Leaseback Financing: Short Term Capital Without Debt
Emerging entrepreneurs and growing businesses sometimes find themselves in precarious financial situations. There is a need for capital to meet immediate financial obligations, or to meet the next milestone in development, but loans do not quite fit the bill. In most cases, taking on extra debt through traditional business loans will hinder growth and create a larger strain on cash flow. In these cases, businesses turn to leaseback financing.
How Leaseback Financing Works
Leaseback financing gives business owners the ability to “sell” their equipment in exchange for immediate short-term capital. What makes the sale unique is that businesses still retain access to their equipment, so they can fulfill customer orders. There is simply a monthly leasing fee to repay the short-term capital. There is no debt placed on the balance sheets, and businesses can use the funds fro leaseback financing to meet payroll, pay creditors, or even use the money to help grow the business.
How Leaseback Financing Is Structured
Leaseback financing is structured around the value of the equipment owned by a business. The amount advanced is predicated on a number of factors. First, the age of the equipment is taken into account. Second, the condition of the equipment play heavily on the amount of funds given to the business. Third, financial professionals look at the uniqueness of the equipment. More expensive and specialized tools, machinery, and equipment yield more capital than everyday pieces. Payments on leaseback financing are determined by credit ratings. Lower credit ratings may translate to higher monthly installments, but leaseback financing also takes into account the type of business, the profitability of the business, and other factors when structuring payments.
Leaseback financing offers tax benefits to business owners. Because all payment on leased equipment can be claimed as deductibles when filing taxes, businesses can list all payments made through leaseback financing programs. Ultimately, most businesses recoup the money paid on leased equipment every year, so leaseback financing pays for itself. In some cases, businesses even end up getting money back through leaseback financing programs.
Learn More About Leaseback Financing
At Biz Com Loans, we offer comprehensive leaseback financing to businesses that need short-term capital without assuming additional debt. To learn more about our program, contact our offices at 1-844-855-6267.