certain degree. By properly identifying your company legal name, what your business does, locations, bank, trade references, etc you can significantly move your transaction along. If you are using the services of a trusted leasing advisor or intermediary then they have the ability to present a strong, complete package that contains all the information you need to be improved, and, more importantly , can position the strengths of your firm in the best light possible . Quality information in- Fast approval out!

In summary, as mundane as applications and proposal letters might seem to the business owner they can speed up your transaction approval and ensure you have maximum financing based on your equipment needs.

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Article Tags: Canadian lease financing, equipment leasing Canada



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