Term / Asset Based Loans

The fixed and variable rate term loans are ideal for funding your purchases of long-term assets that support your business growth. Take advantage of fluctuating interest rates through a variable rate loan. If you are concerned with rising interest rates, a fixed rate term loan will help you budget your monthly finances.

Loans to purchase new or used capital assets

Can be used to refinance an existing debt, business expansion or acquisitions

Flexible repayments when you need it

 

Fixed rate loans:

  • Normally start at $25,000
  • Stabilize your payment schedule by providing consistent payment amounts
  • Provide peace of mind by maintaining your loan carrying costs when interest rates rise
  • Offers an annual 10% prepayment privilege at no charge
  • Payments can be blended to include both principal and interest
  • Monthly payments are usually required
  • Available in Canadian or U.S. funds

Variable rate loans:

  • Usually starts at $5,000
  • Benefit from lower interest rates immediately when the prime rate changes
  • If interest rates rise, the loan can be converted to a fixed rate term loan
  • Make partial or full prepayments to your loan without penalty
  • These are secured loans for a term usually up to 7 years but not exceeding the useful life of the asset being    financed
  • Payment amount set to ensure repayment of the loan remains within the agreed to specified period but not to exceed the useful life of the asset being financed
  • Fluctuates with Bank&rsquos Prime Rate
  • Monthly payments are usually required 
  • Available in Canadian or U.S. funds

Purpose: 

Usually term funds are borrowed for the purchase or refinancing of fixed assets such as land, buildings and equipment. Term loans can also be used to acquire other companies. However, financing the acquisition of one company by another are special transactions and are much more challenging to get financing for, especially if the company to be acquired is another service firm with perhaps much of its value, and the price of the acquisition, related to goodwill.

Term: 

The term will vary depending on the life of the asset to be financed and the individual policy of the financial institution doing the lending. Insurance companies, trust companies, and mortgage companies lend against mortgages on land and buildings, usually longer term -- fifteen years and more, up to 75 percent based on an up-to-date evaluation. Commercial term lenders, including banks, finance companies and Schedule II banks, may lend for a term of five to seven years and sometimes longer, with the amortization period going up to twenty or twenty-five years. Advances typically reach up to 75 percent of a recent evaluation against land and buildings, and in the neighborhood of 50 percent against equipment.

Rate: 

The rate is probably a little higher than the rate charged on an operating loan, to take into account the added risk associated with the long-term nature of the commitment.