Many business owners and financial managers feel that leasing equipment and financial solutions for their financial needs are more expensive than other forms of financing.
At the same time, however, thousands of companies face leasing financing problems every day when purchasing equipment. How a financial solution seen as “expensive” can be one of the most sought-after business financing facilities day after day.
This is because it’s all about benefits and flexibility. In pure theory, if you paid the full price in cash or entering into a term loan, you could make a technical financial case, that leasing financing is more expensive.
But it’s never about price in your personal life, and this certainly happens in business. The reality is that the additional benefits of leasing often outweigh any concerns about costs or interest rates. And quite frankly, at low interest rates all the time in Canada, companies with quite decent credit profiles can obtain equipment financing in the range of 7-8%. And in addition, if your business does not have an impeccable credit profile, you can still get approval because Canadian equipment and leasing and financing professions are experts in asset finance, with a strong focus on the prospects of your business and the assets themselves.
Accounting is not one of our favourite topics when customers ask us for help with leasing, but the reality is when you effectively use leasing – for example, operating leasing, then you are able to increase your overall return on assets, and your banker or other senior lender is not too concerned about the fact that the always ubiquitous debt to equity ratio he talks about.
When customers talk to us about leasing, we can talk about ten or 15 different issues – but frankly, they often have only one – can we get agreement on the rate, term and structure that make sense for our business? This is the most important question more often than not. And more often when leasing financing rises upside down! Lessors take on more credit risk than financial institutions, and in our word, they are more likely to “buy in your history”. – Whether it will be a payback during the year, whether it is a new project that is coming, etc.
Leasing decisions from your point of view are often driven by the simple question of whether purchasing this asset can increase sales and profits. Asset financing companies understand that, in principle, they are becoming your business partner with the extra capital that they put into your equipment financing needs. On the other hand, you can use these additional cash flows and working capital for general operational purposes. You have a matched long-term debt – i.e. leasing, with long-term capital – leasing financing strategy.
Talk to a trusted, reliable and experienced tempest business in equipment leasing and financing. Be surprised by the return in the approval process and the benefits that you did not know you could achieve them.