Getting the best Canadian equipment financing business funding and lease rates isn’t as difficult as you might think if you’re well informed. Canadian business has always regarded business equipment financing as a solid choice for asset acquisition.
When you consider an asset finance decision your alternative usually tends to be a bank loan. Banks obviously have the best financing rates in Canada but did you know that the banks themselves don’t offer equipment leasing. A few have specialized subsidiaries that do offer this type of financing, but in general you need to know that if you are focusing on a great rate for equipment financing via a bank you’re talking about a ‘ loan ‘, not a lease – and boy is there a difference .
In Canada a huge equipment lease industry exists, made up of literally tens of players who are small, large, Canadian, U.S., captive to their mfg parent, etc, and on it goes. We’re going to help you demystify who’s who and how you can focus on getting, in your terminology, ‘ a great deal ‘. And a deal that’s approved!
So what are the secrets to getting the best lease rates for your financing? You need to know how the lender thinks, and he or she is thinking about 2 things – they are cash flow and debt burden.
So when you approach a lease company you should have spent time to demonstrate in advance that you can pay for the equipment. This can be done via a historical cash flow analysis, or by the preparation of a go forward cash flow analysis for the next year or so. You are probably doing that anyway for your regular business planning. It has never escaped our amazement that lease companies analyze your old cash flow to see if you can meet their ongoing cash flow requirements a la your ability to make payments, but we’ll leave that for another day.
Want another great tip? It’s simply that Canadian equipment financing focuses on whether the asset you are buying is productive and will assist you to grow sales and profits, so be prepared to articulate that in some manner.
Most Canadian business owners already know the key advantages of leasing: allow you to acquire assets you need that you might normally not be able to afford otherwise, payment and term of lease flexibility, tax benefits, risk of ownership staying with your lessor, and finally great flexibility at the end of a lease to return, purchase, upgrade, or extend.
Getting back to best lease rates themselves we encourage all our clients investigate operating leases, especially when they are acquiring technology – this type of lease will drive your rate down dramatically, because the lessor assumes a hefty residual value based on your desire to return the equipment at the end of the lease – they then remarket the asset. Speak to a Canadian business financing lease expert to determine the true benefits of an operating lease.
Great lease rates also come with faster approvals in Canadian equipment financing – so on a normal transaction you should assume you will have a solid answer back on rate, term, structure, and credit approval in a matter of days. Naturally, as we have stated you should be positioning your case properly, focusing on ability to repay, providing a proper invoice or equipment description, and ensuring your financials are up to date.
Lease funding in Canada comes from, as we mentioned a number of players, some are small, many are large corporations, some are foreign owned, and some only do certain types of deal sizes and assets. Want to demystify that maze – Speak to a trusted credible and experience Canadian business funding advisor who can help you get the equipment funding you need at lease rates your transaction deserves.