There are many risks and benefits associated with sale leaseback. For starters, sale leaseback is the best way to quickly acquire capital for your business when you are struggling to meet your monthly payment obligations. The downside is that you no longer own a piece of equipment or machinery; you are instead leasing it from another company. The one way to make sale leaseback a smart decision for your business is by finding the right type of leaser to offer you the equipment. Some of the leasing firms out there recognize your need for funds and they may not offer them to you without a higher interest rate attached to them.
How do you determine if sale leaseback is the right type of strategy to follow for your business? Here are some warning signs that may indicate you need to pursue sale leaseback more aggressively:
Sale leaseback is not a loan like most lenders will have you believe. Instead you are simply finding a rich investor or leasing company that will purchase your equipment or machinery and then allow you to lease it from them. This will give you instant cash say $10,000 or more depending upon the value of the equipment and you can use these funds to fix your cash flow issues and pay back some of the debts you may have.
Companies that have high amounts of debt will benefit the most from sale leaseback. They have the opportunity to acquire the cash and they also have a chance to keep their equipment. This type of financing is commonly referred to as "off balance sheet" financing. When you have money now and small monthly payments for your equipment, you can easily prevent your company from getting into another bed debt situation and run the risk of defaulting on your loans. Sale leaseback is designed to bring capital back to your company. This will help to strengthen the financial health of your company, making it more attractive to potential partnerships and investors.
The ideal candidate for sale leaseback are companies that have a high growth strategy. If you see that your company is on the rise, but is in need of funds now to help this growth, you will be able to acquire the money you need in no time. Investing additional cash in your inventory and receivables is a wise option for any business if you would like to see your company expand and grow. A company that is on the down spiral is seen as a significant risk and you will have a challenging time finding a leaser that will offer you the money you need.
Jus about any type of company will be able to apply for sale leaseback if they have the right type of assets to offer leasers. Make sure you work with multiple companies in order to find one that can provide you with the best deal so you aren't stuck with high interest rates on equipment that you have already owned. Sale leaseback is a great strategy for any business that is struggling with debt and needs money now to help pay for some of the immediate business needs. Make a list of all the assets you have that you can use for sale leaseback so you can acquire the funds you need in a hurry.
Corporate Credit Concepts specializes in sale leaseback. For more information about sale leaseback and how it might benefit your business, please CLICK HERE for a free phone consultation.