Coming up with creative ways to finance equipment is nothing new for National Leasing, the Winnipeg-based subsidiary of Canadian Western Bank Group (CWB Group). In fact, it’s the company’s specialty.
For example, a golf course needs plenty of equipment, from carts and maintenance machinery to clubhouse and office equipment. Trouble is, in many parts of the country, golf is only a profitable business for six months of the year.
So National Leasing structures lease payments for golf course clients so that they are higher in the profitable months and negligible in the off season.
Michael Dubowec, senior vice president of sales and marketing at National Leasing, says this type of approach is part of the company’s effort to ensure that it provides services tailored to clients’ needs.
“We can look at structuring a lease package for any type of business,” says Mr. Dubowec. “All we need to know is that the business is sound and that the monthly payments will be made.”
With 16 offices and 300 employees, National Leasing operates in the small- to medium-size equipment lease market right across Canada and in all business sectors.
Mr. Dubowec says the advantage of leasing equipment rather than using a bank line of credit to finance business equipment is that it leaves bank credit facilities available to the business for day-to-day operational expenses.
Mike Docherty is vice president of CWB’s Equipment Financing Group, which provides equipment financing in the $100,000 to $50-million range. The types of clients and the size of the deals CWB considers makes it different to National Leasing, which means the two organizations complement each other.
CWB’s Equipment Financing Group focuses on financing heavy equipment in sectors such as transportation, aircraft, forestry, mining and the energy industry. “We see ourselves as equipment financing specialists,” says Mr. Docherty.
“For example, we appreciate that heavy construction equipment is a revenue-producing asset, and we can structure a financing agreement with that in mind.”
This type of tailor-made package is important to clients who operate in seasonal industries such as construction in parts of Western Canada where far less work is done in winter, so companies’ cash flow is generally less than in summer.
“We can structure repayments so that they are higher when cash flow is stronger and lower or on hold in slower months,” adds Mr. Docherty.
The Equipment Financing Group’s knowledge of the assets it finances also comes into play when considering the lifespan of a piece of equipment.
“We know that some equipment will last longer than other machines and that means we can provide longer amortizations, which in turn helps lower monthly payments for our clients,” he says.
Mr. Docherty believes expertise and knowledge will become an important factor in financing as Western Canada’s economy continues to expand in the years ahead and demand for heavy equipment financing keeps pace.