Overlooked Leasing Equipment As A Source Of Business Finance ? Lease Financing Works. Here's Why!

Overlooked? You tell us, but we're never more amazed at why leasing equipment is such an often overlooked source of business financing in Canada.

Here's why we think the ' unconverted' need to reassess this popular method of financing their businesses when it comes to asset acquisition.Hopefully you've got your short term working capital and cash flow needs sorted out. They might include bank lines, receivable finance, working capital facilities, asset based lines of credit, etc.But what about long term capital when it comes to financing your needed asset acquisitions?

It's an entirely different form of financing and you just need to know some solid basics when it comes to eliminating any surprises. Let's cover some basics.In general Canadian business owners and financial managers need to only know there are basically two types of leases - operating and capital. But the difference between the two of them is huge! When you engage an operating lease scenario you essentially have no ownership or acquisition rights - think if it as leasing your landline phone.

A capital lease on the other hand is a non-cacheable commitment to make a series of payments over time for the purchase of the asset; it's as simple as that. The usual (but not always' end result of a capital lease is the transfer of ownership of the asset from the lessor to your company.Strictly speaking, leases are a form of long term debt, but depending on the type of lease you structure, and how it's structured it doesnt necessarily have to show on your balance sheet.Why then do we think that many businesses in Canada overlook some solid advantages in leasing equipment?

And what are those advantages?First of all leasing as a source of business finance frees up working capital that you quite frankly could use in a more productive matter. A quick example is that if your lease rate is, say 7% and you can generate returns on profit in equity of 10%, as an example... well... enough said!.

Other methods of business finance as a source of financing often require hefty down payments - leasing more often than not is 100% financing or pretty close it depending on your firms overall credit quality .Naturally if you utilize a business leasing equipment firm you are therefore not disturbing any other credit facilities you might have in place, such as short term revolving lines of credit.

And again, with decent credit you don't have to pledge other collateral and solid credits can often negotiate a limited or no personal guarantee. Have we made out point? We hope so. Don't overlook lease financing as a valuable source of business funding.

Speak to a trusted, credible and experienced Canadian business financing advisor on solving your asset finance need today.

Overlooked Leasing Equipment As A Source Of Business Finance ? Lease Financing Works. Here's Why!

Overlooked? You tell us, but we're never more amazed at why leasing equipment is such an often overlooked source of business financing in Canada.

Here's why we think the ' unconverted' need to reassess this popular method of financing their businesses when it comes to asset acquisition.Hopefully you've got your short term working capital and cash flow needs sorted out. They might include bank lines, receivable finance, working capital facilities, asset based lines of credit, etc.But what about long term capital when it comes to financing your needed asset acquisitions?

It's an entirely different form of financing and you just need to know some solid basics when it comes to eliminating any surprises. Let's cover some basics.In general Canadian business owners and financial managers need to only know there are basically two types of leases - operating and capital. But the difference between the two of them is huge! When you engage an operating lease scenario you essentially have no ownership or acquisition rights - think if it as leasing your landline phone.

A capital lease on the other hand is a non-cacheable commitment to make a series of payments over time for the purchase of the asset; it's as simple as that. The usual (but not always' end result of a capital lease is the transfer of ownership of the asset from the lessor to your company.Strictly speaking, leases are a form of long term debt, but depending on the type of lease you structure, and how it's structured it doesnt necessarily have to show on your balance sheet.Why then do we think that many businesses in Canada overlook some solid advantages in leasing equipment?

And what are those advantages?First of all leasing as a source of business finance frees up working capital that you quite frankly could use in a more productive matter. A quick example is that if your lease rate is, say 7% and you can generate returns on profit in equity of 10%, as an example... well... enough said!.

Other methods of business finance as a source of financing often require hefty down payments - leasing more often than not is 100% financing or pretty close it depending on your firms overall credit quality .Naturally if you utilize a business leasing equipment firm you are therefore not disturbing any other credit facilities you might have in place, such as short term revolving lines of credit.

And again, with decent credit you don't have to pledge other collateral and solid credits can often negotiate a limited or no personal guarantee. Have we made out point? We hope so. Don't overlook lease financing as a valuable source of business funding.

Speak to a trusted, credible and experienced Canadian business financing advisor on solving your asset finance need today.

Creative Financing - Ten Ways

Do all the creative financing techniques you hear about really work? Yes, actually. They probably have all worked somewhere for someone at least once. The point isn't if they will all work for you. The point is to know what is possible, so you can find your own creative ways to invest in real estate. Here are ten methods to get you thinking.

1. Hard money lenders. You can ask around or find these online. They specialize in short-term loans at high interest. You typically use this type of financing for a "fix and flip." You can often get the money fast, and if you make ,000 on a project, who cares if you paid ,000 interest in six months.

2. No-doc and low-doc loans. No (or low) documentation of your income or credit required. Again, you can find banks that do these online now. The catch is that you will only be able to borrow up to 80% of the purchase price or property value. If you have 10% in cash, you might be able to borrow the other 10% from a friend or the seller.

3. Seller-carried second mortgages. Sometimes a bank will loan you 90%, and allow the seller to take back a second mortgage from you for 5%, leaving you needing only 5% for a downpayment.

4. Land contract. Called "contract for sale" or other names as well, this just means the seller lets you make payments, and delivers the title upon payment in full. I sold a rental this way for ,000 down, because I wanted the 9% interest, and the higher price I got this way.

5. Credit cards. If a seller will take ,000 down on a fixer-upper that you expect to make ,000 on, why not use credit cards? This is a true 0-down deal for you, and if you turn the project in six months, you will have paid 0 in interest on an 18% credit card. Don't let 0 get in the way of making ,000.

6. Retirement accounts. The laws get pretty complex in this area, but you can check with a tax attorney to see how you might borrow from your own retirement account to finance real estate investments.

7. Friends and family. Keep it all business, if you use this source, but loaning you money at 7% isn't a gift if their money is getting 2% in the bank.

8. Note buyers. The seller needs cash. He raises the price, and sells to you for 0,000 with no money down, taking back two mortgages from you for ,000 and ,000. He arranged (or you did) for a note buyer to pay him ,000 cash for the first mortgage at closing, getting him the cash he wanted. You pay two payments now, one to each note holder.

9. Get a loan on other property. Interestingly, if you take out a home equity loan for a vacation, and then forget to use it for that, you can use it for the downpayment on an investment property, without violating the rules of the bank that gives you the primary mortgage. In other words, you got in with no cash of your own.

10. Partnerships. For bigger projects, you could arrange for five investors to each put money into a partnership, with your share being the management responsibility instead of cash.

Do You Know How To Raise Cash For Financing A Business Purchase Acquisition?

When financing a business purchase acquisition it kind of comes, fortunately or otherwise, to the fact that ' size counts '! . So the cash you need will directly relate to the size of the business you are financing, as well as the asset quality. Naturally how the company you are purchasing and raising cash for is doing play a key element, as often less cash is required and the focus is on financing remaining assets.

So a solid rule of thumb to keep in mind is simply that the amount of cash and ' finance power ' you need is very directly related to your targets situation on profitability. In other words a lot less real cash is required if a company is not profitable or barely breaking even. That certainly makes the job easier, right?In talking to clients about financing a business purchase we often feel they are focusing solely on the purchase, and not on the on going capital and cash flow needs of your newly acquired business.

We also have to consider the fact that raising cash for a business might often be more feasible if you have a strategic partner or other equity investor. That unfortunately will dilute your equity position but might be realistically the best course of action. And it does certainly allow you to purchase and fund a business with less ' monetary' contribution to the deal.In the case of larger transactions Canadian business people might well look to a private equity partner in the deal.

Their assistance in helping you complete an equity investment, as well as their experience in any specific industry is of course a valuable consideration. And to sum up the whole issue of getting either a strategic or operating partner or private equity group we can simply say that often times this might well add credibility and realism to your offer in the eyes of the seller.Bank financing in Canada is available to finance business acquisitions. You or your Canadian business financing partner needs to address the following issues at this point:A concise overview of how you will run the business - i.e. management depth, experience, etcYou need to ensure the industry your business is in is ' in favor ' when it comes to a bank appetite.

Your business plan and projections have to be realistic relative to cash and working capital resources re operations and growthIn a perfect world - and we know it's not! You want to be in a position to demonstrate sales growth, profits, and a balance sheet that hopefully won't have a debt/ equity ratio of 3:1 as an example.

And your assets such as inventory and receivables should demonstrate borrowing power quality.Other ways to finance your business purchase include asset based lending, bridge loans, use of sale leasebacks, and even the government SBL loan if the business has under 5 Million in revenue.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor when it comes to a capital raise for a business purchase acquisition in Canada.