As always, it's a question of the right time and right place. We're discussing business equipment leasing in Canada. When should Canadian business owners and financial managers consider lease financing for asset acquisition and use. We've got some basic checklists on what works when, and, as importantly, with whom!

We're forgiving you if you feel that the many advantages of equipment finance in Canada are sometimes overdone, or overstated. There is of course things such as ' pride of ownership ‘. Furthermore, some, certainly not all assets appreciate over time, or at least hold their value, so there are certain times when 100% purchase for cash / outright ownership seems to make sense.

Additionally, if you enter into an operating lease scenario you have certain obligations to purchase or give back the equipment at the end of the lease. What then, especially if a suitable alternative or upgrade isn't available?

It's just that we think we can count on one hand the amount of assets that appreciate over time these days, and items such as computers certainly aren’t one of them.

So when exactly should the business owner or financial management of a firm consider leasing? One of those cases might be when it's simply cost prohibitive to purchase an asset outright, or if the rates to finance that purchase via a loan seem too high.

Most businesses in Canada don't fully investigate the accounting and tax implications of a lease vs. buy scenario. If they did they might find that those benefits, coupled with a reasonable and affordable monthly payment make business equipment leasing an obvious choice.

Additional guidelines that might make you consider lease financing are areas such as equipment obsolescence, usage that is only temporary in nature, etc.

So now that you've determined when to lease the question becomes ' with whom ‘?! As you consider a lease firm you should, at the same time have a reasonable working knowledge of what type of lease you want. That translates into 3 basic choices in Canada, the lease to own, the lease to use, and the leasing back of your assets. Respectively these choices are known as capital leases, operating leases, and a sale leaseback.

We can imagine the inexperienced business owners or financials manager’s quandary, or indecision on who to deal with. In Canada you have 4 choices, and it makes sense to know the benefits and basics of each of these.

Your four choices are commercial finance leasing companies that are most often private firms specializing in leased assets. Choice # 2 bank leasing companies in Canada; these are closely tied to their parent companies, Canadian chartered banks. Choice 3 is often a fabulous choice, these are the prisoners! Prisoners? Well actually we mean captives, they are finance firms related directly to the manufacturer of the business equipment you wish to lease.

Choice # 4 is often the safest bet. It's a Canadian business financing advisor who has knowledge and relationships with all of the above firms .These players, with the right credentials and reputation can bring true value and save you thousands of dollars on any single transaction. Look for past experience, credentials, etc.

Knowing when and with whom to finance your assets can put your firm on the track business financing success.

Author's Bio: 

Stan Prokop - founder of 7 Park Avenue Financial –
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
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