Sale and Lease back
Sale and Leaseback allows a business to sell an asset that it owns to a funder in return for cash, but the funder then leases the asset back to the business over an agreed term for an agreed cost. This is a simple answer for asset rich, cash poor businesses as they can unlock capital tied in existing assets by effectively selling equipment, whilst remaining its sole user, freeing up cash for other areas of the business.
An advantage of Sale and Leaseback is that an agreement can be set up quickly as the asset itself acts as security. This is a simple form of refinance. The result is a cash injection into your working capital (after paying off any outstanding finance from other finance companies) to be used as required. The nature of the new agreement will be the same as the Finance Lease or Hire Purchase product in terms of structure and tax allowances, depending on the option applied.
Benefits of Sale and Lease Back
- Efficiency - Uninterrupted use of the asset
- Choice - Give your business a cash injection or use the money to buy other assets that may not be accessible through hire purchase or leasing agreements
- Make fast decisions - Releasing capital can help you make faster decisions when negotiating business contracts
Hints and Tips
Before submitting an application for funding, here are some useful tips about what finance companies like to see:
- Recent management accounts
- Last 3 months bank statements
Funders will consider applications where a company has a history of:
- Adverse credit issues
- Bad debts