Equipment Financing Rates For 2010

January 19th, 2010 by admin

During the recessionary downturn of 2009, many equipment financing companies had considerable problems with their sources of financing as credit dried up in all directions.

The first major problem was a higher cost in financing for the capital they could secure.  In many cases this resulted in a premium placed on retail financing products from 2% to 4%.  For A credit deals, this effectively priced many of the leasing companies out of the market and for less than A credit applicants, borrowers we sourced to pay higher rates which caused many business owners to sit on the sidelines and wait out the recession versus straining their cash flow with higher rates.

The second problem some of the lease companies faced was either being cut off from their capital source all together or having all or part of their outstanding debt called, forcing them to sell off all or part of their portfolio at some type of discount in order to repay demand loans.

This effectively reduced the amount of equipment financing sources active in the market which resulted in higher cost lender that was more selective and elusive to obtain than in the previous year.

Going into 2010, the market has loosened up slightly, but high credit is still present in the market place for the most part.  Because of the stress put on many of the leasing companies, there also became a market for acquisitions by larger equipment financing companies that had more secure sources of capital.  The result has been some of the smaller leasing firms back in business under a new banner of ownership, which has also helped to increase the competitiveness of rates available to Canadian business owners.

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