What You Should Know about Digital Agreements in Business Financing

In this post, we discuss what you should know about digital leases and loans.

The world of financing used to be rows upon rows of file cabinets, each containing stacks of paper documents manually typed, signed and notarized. However, like just about every other facet of modern life, technology swooped in to change all of that.

Technology has transformed the way we do business across the board – and that is certainly true of business financing. If you’ve recently bought a home or leased a vehicle, chances are you have come across a digital agreement. You may have even completed the agreement, which represents a lot of money, on your phone or tablet!

At WiseCap, we believe in empowering business owners through access to information, and providing people with the tools they need to understand their finances. In that spirit of empowerment, we would like to demystify the world of digital finance agreements.

In this post, we’ll discuss what digital assets are, who the custodians behind the scenes are, and how technology continues to impact business financing.

What Exactly Are Digital Assets?

“Digital assets” is a broad term encompassing any and all files that exist in a digital format. Images, text messages, emails, spreadsheets, etc. – these are all digital assets. So are the electronically signed leases and loans you may encounter when you apply for business financing.

Digital agreements are increasingly favoured because they are more cost-effective and efficient. Without the need for paper, ink and postage, digital agreements save companies and banking institutions a lot of money. And because they exist electronically, they are quick to sign and complete. But digital leases and loans do require special attention.

For one, they need to be “authoritative copies” – legally recognized, original and unique. They also need to be secure, encrypted and accessible to the agreement owner, which requires the use of blockchain or blockchain-like technology. This raises the question of custody.

What Are Digital Custodians?

In the same way banks used to use massive iron vaults to safeguard assets, digital custodians allow institutions to use blockchain and other technologies to securely integrate their digital assets.

If that sounds confusing, it’s because the tech-y world of digital custody operates with concepts that aren’t easily defined in lay terms. The best way to describe it is in terms comparable to physical custody, as Deloitte has done here: “Custodians are like ‘vaults,’ holding investors’ assets in both electronic and physical form, charging investors a fee in exchange for maintaining them securely.”

The whitepaper linked above goes into great detail on the complex framework of digital custody. If you’re interested in how it works on a granular level, we recommend giving the paper a read. It’s long, but it contains some interesting insights.

The Difference Between E-Signatures and Digital Signatures

One final thing you should be aware of is signature type. Often, people use “e-signature” and “digital signature” interchangeably, but they aren’t the same.

An electronic signature, or e-signature, may refer to any electronic mark you make on a document to signify intention. It can be the simple tick of a box. Meanwhile, digital signatures are highly regulated, highly secure signatures that cover a broad range of legal requirements. When you apply for business financing, you should always encounter the latter: digital signatures.

Working Alongside WiseCap in a Digital World

The benefits of digital leases and loans to you, a business owner looking for business financing, are speed and ease. Digital agreements don’t take weeks to complete, as their physical forebears did. They are easy to read and sign, allowing you to get on with what matters: growing your business.

You can rest easy knowing that these documents are secure, unique, original and accessible. In Canada, they are legally defined by the Personal Information Protection and Electronic Documents Act (PIPEDA).

For example, if you wanted to quickly invest money into your business using current assets, you would come talk to the professionals here at WiseCap about asset based lending and refinancing services. We would then discuss the best options for your business, and may present you with a speedy, efficient and secure digital agreement. Before you know it, you are growing your business.

We understand the struggles you face as a business owner, which is why we’re always proud to offer quick, inclusive options. Your business’ financial reality is continually shifting and evolving. Sometimes, you just can’t waitweeks for a truck loan to close. Visit WiseCap; we will walk through options for commercial truck loans in Canada to get you the equipment you need now.

Offering information about digital agreements is just one more way that WiseCap hopes to empower business owners. For financing options, check out our website or give us a call.