Leaseback Financing: What's this? How can it help your business?
This arrangement allows the owner of the company to raise capital, while retaining the use of assets that are needed in the business. A leaseback can provide the creation of source important funding that can be used for a variety of purposes. This includes pay a specific creditor, that the work capital, capital stock redemption the purchase of a partner, or enhancement, etc.
In sale-leaseback financing is done by transfer of title of the asset, value agreed to a financial institution in exchange for a lump sum payment. The owner of the business makes lease payments the finance company in exchange for the inclusion of cash.
Benefits. Many companies can benefit from this type of transaction. If you do not qualify for traditional bank financing or if you want to preserve your existing line of credit, sale and leaseback can be used to finance growth, restructure financial difficulty, offer tax benefits and improve balance sheets.
It is an approach to raise cash. All business owners know that cash is king. From a tax perspective, leaseback offers the opportunity to structure the transaction as a taxable sale, which may be offset by net operating losses, otherwise expire if unused. It may also offer unique economic benefits or tax for companies that were unable to use operating losses Net deferred for federal income tax.
Since lease payments are not considered part preferably companies that are in an alternative minimum tax (AMT) situation may also benefit. This article should not be considered advice tax. Business owners should always consult a tax professional to their accountant or tax attorney before making decisions tax based on a sale-leaseback transaction.
Qualifying business: If you have been in business for at least 18 months, a score FICO 620 + staff, own the equipment outright, no open tax liens, no bankruptcies open and have financial statements that indicate you service can lease payments, you are a viable candidate for finance leaseback.
Every finance company has its own minimum size transaction and funding parameters, it is best to compare the terms of each. Note: the restaurant owners will typically be in business 2 years, with a personal FICO score of 650 + before the financial institution consider a sale leaseback transaction.
Delivery of material: most durable equipment is eligible for funding and leaseback. Some examples: All kinds of computer hardware, computers, laptops, servers, network switches, routers, telephone systems, copiers, fax machines, dry cleaning equipment, equipment telecommunication stations, cabin, car repair equipment, diagnostic equipment, construction equipment, fitness equipment, and all kinds of medical equipment … just to give you an idea.
Games and equipment for beauty salon are generally not eligible for the sale and leaseback transactions. Some finance companies specialize in certain types of equipment. Others consider a wide range of equipment.
Application Process: It is surprisingly simple compared to other forms of financing. Contact Company funding for their application pages 1-2. Provide a list of equipment you want considered. (Depending on the age of the equipment, can not be a requirement for assessing the residual value). Fax at the request of the finance company. Wait for a response 24-48 hours. If you agree with their suggestion, you can have funds in hand at 10-14 days.
It should be noted that you are a partnership sale of assets to a finance company and then leasing back. As such, the process of approving applications / is simpler than the transaction type of debt financing and therefore a funding process much faster.
In summary: If you are in need of an injection money for your business, equipment rightful owners and are ready to sell equipment to a company specialty finance, but to preserve it for use in your business and finance leaseback is a financing tool that is available to the owner company.
Window Washing System Prototype in action 2 !