YOUR COMPANY IS LOOKING FOR SALE LEASEBACK CASH FLOW SOLUTIONS!
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CONTACT:
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Direct Line = 416 319 5769
Email = sprokop@7parkavenuefinancial.com
UNDERSTANDING THE SALE LEASEBACK TRANSACTION
A sale leaseback bridge loan in Canada is often the answer to working capital or cash flow shortfall for the business owner/management team.
The fact of the matter is that every business, probably yours, has its own story related to business financing needs.
USING LEASEBACK TRANSACTIONS TO GENERATE CASH NEEDS / REFINANCING STRATEGIES
Utilizing asset loans on an underlying asset such as equipment, real estate, and other assets you own (i.e. technology, etc.) is a time-proven fix to capital and funding needs that are often driven by short term fluctuations in your business. Let's dig in on why a leaseback transaction could work for the seller lessee / your business under standard and straightforward capital leases for the fair value of assets you own.
HOW DOES IT WORK?
Hopefully, everyone understands the lease back concept. It couldn't be simpler. Your firm refinances, via a bridge loan or lease an asset or assets you already own, are unencumbered by any liens from financial institutions or commercial finance firms / non-bank private companies.
Typically your goal is to continue to use and benefit from the asset, as title reverts to your company at the end of the lease agreement or bridge loan when final lease payments are completed/paid on the lease liability on your balance sheet via typical finance leases.
ASSESSING SALE-LEASEBACK TRANSACTIONS PROPERLY
Depending on what asset/assets you are refinancing, an appraisal often will protect both the seller and the financier. The concept of ' fair market value ' is key in asset loan refinancing. Be forewarned, though, that often lenders will take a prudent approach and, in some cases, focus on liquidation value instead of market values. They also consider a proper lease term based on all aspects of your transaction.
DON'T FORGET TO ASSESS THE ACCOUNTING / TAX ISSUES
Owners and financial mgrs should also understand some accounting issues that come with bridge loan leaseback financing. This involves your balance sheet and issues that might come up in original cost, book value, etc. Although most business assets ( depreciate ( unfortunately !), the reality is that certain fixed assets and real estate, of course, could appreciate and grow in value over time.
HOW ARE LEASEBACKS STRUCTURED?
Sale leasebacks are structured in various ways, but it's a shortlist. Typical transactions use capital lease paperwork. Term loans via a bridge loan can also be utilized, and in the case of real estate, commercial mortgages are often utilized.
Remember that notwithstanding what we call the transaction, or how it is ' papered ' and ' collateralized, 'the reality is that you still use and benefit from the asset while the contract exists with the 'new owner' .. i.e. the finance firm, while at the same time benefiting from the cash and working capital received under the leaseback. Titles revert to your firm, the original owner, at the end of the term.
While there might be cheaper ways to borrow cash or monetize owned assets, the reality is that sale-leaseback agreements/asset loans deliver on raising cash when it's often most needed via a finance lease. A sale leaseback enables you to fund cash needs creatively.
REFINANCING YOUR BUSINESS UNDER A SALE AND LEASEBACK
Remember that in many cases, this type of strategy allows you to re-do your overall financing strategy related to debt load, ratios, and bank covenants. It's a real win-win when your use of funds is used to generate further sales and profits for equipment or commercial real estate for a business property owner for long-term or short-term needs.
CONCLUSION - SALE AND LEASEBACK TRANSACTIONS
Today's market presents all sorts of funding challenges for Canadian businesses. If you're focused on refinancing assets via the leaseback strategy, seek out and speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can help you with more information and help to understand the risks and benefits of a lease expense under this type of valuable asset funding strategy when capital needs pose challenges.
FAQ: FREQUENTLY ASKED QUESTIONS
What is a sale-leaseback?
One of the most common leasing arrangements is a sale-leaseback. In simple terms: after the owner of an asset sells an asset or property on paper for its agreed-upon value, businesses leaseback that asset via "sale/leasebacks."
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