Philwiper.caMortgage and Business Financing

Equipment leasing is by far the largest type of asset based lending available for the small business owner and current is on the rise with the recent credit crunch. If you are thinking that leasing is expenses and the rates are out of control you need to rethink this valuable tool that is available for your business. in today’s economy you can lease almost any type of hard asset that can be utilized in your business. Everything from trucks and vehicles used in the business to office furniture, to heavy duty equipment and computers can be eligible for lease financing.

A lease works this way, the leasing company (Lessor) purchases an asset and provides the asset to the business owner (Lessee) in exchange for lease payments.

The National Business Institute reports a recent survey indicates the Top Five Reasons for Choosing Leasing :

1 .   Cash flow-capital outlay-far and away the number one reason confirmed by business owners.

2 .   Rapid technological changes cause product obsolescence.

3 .   Financial requirements are not as stringent.

4 .   Leasing companies are more accommodating than banks.

5 .   Tax implications.

It’s not who owns the equipment, but the use of the equipment that makes the profit.

Are you a new business and have been turned down by your friendly bank manager?New leasing programs are available for the new business owners with terms up to 60 months and will allow you to lease equipment valued from $2,000 and up.  for leasing programs up to $20,000 we have a program which will allow you to provide us with in most cases a one or two page leasing application is required. These new business leasing programs help you preserve your valuable cash by financing  upi to 100% of the cost of your equipment. When you are comparing that to you local bank loan that may require up to a 30% down payment, you can see that equipment leasing can be a very viable financing alternative to your bank or other types of financing. Typical Equipment leasing will have end of term options that will either provide a $10 buy out or fair market value buyout.

Most small business owners today are not aware of the excellent opportunities that are available from a leasing company, which can offer flexible, equipment leasing terms. Most companies have been misled into using unsecured credit lines as their primary financing vehicle. As many find out, this is a dwindling spiral and a trap for business owners.

Does it ever make sense to buy? With the number of benefits and cash flow savings  leasing equipment is definitely on the rise among small business owners.

Assets you purchase, equipment you lease!

With many lenders and banks lowering their 5 Fixed rate to 4.99%, the question more and more consumers are asking is, “Variable or Fixed Rate what should I do?”
With variable rates at prime plus 1.0% (or 4.50%) and an expected rate decrease in January what is the consumer to do.

If you lock in for a longer-term fixed rate mortgage, you will have the stability of knowing exactly what your payment will be month after month. This mortgage fits the bill for most first-time home buyers.

If you choose a variable rate mortgage, you can benefit from an expect rate drop in January 2009 but are also risk having your mortgage rate go up if the Bank of Canada rate should rise.

In the long run it has been proven that you will be better off with a variable rate mortgage, short term rates are almost always lower than long term rates. If you can handle you mortgage payment sometimes being higher and also lower then this is the mortgage for you.

For those consumers that either want the certainty of a fixed payment month after month or would be worrying what the rate are every day I would choose that fixed rate. No stress, just regular payment. If you want to save some interest payments without the possible movement of the variable mortgage, choose a weekly or bi-weekly payment.

Need more of your questions answered, find yourself a good mortgage agent who will explain all of your options to you at no cost. Some brokers depending on your credit also have some unpublished rate specials. For instance our current variable rate is 3.95% or prime plus .45% and our 5 year rate is 4.79% with a 90 day rate hold, 30 day rate hold is 4.59%.

U.S. President George W. Bush dipped into the financial bailout package on Friday to offer $17.4 billion US in short-term loans to automakers. GM and Chrysler are expected to participate while Ford has stated that they are not in need of the money at the present time, but would be badly damaged if one or both of the other two companies were to go under. Ford has said the bailout will help stabilize the industry.

According to CNN George Bush stated that, “If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers.”

Prime Minister Stephen Harper along with Ontario Premier Dalton McGuinty announced a $4-billion bailout package for Canadian subsidiaries of the Big Three Detroit-based automakers.

The pair announced that the Canadian plan will provide GM Canada with loans of up to $3 billion and Chrysler Canada will receive up to $1 billion. The first payment will be issued December 29th and the next and final payment will be paid out within the next two months.

CBC news reported “that under the deal, GM and Chrysler are required to fulfill the following conditions:

* accept limits on executive compensation.
* pay money owed to Canadian parts suppliers.
* provide weekly reports on their finances.
* report any business transaction worth more than $125 million.”

The Canadian government will also extend additional accounts receivable insurance coverage for automotive suppliers. They will also set up a new facility to support access to credit for consumers.

In Ontario it is estimated that over 400,000 people and their families rely on the auto industry to maintain their family households. Moving forward this should help out struggling economies in Windsor and Oshawa, where recent statistics show unemployment insurance claims are up 45% and 100% in the month of November alone.

I for one am glad that the both governments have stepped up to help out. There is just too much at stake for both countries. Putting conditions in place is wise, as we have seen with the AIG business party, oh I mean plan.

Finance Minister Jim Flaherty said Thursday he and Bank of Canada Governor Mark Carney will meet with the heads of Canada biggest banks next month to discuss why credit remains tight in Cannada even though the federal government continues to pump cash into the financial sector.
This has been more and more evident as companies have been looking for alternative financing solutions such as equipment leasing and accounts receivable financing. A businesses inability to secure loans is one of the biggest concerns for Mr. Flaherty and Mr Carney. Mr. Carney has stated to the The Globe and Mail’s editorial board in Toronto that “banks were being too cautious with their lending, further choking an economy that is entering a recession.”

CBC News reports that “The federal government is buying $75-billion of mortgage securities from banks to help them expand their balance sheets and pledged to backstop their sales of wholesale debt. The central bank is offering billions more through short-term loans to financial institutions hurt by the credit crisis.”

There is an ongoing perception that there is less capital available due to there being less second-tier U.S. financiers.  The Bank of Canada has recognized this when Mr. Carney stated that he has no issue with the conduct of the Canadian banks.

Markets Jump After Fed Cuts Rate – Could this be Good News For Commercial Rates?

The U.S. Federal Reserve has cut the rate by three-quarters of a percentage point to a target rate of zero to 0.25 percent.

U.S. Commercial banks are now expected to lower the prime rate, this is the key rate for many loans to consumers. The current rate is 4%. That is the lowest level on record in the United States for the target rate.

The cut sparked jumps in the stock markets and a drop in the U.S. dollar against other currencies.

The Fed said U.S. labour markets conditions. consumer spending, business investments and industrial production are all falling.

CBC news reports, ” Financial markets conditions remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.”

The central bank commented that the economy is so bad that the rock-bottom rate is likely to continue for some time. They will continue to purchase large quantities of debt and mortgage-backed securities to support the mortgage and housing market.

Stocks Make Move Upward

The move provided a surge in the stock markets. In New York, the Dow Jones Industrial average gained 359 points to 8924. At the time of the announcement it had been up less than 100 points before the annoucement.

The S&P/TSX composite index rose to 8,724.

The U.S. Dollar fell against other currencies, including the Canadian dollar, which closed up 2.02 cents to 83.21 cents US.

The U.S. Labour Department reported that inflation in November fell a record 1.7 percent, the biggest drop since seasonally adjusted statistics were introduced in 1947. The drop in oil prices drove the decline.

The Fed cut was announced after a two-day meeting to consider its response to what some are calling the worst U.S. economic conditions since the 1930s.

Obtaining Business Financing for companies in Canada has always been a challenge. With today’s economic climate Bank Financing has become almost impossible to obtain and there are very few alternative sources.

Factoring or Accounts Receivable Financing has been gaining popularity in Canada as an Alternative source to conventional bank financing. Using the companies strongest asset, the customer as security. Factoring has a number of advantages of bank financing.

Top 10 Reasons to Use Factoring:

1-    Fast and Easy Process – unlike conventional bank financing, the application process is relatively easy and answers can be obtained quickly.
2-    Cash Received for Your Invoices in 24 Hours or Less – Once you have been approved Factoring can provide you with the ability to meet you cash flows need NOW!
3-    Add Capital to Your Business That is Not a Loan - Loans require collateral limited by your hard assets. Factoring is NOT a loan, so there is no debt to repay. A factoring company purchases your invoices at a discount. This enhances the financial ratios often used to determine your credit worthiness in obtaining other types of financing. Your balance sheet is more attractive and your financial position is strengthened.
4-    Invoice Processing – You can greatly reduce your cost of processing invoices because factors can handle much of the work.
5-    High Advance rate – Our participating factors provide Higher Advance Rates which means you factor fewer invoices to meet your cash flow needs, which also means YOU WILL SAVE MONEY.
6-    No Financial Statement required – In many cases, no business or personal financial statements or tax returns requested. Clean personal credit is not required.
7-    Increased Productivity – Business owners often spend more than half of their time work in their business not on their business, with such duties as collections, administration, bookkeeping, warding off creditors and searching for additional capital. Factoring can help eliminate this unproductive time.
8-    Enhance Your Credit – Once you begin factoring, the increased cash flow will provide the liquidity to pay your vendors on time. This will allow you to take advantage of early payment discounts that may be offered. Making timely payments to vendors positively affects your credit rating and allows you to obtain credit from other vendors and financial institutions.
9-    No Loss of Business Ownership or Equity – Ownership percentages remain unchanged with invoice factoring.
10-    Reduce Overhead – outsourcing your Accounts Receivable – Factoring Companies handle collections in a professional manner. Factors are not collection agencies. They understand the importance of business relationships and treat each debtor as though it is your best customer.

Although there are many more reasons that your business should be using accounts receivable financing, Dominion Leasing believes that these 10 reasons are the most important in your decision to work with an accounts receivable factoring company.

The markets were surprised today when The Bank of Canada cut the key interest rate by three-quarters of a percentage point on Tuesday as it warned that Canada is entering a recession, the rate was cut by 75 basis points to 1.5% a 50 year low.
With the interest rate cut the bank of Canada matched the deep rate cut made on October 21, 2001, to deal from the September 11 terrorist attacks in New York and Washington.
The CBC news reports “Canada’s economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity”.
As a result, the bank of canada has lowered the key lending rate by a combined 150 basis points in the span of two months.