Why Lease Equipment? In Case You Were Wondering…

You have probably heard of the tax benefits of leasing equipment and vehicles through your company. In short, when you lease your gear, truck or passenger vehicle your entire monthly payment can be recorded as a rental expense on your income statement. Obviously, this lowers your taxable income at year-end and can reduce your related tax bill. In contrast, a bank loan or finance contract allows only for deductions of interest expense and depreciation, not the entire payment.

When comparing equipment and vehicle leasing options with a bank loan, often a lease may not look like a lowest cost solution. And it’s true: On secured loans, we generally do not beat the bank on posted annual percentage rates (APR%). But wait! What if you do have significant tax savings? Wouldn’t that offset the cost of your lease?  Bingo.

Besides the potential for tax savings, our equipment and vehicle leasing facilities are an alternative source of funding. Leasing provides diversity of financing (different eggs, more baskets) for your business, while helping you contain and manage operating costs of revenue generating assets over a fixed term.

So what does that mean, exactly?

While your bank may provide you with the apparent lowest cost of borrowing — as you may suspect, there are always trade-offs:  Consider processing time, the usual collateral security pledges, general security agreements, and personal guarantees. Our leasing services are faster, with lower down payment requirements, and generally do not encumber your other company assets.

Leasing equipment and vehicles for business is a sound alternative, especially for early stage companies and those which may be feeling credit leverage due to growth. While financing through a bank may lower your total cost of borrowing in the long term, when considering cash management, a bank loan or finance contract may actually require greater down payments and discipline (monthly reports and bank covenants) over the short to medium term.

So, why is there a consistent appeal to look at a leasing solution?

Simple:  C A S H  F L O W.  Total cost can be calculated in a few different ways.  We often forget that there is a cost to having cash available as you need it:  for operations, for re-investment, for liquidity, for flexibility.  Without cash on hand, a business is cornered — restricted in options and mobility.

Lease structures generally require a lower initial upfront payment (down), can offer lower monthly payments through deferred principal repayment (residuals) and often provide clear, fixed cost end-of-term purchase options (compared to standard rental contracts). With our leasing solutions we offer you a way to improve and enhance the cash flow related to the fixed assets you require to make your company work.

The answers are not always easy. Mostly, “it depends” on your situation, on the age, type and value of equipment, on credit history and the relative financial strength of your company. But please, by all means, let’s have the conversation.  Give me a call, text or drop a note via email to talk about your requirements. Thanks!


Frank
Direct Line: 403.701.5877
email: frank@leasedirect.ca

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Business Development Partners Wanted: Consider the Equipment Leasing Industry!

LeaseDirect is seeking partner track sales and business development people across Canada. Candidates will have some level of sales, business development and financial services experience and training.

Perhaps your past career life was as a banker, accountant, financial analyst, or business broker. Maybe you are simply a quick study in people and the sales process. Possibly a return to the struggles in corporate culture is no longer attractive to you. Is it time to be part of a consulting team, working independently without flying solo?

If this sounds like your situation, consider putting on your consulting hat and go have a listen to what our customers really need. With a bit of training, you will find it relatively easy to filter out who fits the equipment leasing model and who should just go to the bank.

We will teach you to ask the right questions. LeaseDirect believes in being up front with what we can reasonably offer, and we are quick to point rate shoppers and tire-kickers in a more appropriate direction (they always appreciate the honesty and you won’t spin your wheels). That said, our lease structures and resulting payment streams are often very competitive with bank offerings, considering our lower down payment requirements, potential residuals and more flexible credit terms.

To summarize, LeaseDirect offers competitive lease financing structures to growing companies for potential tax advantages. We do it in a timely manner that is efficient for the customer, with minimal hassle. We promote diversity in financing options for business, ensuring that our clients understand where leasing fits within their borrowing portfolio, i.e. use: 1) banks for operating lines 2) credit cards for short term expenses 3) factoring for cash flow 4) leasing to finance revenue generating / supporting equipment.

Keep us in mind please if you are a seasoned individual who may be interested in working within an established brokerage brand and funder network. We are looking for partners — not employees or agents — who can provide consulting services in regional markets across Canada. Join us. Drop a note. Or call Frank at 403-701-5877.

We believe that a better way to work is emerging. Check out Chuck Blakeman’s TedX talk.

 

 

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Creating Efficiencies: Smart Leasing of New and Used Equipment and Vehicles

Some of our most successful clients have built their businesses with a smart approach to acquiring assets that are aimed at improving operating efficiencies. With the right equipment, often a business will improve their processes enough to cover the cost of the leased equipment while also saving time and effort in the delivery of their services.

Some examples:

A siding contractor acquired a Bandit wood chipper to process waste panels into recyclable sized chips. This reduced his waste bin removal and dumping charges by multiple factors while also keeping the worksite tidy.

Including a dump box on a medium duty truck allowed a landscaper to haul smaller loads of top soil, gravel and mulch to residential projects without incurring extra expense to bring in full loads by dump truck on contract.

A start-up flooring contractor acquired good used equipment through a private sale instead of purchasing new (at three times the price).

An established floor covering sales company expanded into refurbishing old floors by acquiring new floor finishing machinery. The new service offering opens the door to future sales of carpets, lino and wood flooring.

Adding a narrow skid steer to their fleet allowed a landscaper to move soil and mulch into clients’ back yards without removing fencing or gates, cutting down the time to finish most smaller jobs. This also worked well in new residential areas where the houses are very close together… (hauling sod & fencing).

Good used pickup and utility trucks are available at substantially lower prices than new units. Cost conscious general contractors, carpenters, plumbers and electricians have saved a bundle. We have financed a variety of privately acquired, wholesale, auction, and dealer supplied used units with very reasonable monthly payments. There are no specific age limits to the used equipment and vehicles you could lease, though there are price points at 5 years and 10 years old.

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Refinancing Equipment: Sale Leaseback Financing for Vehicles and Equipment to Get Cash Out Of Fixed Assets

Your growing company needs a cash injection *fast*, the bank is dragging its heals and a lucrative opportunity may be slipping away. What to do?

Use the valuable equipment already in your business to extract cash to grow your company. Whether machine tools, construction equipment, yellow iron, or specialty machinery, we can leverage the value of used items to provide funds when you need them.

Likewise, if you own your late model car, light truck or van, and it is used for business purposes, consider rolling it into your company and extracting most of its value through a new lease. Essentially, you will be selling us your vehicle and leasing it back from us over a fixed term, at a fixed payment and a set residual value, and the new payments would come from your company account.

Suddenly, you are making your payments on a before tax basis. Mmmm…

To clarify, you may own the vehicle personally, or perhaps it is already owned by the company. It may even have other financing in place (we’ll pay it out for you). It really doesn’t matter to us as long as the vehicle is less than 5 years old, and mileage is under 80,000 kms. We will structure a new lease for you, perhaps with a longer term, higher residual and a lower payment than you even imagined was possible. We will pay you within 2-3 business days from receipt of updated insurance confirmation and registration.

There is no catch, but there is some paperwork involved. To verify your ownership, or title to the equipment, we need a copy of the current registration (or original invoice), and, if your company does not yet have an active commercial credit bureau we may need to review your company financial statements. Also, given this is a somewhat riskier way for us to build our leasing portfolio, your credit history is an important factor in getting the transaction approved on our best terms.

On the other hand, even if your credit or the age of the vehicle are at issue, we may *still* have a solution for you. It may not be as pretty or cost effective, but usually there is a way.

Similarly, if you recently purchased equipment and would prefer to extract the cash rather than having it tied up as just another fixed asset, send us the receipt and proof of payment and we will get to work.

Please give Frank a call at 403-701-5877 to discuss your requirements.

 

Hat tip to Ron Byskal (thanks Ron!)

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Financing Condo and Homeowners Association Repairs, Upgrades and Improvements

If your condo or homeowners association is planning major repairs or upgrades to your building or complex, you may be in for a tough cash call.

There is now an affordable alternative for financing repairs and upgrades that won’t drain owners’ resources. Through simple, straightforward financing arrangements with your association, the cost of repairs and upgrades can be structured into very manageable payments.

Give us a call to find out how.

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Financing Soft Assets? Almost Anything is Possible With Solid Financials.

Good news: We can now lease finance non-traditional ‘soft’ assets for well established, financially solid corporations. This may include software only deals for major mission critical packages key to supporting your enterprise. It could include warehouse fixtures, lighting systems, alternative power supplies, racking, and even specialized HVAC systems.

If your bank doesn’t like it, chances are we can help get your financing done — quickly and on a very cost competitive basis.

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LeaseDirect Canada Now Accredited by The Better Business Bureau (BBB)

Well, we finally got around to getting accredited by the Better Business Bureau, aka BBB, and started off with a pretty darn good rating. Seems with almost 10 years of business under our belt under the LeaseDirect brand, with no registered complaints, no government actions, straight-up advertising and nobody suing us (knock wood), the BBB didn’t have too many challenges providing a solid endorsement.

Have a look?

http://www.bbb.org/calgary/business-reviews/contractors-equipment-and-supplies-rent-lease/leasedirect-canada-corporation-in-calgary-ab-44361

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