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Which Equipment Leasing And Lease Finance Options Suits Your Firm For Canadian Asset Financing? Does a Loan Make Sense?

Guest post by: Stan Prokop

Article Overview: Information on equipment leasing in Canada . Canadian business owners have two lease finance choices when utilizing asset financing lease and loan strategies .

Which Equipment Leasing And Lease Finance Options Suits Your Firm For Canadian Asset Financing? Does a Loan Make Sense?

Did you hear the one about the Canadian business owner and financial manager who couldn't make a decision when it came to equipment leasing and lease finance options. Actually, we're quite sure that same conundrum faces hundreds, perhaps thousands of business owners in Canada when it comes to selecting an asset financing strategy that works... especially for their needs.



Let's examine some of those options and help you out in two clear phases of business financing decisions - the lease or buy decision, and of course picking the right lease finance option if in fact you have made that decision to move forward with one of Canada's most popular financing strategies.



So, lease..? Buy? Which one works for you? A good rule of thumb is to first consider what we can call the useful life of the asset when facing that decision. An even better rule of thumb is to think of purchasing outright if you have a strong level of confidence that the asset will last beyond a typical financing term. In Canada equipment leasing terms, (aka amortizations) are typically 2 to 5 years. (Make that 20 years if you are purchasing a corporate jet, but that isn’t really an everyday purchase!)



So that’s the ' buy ' decision. What factors can impact your decision to purse a lease finance strategy. Here our rule again is somewhat common sense oriented (we love common sense). If you think you wont use the equipment for the after a typical financing term, or if you think it might needed to have an upgrade or an add on then certainly consider an asset financing option via equipment finance leases.



Naturally there are advantages to each of our two lease and buy options. Let’s examine buying first. Purchase decisions, if done via a loan option, typically have blended payments of principal and interest and are simply spread over the life of a loan.



Although loan financing can in some cases be on a 100% basis you typically might be expected to make a down payment, in certain cases sizeable. That down payment of course lowers your monthly loan payment amount. Purchasing an asset outright, or using a term loan keeps the asset on your balance sheet, enhancing your overall fixed asset based. In many cases you can take advantage of depreciation and tax scenarios to enhance the ownership of an asset.



Lease financing. The benefits are somewhat ' classic ' in nature. In the majority of cases the asset is 100% financeable, with down payments being minimal. You have just completed a great obsolescence hedge, especially when acquiring tech type assets - think computers, servers, cloud financing, etc.

Don’t let the lease or buy decision confuse your asset acquisition strategies. Speak to a trusted credible and experience Canadian business financing advisor who can assist you with your business finance needs.

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Article Tags: asset financing, equipment leasing, lease finance



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).
$1,000,000 - Hi Evan, Are you talking about US Dollars? If so, that would be approx £500,000 in the UK. The Canadian Dollars differs also from the Australian Dollar. In any case, one needs to solve problems to help people to get money. The more solutions are given to people's needs to solve their problems, the closer one gets. Finally, are we talking about 'Income' or can we talk about 'Asset'? Kindest Regards Beat "Unlock People's Potentials!"
Re: Finance is the primary requirement of business - [quote="rauljoseph":36x8dadn]Finance is very important in a business. It is all about managing the business' money and other assets. Finance includes the study and analysis of processes, financial institutions, markets and instruments that are involved in the transfer of money or anything that has a monetary value among consumers, businesses and government.[/quote:36x8dadn] Good point. I'll just add that if I was going into business for myself and could only have one skill it would be Sales & Marketing. You need to be able to create customers first and foremost. Finance is more of a support function for entrepreneurs.
Finance is the primary requirement of business - Finance is very important in a business. It is all about managing the business' money and other assets. Finance includes the study and analysis of processes, financial institutions, markets and instruments that are involved in the transfer of money or anything that has a monetary value among consumers, businesses and government.
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


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