“Used Equipment Sale And Leaseback Can Generate Much Needed Capital”

Used equipment sale and leaseback transactions have become quite common in the last few years as people work their way out of the most recent financial down turn in the economy and look to different ways to leverage the equity held in their assets.

A used equipment sale and lease back process involve a business owner selling one or more pieces of their existing equipment to an equipment financing company that funds this type of transaction.

In order to be able to arrange a sale and leaseback transaction, the business owner must own the asset and have considerable equity in it either through no debt owing or a small outstanding loan or lease financing facility still in place.

The equipment that will be considered for sale and leaseback needs to have a high remaining economic and/or useful life and be in good condition.  The equipment also has to have an established resale market so that in the event of payment default, the equipment leasing company has a known and predictable liquidation pathway to get their capital back.

The reason for selling the asset back to the equipment leasing company is to provide them with a stronger security position on used equipment which allows them to better manage their risk and extend more capital to business owners.

And while the business owner will be selling the equipment at below market price to an equipment leasing company, the equity can be preserved in the form of a capital lease whereby the leasing company agrees to resell the equipment back to you at the end of the lease term for a nominal purchase price.

Used Equipment Sale And Leaseback Financing Rates Can Vary Considerably With The Financial Stability Of The Business

Even though you own equipment that would be eligible for a used equipment sale and leaseback transaction, it still may be difficult to find and secure financing depending on the financial stability of your business operation.

For businesses that are in financial distress, there are going to be less equipment lease financing options available and those that do exist are going to have lower loan to value financing ratios and a high cost of capital.

The ideal business scenario for used equipment sale and leaseback is when the business is in need of incremental capital to fund growth that will increase cash flow over time and provide funds for debt servicing for a new leasing facility.

The more financially stable a business is, the more likely it is that used equipment sale and leaseback financing options are going to be available and that better rates and terms will be offered as well.

Leasing companies will typically provide financing on a percentage of appraised value done under conditions of orderly or forced liquidation depending on the requirements of the leasing company.

If you are in need of  used equipment sale and leaseback financing or would like to know more about it, please give us a call and we’ll make sure you get all your questions answered right away.

“Used Equipment Refinancing For Canadian And U.S. Based Businesses”

Used equipment refinancing is typically accomplished through a sale and lease back program provided by one of the equipment leasing companies we work with in Canada and the U.S.

A sale and lease back process is used to provide greater security to the lender compared to a scenario where a borrower retained the title of the assets.

The process is completed when an equipment leasing company that has approved financing purchases the assets pledged for security from the borrower or lessee.

In return, the lessee retains their exclusive rights to use the equipment and is required to repay the purchase price over a lease term that is agreed to by both parties.

Used Equipment Refinancing  Can Vary Considerably By Business Circumstances

The amount of equipment refinancing you can secure and the rates and terms related to the transaction are going to depend on the financial health of the business as well as the type of assets being considered for the sale and lease back process.

For instance, a business requiring additional capital for growth is going to receive higher asset leverage, lower rates, and better terms as compared to a business that is in financial distress and is looking for equipment refinancing is keep the operation going for the near term.

For longer life assets where financing has been paid off after five or six years, it can make a great deal of sense to refinance the asset to make greater use of the equity they hold.

Sometimes this is not easy to do, especially when you have a general security agreement in place with a senior lender that takes first position over all assets once their initial loans or leases are paid off.

There are different strategies available to make equipment refinancing work for most situations.

The key is to work with an equipment leasing specialist who can properly guide you through an equipment refinancing process suitable for your business and business requirements.

If you have an equipment refinancing need, or would like to know more about your options, I suggest that you give us a call and get a free assessment of what’s available to you.

“We Arrange Ontario Sale And Lease Back Transactions For Small And Medium Sized Businesses”

Ontario sale and lease back transactions can be a good way to free up capital trapped in the equity found in your equipment.

A sale and lease back transaction involves selling equipment assets to an equipment leasing company in exchange for cash.

Similar to a loan, you would then pay monthly on an equipment lease to repay the amount received, and then have the option to purchase the equipment back at the end of the lease term.

There are basically three different scenarios where a sale and lease back can be performed.

The most common situation for an Ontario sale and lease back transaction is when a business makes a cash purchase of equipment and then decides to finance all or part of the purchase price after the asset is required.

For most equipment leasing companies, as long as the purchase was done within the last 6 months, they still consider it a new purchase and will be open to looking at a sale and lease back transaction.

If the transaction took place longer than 6 months ago, then it will be harder to get a sale and lease back transaction completed as this will conflict with the lending/funding requirements of most equipment leasing sources.

The second most common form of sale and lease back is when a company is in financial distress and is trying to generate additional capital to help with business operations.

This type of Ontario sale and lease back transaction is only provided through asset based lenders that are well set up for liquidation in the event that the financial position of the business further deteriorates after a sale and lease back transaction is completed.  The rates for this type of sales and lease back transaction tend to be very high as well.

Ontario Sale And Lease Back Financing To Grow Your Business

The third scenario where an Ontario sale and lease back financing request takes place is when a business is in a financially stable position and needs more capital for growth.

In these situations, there are equipment financing and leasing companies available in both Canada and the U.S. that will fund these types of deals provided that the business has a solid financial base and there is very little chance of default or business failure during the term of the proposed leasing arrangement.

While the rates may be higher and the lending or leasing term shorter than for a new purchase, this can provide the means for more capital to come into the company to take advantage of existing sales opportunities.