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Clearlease Financial Group is please to provide various forms of financing specifically to the hotel industry throughout Canada and the United States. Our services include:
- FF & E Equipment Financing
- Categories included in the FF & E Financing Program
- Case Study of FF & E Financing
- Leasing vs. Loan
FF & E Equipment Financing Categories included in the FF & E Financing ProgramClearlease Financial Group can facilitate up to 100% lease financing and offer up to a 66 month term thus helping the hotel owner reach revenue stabilization sooner. Below is an extensive list of the equipment that can be leased/financed under our program:
- All case goods except for the wallpaper and the carpeting
- Televisions
- All telephone systems
- Air-Conditioning Systems
- Door Locks
- Security systems
- Micro Fridges
- Restaurant furniture and equipment
- Gym Equipment
- Pool furniture and equipment
- Complete front office business center equipment and furniture
- Commercial Laundry Machines and Dryers
- Ice Machines
- Various Rental Equipment for resorts; skidoos, marine craft, etc.
Note:If there is item and/or category not listed above, please do not hesitate to call our office.
Sample/Case Study of FF & E FinancingBelow is a sample of how the lease cost per room/per month is covered by one day’s occupancy rate by a hotel guest:
| Number of Rooms: |
|
120 Rooms |
| Case Goods cost per room: |
|
$6700.00 before applicable taxes |
| Total Case Goods value: (120 X 6700.00) |
|
$804,000.00 before applicable taxes |
| Lease Term: |
|
66 months |
| Monthly Payment: (0.02001 X 804,000) |
|
$16,088.04 plus applicable taxes |
| Cost per room/per month: (16,088.04 for 120 rooms) |
|
$134.06 plus applicable taxes |
| Cost per day/per room: (134.06 for 30 days) |
|
$4.46 plus applicable taxes |
Leasing vs. Loan Assumption:Assuming FF & E amount required by the hotel is $1,000,000.00
| Leasing Structure |
Purchase Structure |
| YEAR 1 |
|
$1,000,000 lease
| Lease term: |
66 months |
| Rate factor: |
.02001 |
| Monthly: |
$20,010 |
| Total annual payment: |
$240,120 |
| Total annual expense for income tax purposes |
$240,120 |
|
$1,000,000 loan or purchase
| Year 1 |
$1,000,000 |
| Less 10% depreciation*: |
-$100,000 |
| Undepreciated Capital Cost (UCC): |
$900,000 |
*in year of acquisition |
| YEAR 2 |
|
|
| UCC from Year 1: |
$900,000 |
| Less 20% depreciation: |
-$180,000 |
| UCC: |
$720,000 |
|
| YEAR 3 |
|
|
| UCC from Year 2: |
$720,000 |
| Less 20% depreciation: |
-$144,000 |
| UCC: |
$576,000 |
|
| YEAR 4 |
|
|
| UCC from Year 3: |
$576,000 |
| Less 20% depreciation: |
-$115,200 |
| UCC: |
$460,800 |
|
| YEAR 5 |
|
|
| UCC from Year 4: |
$460,800 |
| Less 20% depreciation: |
-$92,160 |
| UCC: |
$368,640 |
|
| YEAR 6 |
| Expense: |
$120,060 (6 months) |
|
| UCC from Year 5: |
$368,640 |
| Less 10% depreciation*: |
-$36,864 |
| UCC: |
$331,776 |
*in year of disposition |
| Total lease expense over a period of 5.5 years: |
$1,320,660 |
|
| Total depreciation expense over a period of 5.5 years: |
$668,224 |
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Conclusion: Leasing will generate an additional $652,436 ($1,320,660 – $668,224.00) in off balance sheet expenses thereby reducing the tax burden and increasing the company’s equity on the balance sheet. Comment from Schwartz Levitsky Feldman LLP Chartered Accountants (Brett Starkman, C.A.): Based on the assumption that the FF&E are Class 8 assets under The Income Tax Act of Canada, the depreciation/CCA (capital cost allowances) as calculated above are correct.
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