The Equipment Finance Lease In Canada : Eliminating Rough Waters In

Asset Financing
You Cant Handle The Truth Aout Equipment Leasing In Canada !! "r Can You
In#ormation on asset #inancing in Canada! What are the ad$antages and
manageale disad$antages o# the equipment #inance lease #or Canadian usiness
#inancing solutions
The equipment #inance lease is by far the most popular method of asset financing in
Canada. Although paying for an asset in this matter is ' cash going out ' vs. ' cash going in
' this method of finance allows businesses in Canada to acquire assets and technology
needed to run and grow their business. ( Note usinesses can achieve ! cash in" status
via a sale leasebac# strategy $
%hile mostly positive& and we hesitate to use he word ' negative ' there are some issues
that need to be understood by the owner'manager. (t's all about handling the truth we
suppose ) let's dig in.
*nless your lease properly reflects the option to own the asset at the end of the term lease
financing is all about ' using' an asset. +mall to medium si,e lease financings have some
fairly basic issues attached to the documentation- if you don't #now the basics of these
you can over pay ' over spend on lease financing. And by the way& they are all negotiable.
And those basics/
They are0
Amorti%ation term o# the lease
Residual
&urchase "ption
Termination ailities
1or asset financings in the +23 Commercial area documentation around lease contracts
is fairly simple these days ) lessors have strived to eliminate paperwor#. 4arger
transactions and ' 2aster 4ease ' agreements tend to be more complicated.
2any business owners and financial managers don't fully investigate ' operating leases. A
good way to understand these is to thin# of it as a lease for an asset where the life of the
lease term is almost always shorter than the e5pected life of the asset. 6ne of the most
common asset classes financed by operating leases is ' Technology ' Computers"
%hile the appeal of the ' off balance sheet ' aspect of operating leases has pretty well
bitten the dust it"s still a great way to upgrade& replace and add on to e5isting tech assets.
%hile lessors in Canada scream ' benefits ' (fle5ibility& cash flow& alternate credit sources&
ta5 implications$ a more balanced approach is to ensure the potential downside.
Those ' downside' issues include0
&otential non o'nership o# the asset
Termination costs i# (ou are #orced to e)it a lease #or usiness reasons
Cost *rates tied to leases are more o#ten than not higher than pure an+
loans,orro'ings-
%hen we tal# to clients about ' handling the truth ' in those downside issues it"s important
to reali,e they are all manageable and hardly overwhelming if understood at inception.
(f you're loo#ing for ' smoother waters' in your equipment finance lease needs see# out
and spea# to a trusted. credile and e)perienced Canadian usiness Financing
Ad$isor 'ith a trac+ record o# success
who can assist you in matching proper asset financing solutions to your needs.
/tan &ro+op ) 0 &ar+ A$enue Financial 0
http:,,'''!0par+a$enue#inancial!com
usiness financing for Canadian 1irms & speciali,ing in wor#ing capital& cash flow& asset
based financing & 3quipment 4easing & franchise finance and Cdn. Ta5 Credit 1inance .
1ounded 7889 ) Completed in e5cess of :8 2illion ; of financing for Canadian
corporations . (nfo 'Contact 0
0 &AR1 A2E34E FI3A3CIAL 5 CA3A6IA3 E74I&8E3T LEA/E FI3A3CE
E9&ERTI/E
Ha$e A 7uestion ,Comment "n "ur :log "r Canadian :usiness Financing
Alternati$es ;
C"3TACT:
0 &ar+ A$enue Financial
+outh +heridan 35ecutive Centre
7:<8 +outh +heridan %ay
+uite =8<
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/tan &ro+op