Sale Leaseback Equipment Financing is a quick, convenient and relatively inexpensive method for small businesses to get cash. Generally, any small business that owns valuable equipment with resale value can qualify, including those with common loan disqualifiers like bad credit.

With this financing structure, companies can convert non-liquid assets into immediate funds while retaining access to the equipment and ensuring operational continuity.

Cost-Effective

A sale leaseback is a cost-effective solution that allows you to free up the equity tied up in your equipment without disrupting operational efficiency. It is particularly helpful for companies that require immediate access to cash for growth, debt consolidation, or to stabilize cash flow.

If you have excellent credit history and the capability to make a substantial down payment, you can qualify for equipment financing with favorable interest rates and terms. A knowledgeable advisor can help you evaluate the lease terms and tax implications to ensure that the new arrangement is a good fit for your company’s financial position and long-term goals.

A sale leaseback (SLB) is a financial strategy that involves selling assets your business already owns to a financing company and then leasing them back. At the end of the lease term, you have options for purchase or continued use. You may also be eligible for Section 179 benefits and bonus depreciation.

Tax-Friendly

While an equipment sale-leaseback might seem like a complicated financial transaction, it actually provides a straightforward way to monetize existing assets. The transaction transfers ownership from the seller to the buyer, then leases the equipment back for a specified term. The arrangement is particularly beneficial when a company wants to improve its balance sheet and financial ratios, optimize its capital structure, and access new sources of funding.

Unlike loans or lines of credit, an equipment SLB doesn’t create additional debt on the business’s balance sheet. This can help preserve creditworthiness and financial flexibility, especially during economic downturns.

However, a business should carefully consider market conditions and the long-term impact of an equipment SLB before engaging in one. The company should also seek advice from financial and legal professionals to assess the ramifications of this financing arrangement. A good starting point is to evaluate the equipment’s value and the company’s future projections. A professional can then recommend the best options for leveraging the equipment’s value and optimizing cash flow.

Timely

Whether you need to accelerate a new product line, replace outdated technology, or take on a seasonal project, a sale-leaseback can unlock the value of equipment that you already own. Unlike traditional loans or lines of credit, which may not offer immediate liquidity, equipment sale-leasebacks can be completed quickly to meet your specific needs.

Plus, a lease payment structure can be tailored to your company’s cash flow patterns and revenue cycles. This is particularly beneficial for businesses that experience seasonal revenue peaks or lulls, as the lease payments can be adjusted accordingly. The equipment can also remain in use throughout the lease term, ensuring that your business can continue to operate with no interruption.

Flexible

As an alternative to capital expenditures, sale leasebacks enable companies to monetize assets quickly without impacting current cash flows. This enables businesses to deploy capital to support new initiatives, reduce debt, or cover temporary cash shortfalls.

In a sale leaseback, you sell your equipment to a financing partner, who then agrees to lease it back to you for an agreed upon term. You continue using the equipment as usual while making lease payments to your financing partner.

At the end of the lease period, you can decide to buy the equipment back from your finance partner, renew the lease, or replace it with newer equipment. Structured thoughtfully, sale leasebacks can enhance the financial performance and flexibility of your business. For example, lease payment structures can align with revenue patterns and seasonal fluctuations to mitigate cash shortfalls. Similarly, sale leasebacks may offer tax benefits not available through traditional term loans. The right financing partner will work with you to create a solution that aligns with your goals and long-term objectives.