Why The Sale Leaseback Lease Strategy Is Overlooked And Underappreciated When It Comes To Equipment Financing Loans

Could The Sale Leaseback Be Your Company’s Light bulb Moment?

OVERVIEW – Information on why equipment financing loans or a lease via a sale leaseback strategy is one of the most overlooked business refinancing strategies





A Sale Leaseback , when it comes to equipment financing loans can sometimes be a ' light bulb moment ' when it comes to the answer to a working capital and cash flow solution without taking on additional external debt.

Why is this Canadian business financing strategy sometimes overlooked, and often under utilized? And, even better, how does it work? Let's dig in.

The sale lease back has been around a long time. It typically is used for either refinancing of fixed assets, and in some cases real estate .In both of those cases the same principles apply. And more often than not it’s a way to improve profits and utilized assets that otherwise are only sitting on the balance sheet.

The key to a sale leaseback transaction is to understand some of the basic accounting rules around the transaction. As importantly it's also key to ensure you pick the right ' amortization' or ' term’ for the lease or bridge loan that will finalize your transaction...

A quick example of things going wrong?

Let's say your company wishes to do a lease back on your technology assets. It's a solid strategy employed by many. However, tech assets depreciate and become obsolescent faster than many other assets, so refinancing them and picking an amortization of, for example, 5 years doesnt make a lot of sense.

Simply because you will still be making payments on assets that probably need to be upgraded and changed while your firm is still locking into a sale leaseback refinancing payment. So understanding what we call the ' useful life' of the asset is key to a business owner/financial manager’s success in this type of refinancing.

Generally the lease or loan you enter into in this type of transaction should have some common sense attached to it. You need to understand the value of the asset, the costs involved in the refinancing, and some of the accounting and tax issues involved in such a deal.

The key benefit of equipment financing loans or a lease that solidifies your refinancing is the cash it will bring to your balance sheet. You also need to convey to the lessor / lender what the proceeds of the refinancing will be used for, as you do not want it to be viewed as a ' cash grab' for all the wrong reasons.

Have we covered off how the sale leaseback works? In its essence it couldn’t be simpler. Assets you already own that are not encumbered, i.e. they are lien free, are sold back to your lessor/ finance firm. The title transfers to the lender and passes back to your company once payments are completed under your lease back.

In almost all cases some sort of ' appraisal’ value needs to be tied to the deal - both you and the lender benefit from knowing the transaction makes sense re the asset values. And almost all assets can be refinancing via bridge loans, leasebacks. Rates will always be commensurate with overall company credit and asset quality.

If you want to investigate the ' light bulb moment' around the benefits of equipment refinancing loans seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in ensuring you have not overlooked this great refinancing strategy to enhance cash flow.




Stan Prokop - 7 Park Avenue Financial :

http://www.7parkavenuefinancial.com

Business financing for Canadian companies , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded in 2004 - Completed in excess of 90 Million $$ of financing for Canadian corporations . Info re: Canadian business financing & contact details :

7 Park Avenue Financial = Canadian Sale Leaseback Expertise


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Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Sources of Equipment Financing Loans In Canada – What Commercial Business Lenders Meet your need

Get Practical On Sources of Equipment Leasing For Canadian Business

Information on sources of equipment financing loans and leases in Canada . Commercial business finance options that make sense!


After Canadian business owners have made the decision to acquire assets for their business they are often faced with the choice of identifying the best 'source' of that financing.

Businesses lease or arrange commercial business loans for assets they need for ongoing operations. So who do you turn to for a financial option that makes sense - one that allows you to match cash outflows against the expected benefits of the asset you are acquiring?

In a perfect world, (and trust us we know its not!) you want to find a financing partner that has a good sense of what your business and your overall financial condition is about. Your ultimate goal should be to give your business a financing rate, term, structure and benefits that you deserve.

In one aspect of equipment financing loans in Canada we must regretfully report that ' size counts'! What do we mean by that ?Simply that the overall financing size of your commercial loan or lease dictates who your best financing partner will be . We advise clients that in Canada there are in effect 4 tiers of equpment financing size. They are as follows - large ticket, mid ticket, small ticket, and micro. When you know who the best players are in one of those four niches we believe you’re... to quote Charlie Sheen ' winning'!


Ever tried to put something in a box that doesn’t fit? It’s quite an unproductive task. That’s why we cringe when we see clients trying to put their box in a lease niche that doesn’t fit. The reality is that many Canadian businesses get the run around only because they have stumbled into the wrong niche. So whats our point, simply that the asset dollar size, type of asset and your overall credit and financial strength very quickly determine who you should be dealing with.

Credit quality is what business equipment financing loans are all about in commercial financing in Canada. Optimally you will get the best rate when you have a decent balance sheet, good cash flows, and a credible business history.

Unfortunately that doesn’t include thousands of business owners who have unpredictable cash flows, some historical operating issues, or who perhaps find themselves in an industry that is ' out of favor '. Does that mean you can’t be successful in commercial business leasing? Absolutely not , but it does mean that you are now in the category the industry terms as a ' story credit', and its up to you now to tell a good story . If you do that you will get a lease approval, but your transaction will be structured in some manner that affects the rate, term of the lease, or perhaps outside collateral, guarantees, etc.

So who exactly do you turn to for financing you need in equipment? The parties that are offering you financing today are captive vendors, banks (who really are into leasing these days) and independent specialized lease firms of all sizes, types, and ownership. (Many U.S. firms are key players in the Canadian business equipment financing arena.

Want to fast track lease financing approval, and ensure that you find yourself in the right niche and ticket size that we have outlined? Speak to a trusted, credible and experienced Canadian business financing advisor who will help you manage the process and identify your rights, obligations and key benefits. Get your 'best deal' with professional assistance, saving you time... and money.




Stan Prokop - founder of 7 Park Avenue Financial -
http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :


http://www.7parkavenuefinancial.com/equipment_financing_loans_business_commercial.html