Did you hear of sale leaseback financing? Want to know how it can benefit you? As an owner, operator, or contractor, you are likely familiar with some of the options available to you when it comes to purchasing new equipment. There are advantages to all three options: leasing, borrowing, and ownership.
An asset is simply sold to a leasing business and then leased back to the original owner in a sale-leaseback arrangement. In the real estate industry, businesses frequently act like this. Real estate holds a significant portion of capital, thus a business may decide to sell off its stake to raise money for other investments or debt repayment.
In other industries, such as heavy machinery and equipment, sale-leasebacks are quite common.
Some Benefits of a Sale-Leaseback
Depending on the option chosen, the sale-leaseback application process may resemble or differ from the loan application process. When compared to loans or credit lines, sale-leasebacks have a few unique advantages.
- Tax Benefits
Your equipment financing broker will try to arrange your sale-leaseback in a way that maximizes the tax benefits. Up to 100% of the sale-leaseback expense may be deductible, depending on the terms of your arrangement.
- Simple Eligibility
Since you are providing your finance partner with an owned asset, they assume less risk. In contrast to a loan or LOC, you can still be eligible even if you don’t have a pristine credit score or a long credit history.
- Terms That Suit You
In a sale-leaseback arrangement, the financing arrangements are frequently more favorable. Given that you’re selling owned equipment, you have some influence over the conditions of the contract. Your financing partner can discuss the alternate options about affordable financing rates, payment schedules, and lease terms with you.
Eligibility Criteria For A Sale-Leaseback
Simple requirements must be fulfilled in order to qualify for a sale-leaseback, including:
- The equipment must be yours, or you must be almost there in terms of paying it off.
- Resale value is a requirement for the equipment used in the sale-leaseback. Your financing partner won’t be interested in purchasing it from you if it is worthless.
So, these were the benefits of sale-leaseback financing and how it can help your business. If you are looking for a reliable commercial leasing company in Abbotsford to help you out with equipment financing or leasing, look no other than Sandhu & Sran Leasing & Financing. For more details, schedule a free consultation and know about your leasing options.
