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Canada's Equipment

Leasing Experts

Frequently Asked Questions about Leasing

Do you have questions about the leasing process? We have answers. Here are some of the most frequently asked questions about business equipment leasing and the approval process. If you don’t see the answer to your question then give us a call, we’re happy to give you more information.

What types of equipment can I lease?

We specialize in leasing computers, software, IT gear, manufacturing equipment, light industrial, machine tool, automotive equipment, office furniture, construction equipment, and shop equipment. The equipment can be new or used. We will lease other equipment as well.

How long does the leasing approval process take?

We can approve a deal under $50,000.00 in 2 minutes to several hours. For larger deals it can take 24 to 48 hours.

What do we do next?

Complete the credit application and we will process the application. Once approved, we will prepare the lease documents for you to sign. Once signed, we instruct the Vendor to ship you the equipment and upon delivery we ask that you sign off and the lease commences.

How will leasing impact my company?

Over 85% of businesses in North America lease some or all of their equipment because it helps manage their cash flow and provides them with fixed monthly payments that cannot change. It also diversifies their types of borrowing which provides greater flexibility. The general rule is that if something appreciates over time—you buy it, but if it depreciates—you lease it.

What deal sizes can I do?

We specialize in doing small ticket leases from $2,500 to $50,000 but we also do much larger deal sizes as well.

Can I lease equipment if I am a new business?

Yes. Leasing is one of the most common methods for start-ups to finance some or all of their initial equipment requirements. We will need you to provide a personal guarantee which is outlined below.

What is a personal guarantee and a personal net worth statement? Why do you need them?

A personal guarantee is a way to improve the credit strength of your deal and reduce the credit risk. A personal net worth statement is usually used for a new business that lacks commercial credit history or proper financial statements. It again will reduce the risk and provide you with the best solution possible.

How much does leasing cost?

Leasing is a very affordable option when it comes to equipment acquisitions. Your monthly payment is determined by the term and lease structure you choose and can be tailored to fit your cash flow needs.

How is the monthly payment calculated?

Lease payments are determined based on a Lease Rate Factor: a periodic rental payment to a Lessor for the use of assets. The Lease Rate Factor multiplied by the Equipment Cost determines the amount of the lease payment.

How do I account for the lease on my financials?

The lease options you choose up front may have tax and accounting implications. Talk to your accountant to determine the best options for you and your business.

How does leasing affect my bank line of credit?

Since you are not borrowing from your line of credit when leasing, your bank line of credit is unaffected.

How are the provincial taxes dealt with?

The applicable taxes are added to the monthly lease payment over the term of the lease.

Are Capital Leases tax deductible?

For tax purposes, lease payments are a tax-deductible expense for the lessee and the lessor, as it is the owner of the asset who claims the Capital Cost Allowance (CCA). However, Canada Customs and Revenue Agency deem a lease to be a sale if any of the following conditions is present:

– Title to the equipment passes to the user automatically by the end of the lease;

– The lessee is required to purchase the asset; and

– The lessee has the option, during or at the expiry of the lease, to acquire the asset on terms that a reasonable person would exercise.

If any of the above holds, the lease is a sale for tax purposes and the user of the asset claims CCA as a deduction, but not the lease payments.

What is a “$10.00 end”?

A $10.00 end purchase option is considered a Capital Lease where you own it at the end of the term for $10.00.

What is “stretch” lease?

“A Stretch Lease” is a type of lease in which you have an early purchase option usually within 3 to 6 months prior to the end of the lease. If this option is not exercised you will enter the stretch period which will lead you to the end of the lease at which time you will have the option to 1) return the equipment 2) pay “fair market value” or continue to lease the equipment on a month to month basis.

What is a “fair market value” purchase option?

If your lease contains a “fair market value” purchase option, you can purchase the equipment at the end of the lease for its fair market value or you can return it to the funder at that time.

Are there different ways to structure the payments?

Payments are normally structured from 12 to 66 months depending on the asset as well as credit. They can be made monthly, quarterly, or annually. There are several different options outlined above that determine what happens at the end of term.

I have received a letter requesting proof of insurance for the equipment I lease. What do I have to do?

You can either provide proof of insurance from your insurance broker or company showing that the lessor is the Loss Payee. Or you may choose to have insurance coverage added by the lessor and this cost will be added to your monthly lease payment.

Who services or maintains the equipment?

As the lessee you are responsible for the maintenance and service of the equipment.

If there is an issue with the equipment who do I contact?

You would contact the supplier or service company. It may also be covered under a manufacturer’s warranty.

I am part way through my lease and I would like to upgrade my equipment. Can this be done?

Yes. You can upgrade your lease at any time. Please contact your account manager or sales@sprintlease.com

Who owns the equipment?

The lessor owns the equipment, and you are leasing the equipment.