Equipment Leasing Documentation. Caveat Emptor When It Comes To Lease Financing And Asset Leases I

Equipment leasing in Canada

Equipment leasing in Canada. Ever made a big mistake in lease financing of asset leases in Canada? We're going to take a wild guess and say that mistake may have in fact involved the documentation on your transaction.

The actual ' papering ' and documentation around your lease is a lot more important than many Canadian business owners and financial managers might think.

Let's take a short, but much needed walk down the path of helping you sort out the pitfalls of entering into the wrong type of lease issues. The reality is there is a standard process pretty well around every asset lease you enter into.

We're assuming you have picked the type of lease you feel best suits your transaction - that might be a capital, operating, or short term rental transaction. The lease process simply involves ensuring that the purchase of the asset is properly done by the lessor and your vendor. In some cases it might be that you are the vendor, that situation of course revolving around a ' sale leaseback ' scenario.

The whole process is completed by payment for the asset by the lessor, execution of the documents and commencement of payments.

That all sounds pretty basic right? The reality though is that there are three types of lease financing companies in Canada. Their type of operation depends really on their size and market focus. In general they can be called: small / medium and large ticket firms. And depending on which type of firm you are dealing with a whole separate level of documentation and issues need to be address.

In today's case small is good, that's because small ticket equipment leasing in Canada is simple and efficient. It generally consists of a one of two page lease document and covers assets under 25k size. More often than not the simple lease document covers off the rights and obligations of each party - That's you and the lessor, as well as incorporating your acceptance of the asset for lease commencement. Nothing could be simpler.

When we travel up the lease ' food chain' and enter the mid ticket asset leases category we're talking about a different kettle of fish. Oh and by the way, general this category caps out at 500k to 1 Million dollars, depending on whom you are talking to.

Many firms you deal with in this ' mid ' ticket area prefer a single Master lease, at which point individual schedules can be added later. As challenging as it might seem some time we do in fact recommend that to clients because it simply becomes much easier to add other leases down the road - in effect you have already agreed to all the key terms and conditions and don't have to renegotiate them.

Is there a lawyer in the house? We're referring to the fact that when it comes to large ticket transactions you can assume a very ' custom' approach. This is not cookie cutter leasing and we typically see both the lessor and your firm having lawyers negotiate some of the critical terms of the lease , for the obvious reason that its often a multi million dollar transaction that presents potential risk to both the lessor and you the lessee.

Don't underestimate the need to understand the type of lease you are entering into and the equipment leasing documentation that comes with that transaction. Speak to a trusted, credible and experienced Canadian business financing advisor for help in lease financing in Canada.

by: sprokop

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