| This arrangement allows the business owner to raise | | | | Each finance company has its own minimum |
| capital while retaining the use of the assets that are | | | | transaction size and funding parameters, so it is best |
| needed in the business. A sale-leaseback can offer | | | | to compare terms from each. Note: Restaurant |
| the creation of significant source of funds that can be | | | | owners typically will have to be in business 2 years, |
| used for a variety of purposes. This includes paying | | | | with a personal FICO score of 650+ before the |
| off a specific lender, as working capital, to buy-back | | | | financial institution will consider a sale lease-back |
| capital stock, buying out a partner, or upgrading assets, | | | | transaction. |
| etc. | | | | Eligible Equipment: Most durable equipment is eligible for |
| In sale-leaseback financing, is accomplished by | | | | sale-leaseback financing. Some examples: All types of |
| conveying the title of the asset, at an agreed upon | | | | IT equipment, computers, laptops, servers, network |
| value, to a financial institution in exchange for a | | | | switches, routers, telephone systems, copiers, faxes, |
| lump-sum payment. The business owner then makes | | | | machinery, dry-cleaning equipment, telecommunications |
| lease payments to the finance company in exchange | | | | equipment, cubicle stations, auto repair equipment, |
| for the cash insertion. | | | | diagnostic equipment, construction equipment, health |
| Benefits. Many companies can benefit from this type | | | | club equipment, and all manner of medical equipment... |
| of transaction. If you don't qualify for traditional bank | | | | just to give you an idea. |
| financing or want to preserve your existing bank credit | | | | Gaming and beauty salon equipment typically are not |
| line, sale lease-backs can be used to finance growth, | | | | eligible for sale-leaseback transactions. Some finance |
| restructure troubled financials, provide tax benefits and | | | | companies specialize in certain types of equipment. |
| enhance balance sheets. | | | | Others will consider a wide variety of equipment. |
| This is an approach to raise cash. All business owners | | | | Application Process: It is surprising simple compared to |
| know that cash is king. From a tax perspective, sale | | | | other forms of financing. Contact the financing |
| lease-back offers the possibility to structure the | | | | company for their 1 to 2 page application. Provide a list |
| transaction as a taxable sale, which can be offset by | | | | of the equipment that you wish considered. (Depending |
| net operating losses that, may otherwise expire if | | | | on the age of the equipment, there may not be a |
| unused. It may also offer unique economic or tax | | | | requirement for an appraisal of the residual value). Fax |
| benefits for companies that have been unable to utilize | | | | the application to the finance company. Expect a |
| net operating loss carry forwards for federal income | | | | response in 24-48 hours. If you approve their proposal, |
| tax purposes. | | | | you can have funds in-hand in 10-14 days. |
| Since lease payments are not considered preference | | | | It should be noted that you are selling a company |
| items, companies that are in an Alternative Minimum | | | | asset to a finance company and then leasing it back. |
| Tax (AMT) situation may benefit as well. This article | | | | As such, the application/approval process is more |
| should not be considered tax advice. Business owners | | | | straightforward than the typical debt-financing |
| should always seek professional tax advice from their | | | | transaction and therefore a much faster funding |
| CPA or Tax Attorney before making tax decisions | | | | process. |
| based on a sale lease-back transaction. | | | | In summary: If you are in need of a cash infusion for |
| Business Qualifiers: If you have been in business for at | | | | your company, own equipment outright and are willing |
| least 18 months, have a personal FICO Score of 620+, | | | | to sell equipment to a specialty finance company, but |
| own the equipment outright, no open tax liens, no open | | | | retain it for use in your business, then sale lease-back |
| bankruptcies and have financial statements that | | | | financing is a financing tool that is available to the |
| indicate that you can service the lease payments, you | | | | business owner. |
| are a viable candidate for sale-leaseback financing. | | | | |