Is A Sale Leaseback Transaction , Or A Bridge Loan Your Solution To Working Capital . Sales Leaseback Finance Works!

A Reverse Position ! Refinance Assets With Sale Leasebacks!


Information on the sale leaseback as a working capital strategy . Why sales leaseback finance or a bridge loan just might be the solution you are looking for in an innovative financing solution





We're pretty sure (and we hope!) that Canadian business owners and financial mangers leave no stone unturned when in comes to exploring different financing options in what can generally be viewed as a tougher credit environment in Canada. Not brutal, but tough for sure!

One of those options is the sale leaseback strategy. It's what we can call a reverse position; you are in effect using sales leaseback finance, via a lease or a bridge loan, to sell your asset back a finance firm. The benefits. They are pretty clear - no new excessive debt and new cash flow into the company, leveraging your balance sheet.

Naturally it’s all about the value of the assets - it’s simply a method to maximize, via new found cash flow, the value of existing assets on your balance sheet. What the business owner and financial manager have achieved is in effect a redeployment of shifting of the balance sheet, for the better we believe! Depending on the quality of the asset and your firms overall credit and financial strength the pricing that you can achieve from a viewpoint of interest rate on the deal is probably a lot better than mezzanine, and certainly better than the cost of new equity .

By the way, even real estate assets are a solid asset to consider in the sales leaseback finance decision. Your essential decision should revolve around the fact that you can generate a higher return in your business than the rate you are being charged for the bridge loan or leaseback. Makes sense right, as its all about return on capital and investment?

If a value, via an appraisal or some other method can be placed on an asset it can be refinanced. So that covers real estate, heavy equipment, technology assets, construction equipment, printing presses, rolling stock assets... well we think you get the picture.

For a number of clients that we talk to their decision simply revolves around ' what is my core business ' and if it isn’t real estate it makes sense to deploy cash in your normal business operations. Recall that in Canada we have even seen some of the banks in downtown Toronto sell their prestigious bank towers... why? … for cash! And these are the guys supposedly with all the cash !

Growing your company is one key use of sale leaseback capital - other reasons might be to pay down debt, pay off government arrears, improving your covenants with the bank or other lenders, or simply taking advantage of certain assets which have either appreciated , or held their value as you have made your payments .

It is important to talk to your accountant or tax advisor on the implications of any tax scenarios that come with a sale leaseback, but we have rarely seen that hold back a good deal. Also, when a pure ' lease ' scenario does not work a bridge loan financing is often just as effective

Seek out and speak to a trusted credible and experienced Canadian business financing advisor on the advantages and implications of the sale leaseback or bridge loan.