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Leasing Equipment in Canada

Guest post by: Stan Prokop

Article Overview: The article explores why Canadian business owners engage in Equipment Financing and Leasing for capital expenditure financing .

Leasing Equipment in Canada

When Canadian business owners and financial managers realize that the core of their business is often the acquisition of capital assets they need to investigate equipment leasing in Canada.

Why do they wish to lease? Very imply put - necessity, convenience, risk shifting, and tax and financial statement advantages.

Depending on what industry you Canadian company is in you potentially have a large need for capital equipment. Capital expenditures, capital equipment they are simply the business 'buzz words' for assets that you need to run your business - it might be a new computer system and software ( yes software can be leased and financed!) , plant machinery, or additional office equipment such as copiers, etc . All of those assets can be financed.

As your company has grown it has potentially grown more debt at the same time! The bankers and financial analysts of course refer to that as potentially 'over leveraging' your company. Your are of course repaying that debt from your cash flow and profits, and most business owners and financial managers do not wish to hinder their bank arrangements. In certain cases based on the current economic environment you might even be looking at an acquisition , which is another very solid reason to avoid ' senior debt ' - By senior debt we usually mean bank and mezzanine or subordinated debt that you have in place .

So what's the solution? You might be saying, '... well leasing isn't necessarily the solution because that's more debt right ..? 'And the answer is: maybe. The reality is that by carefully structuring your capital asset acquisitions as operating leases you avoid some of those balance sheet issues which may have, or could become, a concern.

Canadian business owners might be thinking that the same challenges they faced in obtaining that 'senior debt' we spoke of might in fact come into play with lease financing. The reality is that equipment lease financing, particularly when structured properly by an advisor or lender who is credible is in fact very asset focused and places significantly less reliance on the traditional metrics imposed by banks.

As in every aspect of business you should be partnering or consulting with someone who is a recognized expert in equipment lease financing and who will maximize flexibility and take the time to understand your business.

The internet might be a very reasonable choice to find such an expert partner, and of course referrals from your trusted sources are worth their weight in gold also.

In Canada, if you are choosing to enter into lease financing and you do not understand:

The industry players

Credit and documentations issues

Types of Leases

Rates structures based on your credit quality

Etc, then you potentially are at a very significant disadvantage with respect to maximizing the best type of lease financing that your firm can achieve.

Competitive pricing and Approved Financing - those are advantages of Canadian equipment financing!

.

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Article Tags: canadian business, equipment lease financingcapital expenditure, leasing equiptment in Canada



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