Muncipal Equipment Leasing
“Municipal Equipment Leasing Options For All Asset Types”
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Call 1 800 559 8845 and Speak Directly To An Equipment Leasing Specialist Or Click Here To Send Us An Email |
Using Equipment Leasing To Restructure Debt
“Equipment Leasing Can Be An Effective Way To Restructure Short Term Debt”Equipment leasing through a sale and leaseback process can be a very efficient and effective way to restructure the short term debt on your balance sheet. When we speak of the need for short term debt restructuring, this refers to situations where the business is behind on short term debt obligations such as trade credit, operating accounts, and government remittances. If these accounts are not brought up to date, the business runs the risk of having credit reduced or eliminated and having collection action taken against it which can restrict the ability to operate or even stop business operations all together. When there is considerable equity in equipment assets, the best solution for generating additional capital to pay up short term debt and then repay the refinanced amount over future years is through equipment leasing. The equipment leasing process for debt refinancing, described as a sale and lease back transaction, has the lender or leasing company purchase the assets from the business in return for incremental capital and an equipment lease that allows the business to retain exclusive access to the equipment during the term of the lease. At the end of the lease term, the equipment is typically bought back from the leasing company for some nominal amount that was determined at the outset of the financing. The leverage that can be secured from this type of transaction will depend on a number of factors including the type and condition of the equipment and the financial profile of the business. Basically, the more stable the business operation and the longer the remaining life of commodity type assets, the more leverage that can be secured. Debt Restructuring Through Equipment Sale And Leaseback Can Be A Business SaverIn most cases, the cost of a sale and leaseback transaction for the purposes of debt restructuring is going to cost more than conventional financing for the purchase of a new or used piece of equipment. But when you compare the incremental cost of financing to the business risk that is being reduced or eliminated with respect to trade credit and government remittances in particular, the additional cost can prove to be insignificant. That being said, equipment refinancing costs can also get quite high if the business is considerable financial distress, so the cost of the debt restructuring action should always be weighed against the benefit being gained from doing so. The primary goal here is to develop structured repayment of short term debt into an equipment leasing facility so that the short term debt that has built up can be paid back over a longer period of time without causing any further financial distress to the business. |
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Call 1 800 559 8845 and Speak Directly To An Equipment Leasing Specialist Or Click Here To Send Us An Email |
Click Here To Speak To An Equipment Leasing Specialist For All Debt Restructuring Needs
Refinancing Equipment Through Leasing And Loans
“Refinancing Equipment Through An Equipment Leasing Facility Is Common Place In Most Industries”The process of refinancing existing equipment that has either been paid for in cash, or has had a loan or lease against the equipment which is now paid off, is most typically done through an equipment leasing process known as a sale and lease back. The other equipment refinancing scenario would be when equipment has a current lien or charge against it and you wish to get a new loan or lease in place to pay out the existing charge, plus potentially provide additional capital, assuming that there is enough equity in the equipment to justify an increased borrowing or leasing amount. Under this second scenario, a sale and lease back option is still going to be the most common form of equipment refinancing in most situations. With a sale and lease back transaction, your existing assets you own, or the assets that you are leasing that are owned by another leasing company, are sold to an equipment leasing company that is prepared to finance your used equipment for an agreed up amount, rate, and lending term. Most equipment financing companies have a standard rule that if you have purchased an piece of equipment for cash or self financed it, you can readily apply and receive an equipment loan or lease up to 6 months after the date of purchase without much issue. This is because most financing companies consider an asset purchased within six months to be new and apply their financing criteria accordingly. But once an asset is owned or leased for more than 6 months, additional lender and funding criteria can come into place before you will be able to come an equipment refinancing transaction. Refinancing Equipment Can Require You To Meet A Higher Lending StandardIf you’d like to get the best available rates, or close to them, from an equipment refinancing transaction, then you’re going to have to prove to the lender through your financial statements and credit profile that purpose of the transaction is to fund growth or restructure the balance sheet in a stable business operation. If the business is in financial distress, it is unlikely that “A” lenders are going to consider providing an equipment refinancing facility. In cases where additional cash is required and the business is not financially stable, the borrower or lessee will have to consider “B” or “C” credit options which fall more into equity based lending whereby the lender will assess the market value of the asset based on a forced liquidation appraisal and provide a percentage of that value in the form of a loan or lease. The rates for equity based or asset based loans or leases of this nature are considerably higher than “A” lender rates and are only provide for one or two year periods, allowing the business time to either improve their financial position so they can qualify for lower rates, or sell the assets off under orderly liquidation in order to preserve their equity.
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Call 1 800 559 8845 and Speak Directly To An Equipment Leasing Specialist Or Click Here To Send Us An Email |
Click Here To Speak To an Equipment Leasing Specialist
For More Information On Refinancing Equipment
Equipment Leasing Providers
Canada Has A Wide Range Of Equipment Leasing ProvidersEquipment leasing providers in Canada are considerable in number and are spread out over the country, some focusing in on certain regions, types of assets, financing amounts, and credit or risk profiles The highest concentration of equipment leasing companies in in the province of Ontario where there are head offices for both national and regional entities that provide lease financing. While there is considerable representation by equipment leasing providers all over the country, Ontario has considerably more options due to the large business population and the concentration in manufacturing and construction which lends to large capital requirements for businesses in these industries. Regardless of where your business is located in Canada, the equipment leasing providers will be broken down in different classifications to further describe where they fit into the market. For instance, most equipment leasing providers fall into what we call the small ticket financing, where the majority of equipment leases they provide will be under $100,000 with a maximum of around $250,000. Small ticket leasing companies also tend to be quite diverse in nature as their risk is somewhat restricted to the lower dollar amounts they are dealing with. For the larger financing requests, there tends to be more concentration in certain types of assets due to the need to manage the risk of default on larger financing facilities. Equipment Leasing Providers Occupy Many Different Market NichesIn order to be more unique in the market and to develop some degree of competitive advantage, there is also a fair bit of specialization in the market among leasing companies. For instance, there are certain companies in both the small ticket and larger ticket segments that will focus more on businesses with some combination of distressed cash flow and credit. These companies are typically closely aligned with auction houses and liquidators in order to be able more effectively deal with the high risk of default that comes with more distressed lending scenarios. On the other side of the equation are the bank leasing divisions that provide equipment leases at very good rates, and in many cases, better leverage than their own small business financing arms, provided that a given business can qualify. With all the different potential options to choose from, the best approach a business owner can take towards securing lease financing from an equipment leasing provider is to work with an experienced equipment leasing broker. If you have an equipment leasing requirement right now, or are just planning ahead, we suggest that you give us a call and we’ll make sure you get all your questions answered right away.
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Call 1 800 559 8845 and Speak Directly To An Equipment Leasing Specialist Or Click Here To Send Us An Email |
Equipment Leasing Recourse
“Using Equipment Leasing Recourse To Increase Sales”
| If you’re an equipment dealer or equipment reseller, your number one goal is to sell more equipment, right?
The biggest barrier to equipment sales, especially with bigger ticket items, is your customer’s inability to get the equipment financing or equipment leasing from a third party financing source to close the deal. If you resell used equipment only or used as well as new, then offering the lender some form of recourse can be beneficial to you in a number of ways, First, of all, what is a recourse agreement? In simple terms, if the buyer defaults on the financing arranged to acquire a particular piece of equipment, the dealer agrees to buy the asset back at a predetermined price or a price that will be determined by a predetermined formula for setting it. The proceeds from the sale go towards paying down the lender or leasing company debt and the asset is added to the dealer inventory for sale. How Can Equipment Leasing Recourse Benefit Your Business Profits?There are two main ways that a recourse agreement can benefit you as a dealer. The first and most obvious way is that more customers are going to be able to qualify for financing which is going to result in more sales and more profits. The second benefit of recourse agreements are that they can provide a low cost source of used equipment inventory that can be resold for additional profits. Let’s look at an example. An equipment dealer enters into a recourse agreement with the financing company whereby in the event of default the dealer agrees to purchase the equipment back from the leasing company for 50% of its initial cost during the term of the lease. Say the lease term is 3 years and the dealer is very confident that the equipment will be worth more than 50% of the purchase price at the end of the lease term. Because of the borrower or lessee’s difficulty securing credit without recourse, the lender or leasing company asks for a 25% down payment. The recourse agreement reduces the lessor’s risk of loss to 25% and if the lessor makes their payments for at least one year, then no loss can be incurred. In the event of default, the dealer acquires the asset back at potentially a below market price and puts it into inventory to resell. The dealers risk is in the actual market value of the asset in the event of default which places the profit margin from the original sale at risk. But considering that default is likely only going to happen occasionally, the dealer has made more sales through recourse and banked the related profit margin from the additional sales. Again, this is a very oversimplified example as there can be almost an infinite variety to potential recourse agreements. But the point remains that if done right, an equipment leasing recourse agreement can increase both sales and profits
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Call 1 800 559 8845 and Speak Directly To An Equipment Leasing Specialist Or Click Here To Send Us An Email |
Click Here To Speak To an Equipment Leasing Brokert For All Your
Equipment Leasing Needs.