Equipment Financing in Canada

Equipment financing in Canada happens to be a specialized kind of financing. As far as lease financing is concerned, it dates back to hundreds of years and is still a very popular financing tool. Many important firms in Canada use lease financing; so why should your company stay far behind?

Lease financing

It covers all kinds of equipment which includes transportation equipment, production equipment, computers, machine tools etc. Most banks in Canada are unable to offer lease financing, even though the two Chartered banks in the country have started lease operations. However, they require extremely high credit quality.

Give some thought to leasing since it’s not difficult at all to arrange for financing agreement between your equipment’s vendor, the less or and yourself. Leasing itself is not a complicated process. However, leasing practices in Canada along with the parties that take part are very much different compared to that in the US. Business owners in Canada and financial managers are benefited to ensure that they are able to comprehend why leasing has turned out to become so widely-known.

Types of leases

Business owners in Canada can avail of two fundamental kinds of leases. They are operating and capital leases. The former is promoted by vendors or manufacturers and include insurance and maintenance. You are advised to meet with a specialist of heavy equipment financing in the country to find out whether an operating lease is appropriate for your company. The significance associated to an operating lease is that your intention lies in using the equipment and not owning it. After entering into an operating lease, see to it that you don’t have any objective to own the equipment when the term comes to an end. In such a case, your payments turn out to be relatively lower compared to if you intended to own the equipment following the termination of the term.

Strategies of equipment financing in Canada

When you come into contact with a lease firm in Canada, you need to demonstrate that you are able to furnish payment for the equipment. You can do this by a historical analysis of cash flow or by preparation of an analysis of cash flow in the coming years. To get equipment loans in Canada, you need to prove that the equipment which you are purchasing is productive and will help you to enhance your sales as well as profits. So get ready to prove this fact in any manner you want.