Using Equipment Sale Leasebacks To Get Business Cash

Using Equipment Sale Leasebacks To Get Business Cash

A business equipment sales lease-back is one of the many ways you can raise capital for your business, and this type of financing can provide certain tax advantages and improve your business credit rating as well. What an equipment sale lease-back involves is that you will in effect sell your business equipment to a financial company for a sum of cash then lease your equipment back from them paying them a monthly lease fee for the use of the business equipment.

With this kind of financing arrangement even though you are in reality selling your business equipment to a finance company the equipment never really leaves your property, so there is no interruption in your use of the business equipment. And you can usually get up to 70 percent of the current value of your business equipment with this form of business financing.

Moreover an equipment sale lease-back may allow you to set up the sale transaction as a taxable sale, which can possibly offset a net operating loss improving your balance sheet. And since an equipment sale lease-back is not carried on your books as a debt it allows your business to preserve existing credit lines for other purposes.

Also since you don't actually own the business equipment, the financing company does, and it is not carried on your books as a debt this will improve your businesses debt-to-equity ratio. With an improvement in this ratio your businesses general credit score will go up, thereby allowing you even more financing and capital raising options.

The basic qualifications for being able to use this kind of equipment financing are usually that you have been in business at least a year, have a fairly good business and personal credit score, and you own the equipment outright. In addition, you must not any open tax liens, open bankruptcies, and you must have good financial statements indicating that you can make the lease payments, these basic qualifications will of course vary with each finance company.

Almost any kind business equipment is eligible form of business financing including computer equipment, office equipment, auto repair equipment, medical equipment, machines, construction equipment, just to name a few. While some finance companies specialize only in lease-back financing of particular kinds of equipment, others will consider almost any kind of equipment for this type of financing for this method of funding.

The application process for this type of business funding is much more simple and faster than other types of business financing. To obtain this kind of financing simply locate a number of finance companies that do this kind of equipment funding, and get their funding guidelines and applications, most have simple one or two page applications that are easy to fill out, and then simply select the ones you want to work with and apply.

Using a business equipment sale lease-back can help your company get needed cash for working capital and other business purposes. It can also provide your business with certain tax advantages, and improve your company's credit position. For all of these reasons and others you should strongly consider using this form of business financing to obtain funding for your business.

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