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A Sale Leaseback is a form of leasing where the business owner sells existing equipment in exchange for cash. The equipment leasing company buys the property and then leases it back to the business owner. The business owner now pays the leasing company the monthly rent for the continuous use of the equipment.
If you own a business and have purchased all the necessary equipment you need to start your company, then equipment sale leaseback can be a welcome option for you. How so? At any time you need extra cash to spend you can opt to do a sale leaseback and use your business equipment to produce cash, and still continue to use them for your business operations.
What are the advantages of Equipment Sale Leaseback?
Being able to use your business equipment as collateral has many advantages. First, it gives you the opportunity to produce additional funds quickly and fairly easily. Second, you can use the money obtained from the sale of the equipment for any purpose you want.
Another advantage is that if have unused equipment or equipment which is only used occasionally, you can use it to create working capital for your business, and still get to keep the equipment within your premises. Hence, any time you may need to use it, the equipment will be available for you.
It is also worth nothing that a sale leaseback does not utilize your credit lines so you can save it for emergencies or for larger expenses. Not maximizing your credit limit protects your business credit score from dropping.
What types of equipment qualifies for a leaseback?
The specific types of equipment that qualifies for a sale leaseback will depend on the leasing company. Some leasing companies only accept equipment with a high value or which can be easily sold to auction such as industrial machines or specialized equipment. Take note that these leasing companies may not accept office equipment such as computers, printers, and other machines which gets worn out quickly or which has a low market value.
How long will the process take?
Upon submission of your lease application, it takes only 1 day to 3 days to get an approval. Once approval, the whole process can be completed anywhere from 10 to 15 business days. Within this time frame, you can receive the financing you need and continue using the equipment.
Take note that the leasing company will require a site inspection. Meaning they will come out to your place of business and evaluate the condition of the equipment you want to use. The equipment must be found in good condition in order for your application to be approved.
Who can apply for Equipment Sale Leaseback?
Most leasing companies prefer an established business but this program is also open to startups / new businesses. Good credit is generally not a requirement for this type of program and you must OWN the equipment to qualify.
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