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Need cash now? How about a sale-leaseback?

January 15, 2024

A sale-leaseback arrangement is a financial transaction in which a company sells its equipment or assets to a third party and then leases them back for use in its operations. This arrangement can offer several benefits to businesses:

Immediate Cash Inflow: The primary benefit of a sale-leaseback is the immediate cash injection into the business. By selling assets, a company can unlock the capital tied up in those assets, which can be used for various purposes, such as paying off debt, funding expansion, or investing in new opportunities.

Improved Liquidity: Sale-leaseback transactions can improve a company's liquidity and cash flow, which is especially valuable during periods of financial strain or when working capital is needed for day-to-day operations.

Tax Benefits: Depending on local tax regulations, a sale-leaseback can offer tax benefits. For example, lease payments may be tax-deductible, and the company may be able to claim depreciation on the assets even a tier selling them.

Flexibility: Lease terms can be structured to provide flexibility. Companies can negotiate terms that suit their specific needs, including options for lease renewal, purchase, or even upgrades to newer equipment.

Risk Mitigation: By transferring ownership of the assets to a lessor, a company can mitigate risks associated with asset depreciation, maintenance, and obsolescence. The lessor assumes these responsibilities.

Focus on Core Competencies: Companies can concentrate on their core business operations rather than allocating resources to asset management, repair, and maintenance.

Hedging Against Inflation: Lease payments are generally fixed over the lease term, which can act as a hedge against inflation. This means that as the cost-of-living rises, the lease payments remain stable.

Capital Allocation: Companies can allocate their capital more efficiently by using the proceeds from the sale-leaseback to invest in areas of the business with higher growth potential or better returns.

Asset Upgrades: Sale-leaseback transactions can provide an opportunity for companies to upgrade their equipment or assets without a significant upfront capital investment.

It's important to note it's advisable to seek legal and financial advice to ensure the arrangement aligns with the company's overall financial strategy. Easylease ensures all customers receive the best service possible by assigning all customers an individual local account leasing representative with strong leasing knowledge and experience. Your representative is responsible for managing your account, including all inquiries from the point of inception to the point of completion of each financing contract.

For any inquiry, reach out to us on our website or call us at 1-800-293-1119.