A sale leaseback is one way to quickly convert a company’s non-liquid assets into cash. It allows businesses to fund growth and reduce debt while maintaining operational continuity.Businesses that are cash constrained can benefit greatly from the ability to unlock capital for investment in new equipment and growth initiatives with Sale Leaseback Equipment Financing. With payments categorized as operating expenses rather than debt, leasing can offer greater tax deduction benefits than traditional borrowing options.

Lease payments are typically deductible from income, which can significantly reduce taxable income and improve cash flow for businesses operating in tax-favored industries. Additionally, payment schedules and term lengths can be structured to align with tax planning objectives.

A sale-leaseback transaction differs from a traditional term loan in that the asset is sold to a financing company and then leased back to the business. This can provide the company with the option to purchase the equipment at the end of the lease term, extend the lease, or return the equipment, depending on how the contract was originally structured. Obtaining professional advice before engaging in a sale-leaseback transaction can help businesses understand the process, tax implications, and other details that could impact their bottom line.

Leverage Existing Assets

Sale Leaseback Equipment Financing allows you to unlock the value of your existing equipment and turn it into cash. By selling your equipment to a financing company, which then leases it back to you for continued operation, you’re able to use the funds to grow your business and achieve your short- and long-term goals.

This is particularly beneficial for businesses in the life sciences space, which often invest large amounts of capital into costly analytical instruments. The ability to get the cash infusion you need from monetizing these assets opens up new possibilities for your business, and the lease terms can be customized to fit operational requirements and business growth objectives. Even if your credit is less than perfect, you may be eligible for this form of financing. Speak with a sales representative to learn more about how to qualify.

Avoid Debt

Sale Leasebacks can help avoid debt by leveraging existing assets to fund growth. The transaction unlocks trapped revenue-generating equipment potential that would otherwise be locked in as an un-realized book value on the balance sheet.

To qualify, a business needs to own its equipment free and clear of liens. Then it can sell its assets at fair market value to a financing company, which then assumes the ownership and operation of the equipment for an agreed-upon lease payment over the term of the lease.

It’s important to note that lease payments are tax deductible, much like interest expense. Moreover, sale-leaseback financing offers more flexibility than some other types of financing. Breaking down the #ABLmyths helps decision makers better evaluate whether this type of financing fits their company’s needs. For example, sale leasebacks can also be used to cover temporary working capital shortfalls resulting from seasonal demand or growth spikes. This allows businesses to manage cash flow fluctuations without relying on external sources of funding such as loans or lines of credit.

Flexibility

Sale leasebacks offer a blend of benefits including an immediate influx of cash, potential tax advantages, and flexibility in financial planning. However, it is important to consider the overall business landscape, specific equipment needs, and long-term goals before entering into an agreement.

The key to maximizing the value of your existing equipment is to have it professionally appraised to determine its current fair market value. From there, you can sell it to an equipment financing company for a lump sum payment and then make lease payments for the duration of the lease term. The company retains the right to use the equipment during the lease term and at the end of the lease you have several options based on the original agreement terms.

While some perceive sale leasebacks as predatory forms of financing, this is far from the truth. When approached strategically, these agreements minimize true total capital costs and align interests over longer horizons – a winning combination for most businesses.