It’s a simple question really… is your firm making the best use, and taking advantage of the use of equipment leasing and finance when it comes to asset acquistion?

Just the use of your owner and management time in sourcing solid lease finance solutions can sometimes sap your business strength! When you think of it there are probably about 5 key steps in equipment leasing and finance strategies you employ.

First of all you must decide on which solution works best for your firm, in the context of what’s available in the Canadian marketplace. Here there are a plethora of firms, many specializing in either specific assets or deal size.

Step # 2 is simply getting a ‘ package ‘ of relevant info together – that might include equipment quotes or invoices, as well as the financial information you might be required to provide that demonstrates that the deal ‘ cash flows’ in the eyes of your lessor .

A challenge faced by most business owners is that asset finance lease approval is heavily focused on historical and present cash flow. If you don’t have those then your transaction will have to be ‘ structured ‘ in some manner. That might mean a down payment, a shorter amortization, or additional collateral or guarantees.

Step 3 is the idea of presenting your package to a lessor that makes sense for your firm. Don’t forget in Canada that the equipment finance marketplace is really broken down into 3 categories – small, medium and larger size transactions. Small in general might be termed as under 100k… mid we could say is up to the 500k range, and larger ticket transactions can be financed in the million of dollars if suitable credit and asset criteria is in place .

Complimenting these three asset lessors are of course captive firms who actually manufacture the product and then offer financing to your firm. The computer industry is a good example of this type of lessor – and by the way they offer the best rates, terms and structures given they are incented to approve your transaction, allowing them to make a sale at the same time!

Step 4 in our whole process is the negotiation process. Here you’ll be asked to potentially provide more information and clarify what type of transaction works for you in the case of the asset category. Knowing the benefits, advantages and potential downside of capital or operating leases is key to your success at this point.

As you head into step # 4 remember that lessors in Canada have numerous ways to enhance their yield, at your expense. So understand some of the nuances of terms such payments in advance, or what the down payment or security deposit does to your pricing, and the lessor yield.
Companies with decent credit history have more negotiating power than they think, given that it’s currently a very competitive market in Canada when it comes to asset finance.

The last part of your transaction, our step # 4, is simply documentation and legal requirements around the transaction. This involves the lessors registration of collateral, waivers from any other secured creditors, etc.

If you’re a Canadian business owner or financial manager that simply doesnt have the time to prepare information, negotiate, and then select from hundreds of capital sources in Canada for equipment finance then consider using the services of a trusted, credible an experienced Canadian business financing advisor . Just going through the whole 5 step process we have outlined sometimes becomes a job in and of itself – so consider some expert help when it’s available.