Looking For Some Business Financing Oxygen? Try Asset Finance Via An Equipment Finance Company. Here’s Why!

Looking for some breathing room , aka some business financing ‘oxygen’ for the finance of assets in Canada ? You just found it .

The challenge of matching capital outlays for the assets / equipment you need for your business can be a significant one… a bit more so if you industry is capital intensive .

Does asset finance have to always be difficult? We know it’s never easy, but utilizing lease finance is certainly one way to remove a lot of the challenge.

In many ways it’s a perfect world when you consider the lease finance option. Why? Because you’re benefitting from the combo of tax and accounting benefits which accrue to the lease decision, couple with the concept of being able to upgrade, return, buy new or used again, etc . (Yes used assets can in general be easily financed, as long as there is a mutual agreement of value between yourself and the equipment finance company you are dealing with).

The equipment lease option is at the other end of the spectrum of purchasing / buying assets outright. The methodology a business owner or financial manager uses to make that decision is commonly called the ‘ lease vs. buy ‘ choice.

Part of the appeal of equipment finance is simply that your lessor is the one that’s of course paying directly for the assets, and by the way that can very typically include costs associated with delivery, installation, etc. Even software and other intangibles such as warranty can be financed.

It goes without saying that the buyer of the assets retains title to the asset. Your firm uses it during the term of the lease, and then, based on the type of lease you have entered into (there are two – capital and operating) title / ownership revert to your company, or stay with the lessor.

The operating lease strategy we refer to above typically has title and return of the equipment staying with the lessor. However your firm has of course derived the benefits of usage.

Many assets you require for your business should not necessarily ever be owned. Best example – Computer and telecom asset classes. They depreciate quickly, technology changes, and more often than not the new product line is. you guessed it.. newer. faster, and even cheaper !

We can never over emphasize to clients how critical it is to spend a bit more time on your lease documentation with respect to your firm’s rights and obligations. Unfortunately we see our clients often over focused on rates, monthly payments. Etc. They can’t believe it when we tell them they get to pick their own rate. Unbelievable?! Not really, because the industry is very competitive and your overall credit quality is easily determined by the lessor, and you, the (hopefully astute) borrower.

We further note to clients that the entire operating lease industry is in some minor upheaval since international accounting standards have changed dramatically relative to what counts and doesnt count in a ‘ True ‘ operating lease . Key point – the manufacturer finance facility, aka the industry ‘ captive ‘companies that finance the parent company products are often the best place to achieve true operating lease nirvana.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your asset finance needs.