If your business is flush with equipment and machinery but struggling to free up capital for essential operations, necessary growth, special projects, additional streams of revenue, or new product expansion, a Sale-Leaseback program offers you the ability to increase cash flow with resources you already own. Our expert team at First Capital Leasing offers our clients flexible terms with a leaseback arrangement tailored to their unique needs.
What is a Sale-Leaseback?
A Sale-Leaseback is an arrangement in which an organization can sell equipment or machinery assets to a financing provider for fair market value then lease back those same assets from the purchaser. This financial program offers a business the opportunity to use equipment they already own to increase capital, opening up cash flow for expansion, partner buyout, new streams of revenue, and more.
If your business is seeking increased cash flow for operations, A Sale-Leaseback transaction could be the solution to finance your growth.
How Does A Sale-Leaseback Work?
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- Choose Your Collateral: You decide which assets (equipment) you wish to sell. These can be pieces that are still in use for your operations.
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- Negotiate Your Transaction: Working with your leasing company you will agree on the value of your assets (fair market value), your payment terms, and loan period.
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- Title Transfer: The ownership of the assets will transfer from your business (the lessee) to your leasing company (the lessor).
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- Receive Payment: A lump sum payment of cash is received, providing the capital you need.
A Sale-Leaseback program gives you access to working capital while still allowing you to use the equipment vital to your organization’s operations.
The Pros Of A Sale-Leaseback
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- Immediate Cash Flow: The funds negotiated for the purchase of your equipment go directly into your business, providing you with essential cash flow.
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- Streamlined Budget Management: Fixed-rate monthly leasing payments allow you to structure and simplify your budgeting.
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- Mitigated Risk: You reduce the liabilities attached to ownership because title has passed to your leasing company.
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- Tax Benefits: There are immediate tax benefits for your business with lease-related deductions.
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- No Interruptions To Operations: The transaction of a Sale-Leaseback allows you to continue your workflow with the equipment you need while benefiting from the quick infusion of capital.
The Cons Of A Sale-Leaseback
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- You Must Own Your Equipment: The equipment you sell in a Sale-Leaseback arrangement must be owned outright and free of any liens.
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- Equipment Must Hold Value: Although the equipment you wish to sell may have value to you, it must also have quantifiable market value to give your lessor reason to purchase.
What Types of Assets Can I Use For A Sale-Leaseback?
Sale-Leaseback programs can be offered for almost all types of working, fair-valued equipment across a variety of sectors including Agriculture, Automotive, Construction, Technology, Fitness & Healthcare, Manufacturing, Transportation, Hospitality, Oil & Gas, and more.
What Kind of Business Is It Best For?
A Sale-Leaseback agreement is ideal for businesses with outright ownership of valuable equipment or machinery that need to quickly raise capital to maintain or grow their operations. This financing solution simplifies budgeting with fixed monthly payments and reduces liabilities tied to ownership of assets. First Capital Leasing provides a variety of strategies for companies seeking financing solutions. We partner with each of our clients to provide completely customized approaches for financing. If you are interested in exploring A Sale-Leaseback program or another suitable option for your organization, connect with our team at First Capital Leasing at 1-888-251-3644 or by our online contact form and get back to business sooner.
FAQs
Is there a maximum transaction amount in a Sale-Leaseback?
There is no maximum. We can negotiate on the sale of single or multiple pieces of equipment. Contact our team to discuss your capital needs and the equipment you have available.
How quickly can I receive payment after making an arrangement?
Payment for your leaseback contract can be remitted to your company as quickly as 48 hours after all documents are signed.
How do I apply?
We have an easy application process. Apply Here. And once you have applied, there is no need to apply again. We will continue to partner with you for all your business financing needs.
