YOUR COMPANY IS LOOKING FOR A SALE LEASEBACK CASH FLOW LEASE OR LOAN!
SALE AND LEASEBACK CASH FLOW SOLUTIONS FOR CANADIAN BUSINESS
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the most significant issues facing business today.
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Sale leaseback financing is a reliable alternative for Canadian businesses that wish to refinance business assets, or commercial real estate, intending to enhance working capital or generate capital for business needs while retaining use of the asset and ownership at the end of the lease.
CASH FLOWING YOUR BUSINESS ASSETS
In certain cases, it simply might make sense for owners to cash flow some of their business assets for personal needs. But how does the owner/financial manager evaluate the lease back option and determine fair market value? Let’s dig in.
A LEASEBACK CAN BE ACHIEVED VIA A LEASE OR LOAN
While the term ' lease ' is inherent in our subject title, we point out to clients that many of these types of transactions can also be accomplished via a bridge loan. Depending on the type and timeframe of the financial need, the balance sheet could reflect a ' bridge loan' versus a lease. The ultimate gain, ' cash flow,’ is still the same. Generally speaking, a bridge loan is shorter-term in nature, while a ' lease ' often denotes a multi-year payback arrangement at a fixed rate.
WHAT IS THE COST ON A SALE LEASEBACK?
Clients, of course, are always asking us what the financing rates are for a lease back. We hate to on our ' lawyers cap ' and say, well, ' one hand .' but the real answer here is that the rate on such a transaction boils down to the asset's credit quality and the business, or a mix thereof.
UNDERSTANDING TERMS AND CONDITIONS AND END OF LEASE SCENARIOS
As important as the ' rate' is in any transaction, it's equally important to understand your transaction's legal terms and conditions and ensure you and your accountant are on board relative to the tax and accounting standards treatment of the lease agreement. A quick example here to consider is that in some cases, the sale of the asset to the lender or lessor might actually trigger a tax liability or benefit from tax advantages if the asset sold has a much higher price than it's carried in your financials.
WHY SALE LEASEBACKS?
These days, a very typical transaction is for owners and financial managers to consider the sale and leaseback option for additional growth capital. If the business can't secure that financing from a traditional bank or commercial finance company sources, the leaseback options via a buyer lessor become a reliable solution.
REFINANCING DEBT IS A POPULAR REASONS TO ADDRESS A SALE LEASEBACK
In some cases, it makes perfect sense to consider retiring existing debt that came at a higher interest rate with the proceeds of leaseback transactions. We recently completed a transaction for clients that allowed the sale-leaseback to retire debt incurred in a management buy out.
CLEANING UP THE BALANCE SHEET
Properly structured the leaseback or bridge loan strategy can ' fix up ' your balance sheet related to key issues such as debt to equity or current ratios and depreciation that was previously being taken on the asset as an expense. Lease payments are always structured to suit your needs, and the lease term can be short term as a bridge loan type solution or longer term.
CAPITALIZE ON THE SELLER LESSEE FUNDING SOLUTION
If time can't wait for your company's needs for cash flow replenishment, seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with sale-leaseback options and a leaseback arrangement that makes sense from all points of view.
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Stan Prokop
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