Another popular method of leasing business equipment is known as the Sale Lease Back. On this post, let’s define what this equipment lease program involves and consider if it is suited for your own business.
What is a Sale Lease Back?
Have you purchased all the equipment you need for your business operations? If so, then obviously you do not need to apply for business equipment lease. However, if you run out of cash, then you may consider acquiring a Sale Lease Back.
A Sale Lease Back is form of leasing where the owner of the business sells the equipment to a leasing company in order to produce cash. In turn, the leasing company leases back the equipment to the business owner so it can continue to use it for the business operations. A monthly lease or rental fee is submitted to the leasing company as part of the arrangement.
Through this program, the money that was originally spent to invest on equipment does not need to be tied up for a long time. Instead, it can be spent for other important business expenses. When the lease term ends, the business owner can decide whether to buy back the equipment at a small cost or leave it to the lessor. The conditions will vary depending on the lease company.
Who Can Apply for an Equipment Sale Leaseback
Different leasing firms have varying standards when it comes to approving customers.
For instance, some lease providers will only accept established businesses or businesses which have been in operations for at least two years or longer. On the other hand, some lessors may be willing to offer a Sale Leaseback even if you own a new business or a start-up business.
What types of equipment can be leased? Generally, any type of equipment which has a good market value and can be put into auction can be leased such as industrial and heavy machinery. However, most lending companies will not lend against very specialized equipment such as office equipment and furniture because these types of equipment will be difficult to sell at auction.
What about credit rating requirements? The criteria will vary from one lending company to another. You may find that many lessors are more lenient with Sale Leaseback programs because collateral is instantly involved. Nonetheless, you need to remember that not all leasing firms offer this kind of program. Some leasing companies do not offer Sale Leasebacks. Hence, before submitting an application, make sure that your preferred leasing company does offer a Sale Leaseback. Upon submitting your lease application and other prerequisites, approval can be expected in as quick as 1 to 2 days. You will also be able to receive the loan within 10 to 15 days on average. During the processing period, the bank will send out a representative to conduct ocular inspection on the equipment used as collateral. Needless to say, if the equipment is in bad condition or has damages, the lessor will decline the transaction.
Lai Castillo is an equipment leasing broker that specializes in getting start up equipment leasing and providing articles in finding solutions for Leasefunders.com. For equipment lease application visit leasefunders.com.