Commercial Funding Group Inc. Thursday, June 29, 2017   
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In This Section:
FF & E Financing
Categories included in the FF & E Financing Program
Case Study of FF & E Financing
Leasing vs. Loan



Allied Member (2005) - Hotel Association of Canada
Allied Member (2005)
Hotel Association of Canada
HOTEL FINANCING PROGRAM

Hotel Financing

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Commercial Funding Group Inc. is pleased to provide various forms of financing specifically to the hotel industry throughout Canada and the United States.

Our services include:


FF & E Financing

Categories included in the FF & E Financing Program

Commercial Funding Group Inc. can provide 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:

  1. All case goods
  2. Televisions
  3. All telephone systems
  4. Air-Conditioning Systems
  5. Door Locks
  6. Security systems
  7. Micro Fridges
  8. Restaurant furniture and equipment
  9. Gym Equipment
  10. Pool furniture and equipment
  11. Complete front office business centre equipment and furniture
  12. Commercial Laundry Machines and Dryers
  13. Ice Machines
  14. Various Rental Equipment for resorts; skidoos, marine craft, etc.
Note:  If there is an item or category not listed above, please do not hesitate to call our office.

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Sample/Case Study of FF & E Financing

Below 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

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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        
Expense:$240,120
UCC from Year 1:$900,000
Less 20% depreciation: -$180,000
UCC:$720,000
YEAR 3        
Expense:$240,120
UCC from Year 2:$720,000
Less 20% depreciation: -$144,000
UCC:$576,000
YEAR 4        
Expense:$240,120
UCC from Year 3:$576,000
Less 20% depreciation: -$115,200
UCC:$460,800
YEAR 5        
Expense:$240,120
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

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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1-866-762-0484 ext 231

Email info@commercialfundinggroup.com


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