The Equipment Finance Lease In Canada : Eliminating Rough Waters In Asset Financing

by

stanprokop

The equipment finance 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 Businesses can achieve ‘ cash in’ status via a sale leaseback strategy )

While mostly positive, and we hesitate to use he word ‘ negative ‘ there are some issues that need to be understood by the owner/manager. It’s all about handling the truth we suppose – let’s dig in.

Unless your lease properly reflects the option to own the asset at the end of the term lease financing is all about ‘ using’ an asset. Small to medium size lease financings have some fairly basic issues attached to the documentation; if you don’t know 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 are:

Amortization term of the lease

Residual

Purchase Option

Termination abilities

For asset financings in the SME Commercial area documentation around lease contracts is fairly simple these days – lessors have strived to eliminate paperwork. Larger transactions and ‘ Master Lease ‘ agreements tend to be more complicated.

Many business owners and financial managers don’t fully investigate ‘ operating leases. A good way to understand these is to think of it as a lease for an asset where the life of the lease term is almost always shorter than the expected life of the asset. One of the most common asset classes financed by operating leases is ‘ Technology / Computers’

While 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 existing tech assets.

While lessors in Canada scream ‘ benefits ‘ (flexibility, cash flow, alternate credit sources, tax implications) a more balanced approach is to ensure the potential downside.

Those ‘ downside’ issues include:

Potential non ownership of the asset

Termination costs if you are forced to exit a lease for business reasons

Cost (rates tied to leases are more often than not higher than pure bank loans/borrowings)

When we talk to clients about ‘ handling the truth ‘ in those downside issues it’s important to realize they are all manageable and hardly overwhelming if understood at inception.

If you’re looking for ‘ smoother waters’ in your equipment finance lease needs seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in matching proper asset financing solutions to your needs.

Stan Prokop

Stan Prokop – founder of 7 Park Avenue Financial http://www.7parkavenuefinancial.comOriginating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 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.http://www.7parkavenuefinancial.com/equipment-finance-lease-asset-financing.html

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The Equipment Finance Lease In Canada : Eliminating Rough Waters In Asset Financing}

Want to know about loan review

by

Jamie Hanson

A property owner whose shopping center, apartment complex, retail shop or any other equivalent property is facing a danger of foreclosure can team up with a lending entity to get benefitted from allowances of a loan modification. During negotiations to alter mortgage terms for a property; proprietor’s preliminary information and other pertinent data and documents will be examined. This process is called loan review.

It involves two parties namely the property owner and the lending party. Numerous banking regulation groups and financial institutes promote restructuring agreements between the two parties mainly because the compromise can be advantageous for both. Financial regulatory groups advise this alternative as majority of the property owners are probable to have provisionally lost the ability to make payments and might recover their foothold in near future. Most of these proprietors do no want to flee from their responsibilities; but only require some time until they can carry on with regular payments. Giving these business units an opportunity to recover is enviable in long run as it can prevent considerable losses to the lending party and borrower. A debt restructuring and review is a boon for all businesses that can in due course get back to their previous position. The consulting firms and their loan review programs can identify which business unit can and which cannot return to regular operation. This process evaluates the firm’s ability to pay back debt with the tailored mortgage payments. Creditworthiness of a borrower is judged keeping in mind a number of factors like payment records, borrower guarantors, cash flow trend of the business and relevant market conditions. This kind of review essentially decides whether the application for restructuring can be approved or not. The borrower’s loan modification is carried out by experts like loss mitigation lawyers as well as analysts. The review pays attention to the contents of the initial agreement between the two parties. Loan reviews are undoubtedly great for borrowing parties. If you are looking out for a firm which could provide an independent loan review service then I would recommend you to check out www.ceisreview.com. They use ALLL methodology and ensure allowance for loan and lease losses. Loan review programs offered by this firm are executed by highly experienced senior lenders. All the professionals at this company were connected with regional banks, money market, commercial finance companies and community banks.

For more information please click here

Loan Review

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A Government Backed Business Loan : How Not To Fail At SBL Bank Loans

by

stanprokop

The government backed business loan in Canada – what Canadian business owner/financial mgr wouldn’t want a clear start to finish road map for ‘ SBL ‘ bank loans in Canada? Let’s dig in.

Expectation, or should we say ‘realistic’ expectation is key in understanding the path to success in govt business loans. Specifically this is the financing offered under Industry Canada’s CANADIAN SMALL BUSINESS FINANCING (CSBF) program.

Our chartered banks fit in because they are the facilitators of the loan under the government’s ever watchful eye.So how does the owner/entrepreneur successfully prepare an application and obtain financing approval for these loans? It’s all about really bring the pieces of the pie together in accordance with what is really required to achieve loan success – we see a lot of clients focusing and preparing issues and info respectively that is simply not required or is much less important relative to final loan approval. Doing it right allows you to eliminate the pitfalls and failure.At the outset its key to understand the amount of financing you are eligible for. In the case of the program itself it’s specifically $ 350,000.00 for the main offering of the program. (If real estate is involved as the asset financed a 500k loan is allowed – however in our experience SBL loans are rarely used for real estate).

One top expert, and we agree, advises that adopting an ‘ as much as I can get ‘attitude is a failed strategy! Here is one case where being specific counts – and that is easily achieved in the following manner: Have a clear ‘ use of funds ‘statement that specifically identifies the asset and leasehold to be financed, including the $ breakdown.

That also reminds us that you need a clear understanding that government backed loans only finance two asset categories – equipment and leaseholds. Equipment by the way can easily include technology, software, etc., as these assets are clearly part of the new economy.

Other key elements of your proposal should include info on the owners – that includes mgmt and industry experience, financial stability, and a general sense of demonstrating you know how to run a business. Newbie’s beware!The other key element of your application is a strong executive summary, or even better a business plan.

This should not be viewed as a difficult document – they can easily be prepared by your accountant, or even better an advisor who works in this area and understands the basics of what the banks like to see – specifically cash flow, an opening balance sheet, etc.

Fine tuning the cash flow to show a positive and realistic ability to repay the loan is essential.The majority of businesses applying for an SBL loan operate out of a premise, and you should ensure that you have a lease that is at least as long as the term of the loan – for some reason lenders like to know you’ll still be around !In the cases of your ‘ owner equity ‘ or ‘ down payment ‘ in the program that is a minimum of ten per cent but depending on who you are dealing with that might be more.

Demonstrating up front you have ‘ proof of funds ‘ is key.If you want to become a quick ‘ hero ‘ in SBL government backed loans and have that ‘ zero to 60 ‘ feeling seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with govt bank loans that are achieved annually by as many as 8000 other businesses in Canada that take advantage of the program.

Stan Prokop – founder of 7 Park Avenue Financial http://www.7parkavenuefinancial.comOriginating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 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.http://www.7parkavenuefinancial.com/government-backed-business-loan-sbl-bank-loan.html

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A Government Backed Business Loan : How Not To Fail At SBL Bank Loans}