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Free up cash using the value of your equipment

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Did you know that you can refinance any current equipment leases AND use the value of the equipment to free up capital?

Consider the following case study:

BlueJay Contracting (BlueJay) builds custom luxury homes across Alberta. The company has 7 pieces of yellow iron construction equipment that they use in daily operation. Each item is worth over $250,000.

Mike, the owner of BlueJay has been presented with a unique opportunity to purchase a large plot of land at a heavily discounted price, subdivide it, and build custom homes. Mike is looking to raise $80,000 to pay for the down payment on the land.

Mike learns that he can re-finance some of the equipment that BlueJay Contracting owns and leases. Re-financing or re-negotiating the terms of his leases allows Mike to free up the cash he needs to purchase the land.

CONTACT US TODAY TO LEARN HOW YOUR BUSINESS CAN BENEFIT FROM REFINANCING OPPORTUNITIES.

Lease Link Canada: 1-877-414-0616

Lease Plus Financial: 1-877-279-2178

 

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Five things small businesses need to know about the budget

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In an article published on March 23, 2016, David Steinberg of the Globe and Mail listed five things small businesses need to know about the new Liberal federal budget.

Read the full article here.

Here are the main points from the article to help you navigate a new era in Canadian politics as it relates to small businesses and small business taxation.

1) Small business deduction

The 2016 budget saw two types of changes made to the small business deduction. Under existing legislation, the small business deduction is available to corporations that earn business income up to $500,000. The tax rate is 15 per cent and the deduction provides tax savings of up to $55,000.

There was a perceived abuse of primarily professionals that used corporations to claim the small business deduction by charging fees to a partnership of which the shareholder was a partner. This perceived loophole has now been blocked, as these fees are no longer eligible for a full small business deduction.

Additionally, previous tax plans had allowed that under certain circumstances, groups of companies could potentially double up on the small business deduction by allowing for the conversion of interest income to active income. The 2016 budget has removed this planning and has closed the perceived tax loophole.

2) Corporate tax rates

The newly released budget has no changes that have been proposed to the general corporate income tax rates. Of particular interest, the budget doesn’t propose to limit access to the general corporate rate of tax earned by a professional corporation or any other corporation, either on business income allocated from a partnership or earned directly. Canada still has one of the lowest corporate tax rates of the G7 countries.

3) Eligible capital property (goodwill)

Under current legislation, when goodwill was purchased, 75 per cent of what you paid for goodwill went into a pool that depreciated at a rate of 7 per cent. When goodwill was sold, only 50 per cent of what you received was taxable at a rate of 26.5 per cent, resulting in an effective tax rate off 13.25 per cent.

Under new budget measures, when you buy goodwill it goes into a capital cost allowance (CCA) pool similar to the rules for the purchase of any other depreciable capital asset. The new depreciation rate will be 5 per cent. When goodwill is sold, any proceeds received in excess of cost of goodwill will be taxed as a capital gain at the rate of 25 per cent.

4) Transferring life insurance

A perceived tax loophole has been eliminated regarding transfers of life insurance policies. Under existing legislation there was a way to extract tax-free corporation money by transferring a life insurance policy into a corporation. The new budget proposes to limit the tax benefits of such transfers, as well as retroactively adjust certain benefits associated with policies transferred before 22 March 2016.

5) No changes to capital gains inclusions and stock options

It was speculated prior to the 2016 budget that the capital gains inclusion rate, currently 50 per cent, was to be increased and that there would be changes to the stock option benefit rules. The newly released budget doesn’t propose any amendments to either the capital gains inclusion rate or the stock option rules.

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The “Real Cost” of Financing

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Customer’s all too often only look at and consider the interest rate or immediate cost to their financing solution(s). A small businesses really need to look at / consider the overall cost of their financing and the relationship with their lender.

There are endless choices today to finance your small business: bank loans, credit cards, alternative lenders, leasing, private loans, equity, etc. In this article, I will address the 2 most common financings for Canadian Small Businesses: Equipment Financing & Working Capital needs. In future articles, I will address other financings.While a bank will likely provide you the lowest interest rate, what is the real cost? How many hours/days will you spend on obtaining the financing? Current estimates tell us it takes the average small business 30-80 hours of work & research to obtain a bank loan. What is the cost to your business to maintain the ongoing compliance costs (bank reports, margin reports and financial statements at intervals you may not do anyway). These costs must be factored into your overall cost of borrowing.

Equipment Financing

One of the most common reasons your small business will borrow is to finance an asset (Equipment, Vehicles, etc). If you are purchasing a piece of equipment you are likely considering the following options:

  • Using your working capital (paying cash);
  • Using your business line of credit;
  • A term loan secured by the equipment; or
  • Equipment Leasing

Before you choose the apparent cheapest option, you should consider:

  • The ability to buy-out / payoff your financing choice early
  • Does the term work within your cash flow? (a lower rate, with a short term, may not be ideal for your business if the payment is going to stress your cash flow)
  • If your business is seasonal, does the financing option include seasonal payment structures?
  • What is the after-tax cost of the financing (ie – Leasing may provide tax benefits)
  • The compliance cost of your financing choice.
  • If you think you may need to replace the equipment or trade it in – your early payout options are very important. Many finance contracts have a “balance of payments” provision, some call for 3 months interest and some may not allow any pre-payment.
  • Not all leases / loans are the same – read the terms and conditions of your agreement! Ask questions to determine the overall cost of financing and the flexibility the financing offers. Flexibility in financing is critical to a growing small business. Can you establish a seasonal payment structure to match your revenue? Can you skip a payment? Can you move a payment? Can you payout early? These questions should be factored into your decision making process, not just the interest rate.

Most small businesses are always short of working capital. Tying up your banking lines or your borrowing capacity at the bank may not be the best choice for a growing small business, again flexibility is critical for a small business. What if you tie up your banking facilities for a new piece of equipment and then your facilities are maxed when you need help with a large order?

Generally, equipment manufacturers and suppliers can offer you attractive financing options. You could also use the services of a business loan / lease broker. They will shop the market for you and provide you the options available for your business. A professional broker will also outline for you the various terms, benefits and flexibilities with each option they sourced. Typically, Loan/Lease Brokers are paid by the lender, so there shouldn’t be a direct cost to you (note: the lender will build in this cost into the offer they make your business).

Avoid any finance contract/agreement with “verbal” promises. Every reputable finance company will document their terms, conditions and representations to you. If the company or broker has made a representation to you outside the terms & conditions, ask for that representation to be put into the contract or in writing.

Working Capital Needs

If your small business needs additional working capital, you’re not alone. One of the main reasons small businesses fail is due to a lack of working capital and/or cash flow problems. Some options for working capital are:

  • Investor / Venture Debt
  • Bank Lines of Credit
  • Alternative Lenders
  • Invoice Factoring

If you are looking at taking on an investor or venture debt, what is the real cost of the capital you obtained when you sell your business in the future? Did your business obtain extra value from the investor? Did they help you grow the business? If, not you likely have paid the highest rate for an effective loan.

Have you considered alternative lenders for your working capital needs? Numerous companies have started to offer working capital solutions in Canada. AccordAccess is one such product. There are numerous companies now offering solutions to small businesses. As you may suspect, the same questions listed above should apply to your working capital loan:

  • How flexible is your working capital loan?
  • Are they secured or unsecured? Do you need to pledge collateral?
  • How long do you need the capital for?
  • Can you re-advance?
  • Can you payout early?
  • Seasonal payments?
  • Can the lender offer solutions as your grow?
  • What is their lending capacity? Do they have the ability to finance your growth?
  • Are you building a relationship with the lender and them with you? Or are you just a customer number?
  • Have you considered invoice factoring? (this will be discussed in detail in a future post)

To determine the TRUE COST of the financing: factor in your time, your ongoing compliance costs and any fees associated. Is the financing matching your business needs? Talk to your lender about your immediate and future needs to determine if they are a good fit for your business.

Don’t assume each finance company is the same. Like you, they have to differentiate themselves in the marketplace. Perform the same due diligence in choosing your finance source as you would with any other business relationship and purchase.

A strong relationship with your finance source(s) is critical to your small business’ success and growth.

Do you need an opinion on your situation? Feel free to connect and send me a message on LinkedIn.

James Jang

email: jjang@credicor.com

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Alberta Flood Relief

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The Alberta Floods have impacted families and businesses province-wide. Having uprooted some 120,000 people from their homes, and with estimates reporting nearly $5 billion in property and infrastructure damage, bouncing back from this disaster will call on the true soul of the province to shine through.

The devastation has had an impact that will be felt for years to come, especially in the city of Calgary where the effects of the floodwaters have caused the most extensive damage. Calgarians are now charged with the daunting task of rebuilding what was lost and reclaiming their city. This is a task that will require perseverance, hard work, manpower, community effort, financial support and the support of local business to get Calgary back into shape.

Some of you may have experienced significant personal or financial loss, loss of property, or may be facing uncertainty regarding your income. You may be concerned with your ability to make your lease payments

Lease Link Canada and Lease Plus Financial will do our best to assist with any special requests or considerations as a result of the flood damage. Our team can assist to help arrange:

  • Special payment arrangements
  • Capitalization of outstanding interest
  • Deferral of payments

This team will complete a full financial capability assessment with you to assess your individual situation and provide the most suitable advice.

You can get in touch with us the following ways:

For Lease Plus Financial
Call toll free at 1-888-330-7587 or email tbeattie@leaseplus.ca.

For Lease Link Canada
Call toll free at 1-877-322-6746 or email info@leaselink.ca.

We fully understand and sympathize with the disruptiveness of this event to local business operations and are prepared to assist in any way possible.

We have made a donation to the Red Cross as well. Here are a few ways anyone can help out with flood relief:

Donate to the Red Cross
Volunteer through YYC Helps
Samaritan’s Purse

Best Wishes,

Credicor

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Press Release: Credicor Financial Corp. Retains Steve Klein as VP Business Development

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FOR IMMEDIATE RELEASE

September 10, 2012

Credicor Financial Corp. (“Credicor”), announced today that it has retained the services of Steve Klein as Vice President of Business Development.  Mr. Klein will manage major national accounts for Credicor subsidiary companies: Lease Link Canada Corp., and Lease Plus Financial.  As well, he will work with Credicor senior management to grow the business in new markets and growth areas across Canada.  Mr. Klein will serve from his current location in Toronto to further strengthen Credicor’s Central Canada presence.

Mr. Klein has over 25 years of experience in the Canadian finance industry and brings veteran expertise to Credicor.  Mr. Klein began his career with Citibank Leasing Canada and has held various senior management positions with leasing and financial services companies including Commcorp Financial Services and Newcourt Credit Group. He also held the position of Country Head for CitiCapital Canada. More recently he was Senior Vice President and General Manager for Corporate Fleet business at GE Capital.

“We are pleased to welcome Steve Klein to Credicor to lead our national accounts program,“ said James Jang, President of Credicor.

“Throughout the years Steve Klein has demonstrated a commitment and passion for the financial services industry, the Canadian market, his clients, and his employees,” said Steve Passant, Chairman of Credicor.  “From sales, to corporate management, to virtual start up businesses, Steve has been successful in his approach, his ethic, and his results, and we look forward to him serving on our leadership team,” added Mr. Passant.

Mr. Klein is a former director and member of the board for Citibank Canada, The Citigroup Foundation, Citicorp Vendor Finance, and the Canadian Finance and Leasing Association.

Download Press Release Here

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Press Release: Lease Link Acquisition Corp Changes Name to Credicor Financial Corp

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FOR IMMEDIATE RELEASE

June 11, 2012

Lease Link Acquisition Corp. is pleased to announce that it has changed its name to Credicor Financial Corp. (“Credicor”) and concurrently completed its share swap with Lease Link Canada Corp. (“Lease Link”). There was no effective change in ownership in either company. Credicor acquired its initial 25% stake in Lease Link from National Leasing Group, Inc. in March 2011.

In a separate transaction in March 2012, Credicor’s subsidiary, 7964927 Canada Inc, acquired the assets of Lease Plus Financial (“Lease Plus”).

Credicor’s two primary subsidiaries, Lease Link and Lease Plus receive and process $162 million in applications for lease financing annually. Credicor is one of Canada’s largest independent small ticket lease originators.

Lease Link and Lease Plus will continue to operate as independent brands in their respective markets, while Credicor will provide comprehensive back office services including treasury, finance, marketing, and technical support. As of June 1, 2012, all Credicor systems have been fully deployed to both Lease Link and Lease Plus.

Credicor is currently reviewing and actively seeking strategic acquisitions of industry leaders in their respective financing segments to compliment the Credicor family of companies.

About Credicor Financial Corp:
Founded in 2009, Credicor provides treasury, finance, marketing, and technical support services to its associated companies. Credicor’s two primary subsidiaries are Lease Link Canada Corp® and Lease Plus Financial™. Collectively Credicor subsidiaries currently receive and process approximately $162 million of annual applications for lease financing. Credicor is one of Canada’s largest independent small ticket lease originators. More information about Credicor can be found at www.Credicor.com

About Lease Link Canada Corp:
Lease Link Canada Corp. is a 100% Canadian owned and operated financial services company. Lease Link provides equipment lease financing and asset management services to new and established companies in a wide variety of industries. Our asset range is equally diverse; offering capital for new and used commercial equipment.

Lease Link’s team of professionals ensures long-term financial relationships by delivering a premium service. Our success continues through the focused energy of our staff, the suitability of our products and a persistent company-wide commitment to meet the requirements of our clients. More information about Lease Link can be found at www.LeaseLink.ca

About Lease Plus Financial:
Established in 1990, Lease Plus Financial is a Calgary based leasing brokerage company. Lease Plus Financial provides leasing programs to local equipment vendors and dealers. Lease Plus Financial structures leasing solutions for a wide range of businesses of varying sizes, operating history, and credit situations. More information about Lease Plus Financial can be found at www.LeasePlus.ca

The registered Trade Mark “Lease Link” is owned by Lease Link Canada Corp.
The Trade Mark “Lease Plus” and “Lease Plus Financial” is owned by 7964927 Canada Inc.
The Trade Mark “Credicor” is owned by Credicor Financial Corp.

 

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Credicor.com Officially Launched

Welcome to our new site

We will be updating this page with breaking Credicor news. Stay tuned for updates.

Have you had a look around yet?

Browse around for more info on our business-building services and be sure to let us know if you’re interested in joining us.

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