YOUR COMPANY IS LOOKING FOR SALE LEASEBACK FINANCING SOLUTIONS!
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest 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 - sprokop7parkavenuefinancial.com
7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
L6J 7J8
Lease back financing in Canada has been around for decades - it's a proven strategy to obtain financing for your firm on assets you already own. The sale leaseback transaction allows your company to use still the asset (typically equipment or real estate) while repurchasing it over the lease term. We're examining those proven benefits. Let's dig in.
The main driver for business owners/mgrs to utilize this form of financing is the need to free up capital for use in the business - simple as that. Depending on how you use the capital there is typically an improved balance sheet when it comes to some of the ratios that banks and other commercial lenders like to see.
Also, since you temporarily don't own the asset you don't have that additional depreciation expense. When the transaction funds are used to increase sales, it’s a true ' double whammy'!
What are some of the issues in properly executing the lease back?
They include:
The need to properly assess the true current value of the equipment - this benefits both you and, of course, the lender and is often achieved via a third-party appraisal . In our experience, our clients often feel the asset in question has more value!!
The requirement to ensure that the interest rate and cash outflow on your lease payment makes sense from a cash flow perspective to your business - Here, picking the right amortization ( lease term ) is key
The actual final buyback payment must be negotiated fairly.
It might well be considered for larger transactions to discuss the transaction with your lawyer and or accountant. In the SME COMMERCIAL FINANCE sector, the personal guarantees of owners on the transaction may well apply.
Let's recap, with a total of 7 solid benefits of leaseback financing.
1. Equity in your business is freed up so that owners and or creditors can make maximum use of capital
2. The company can still use the asset/assets in question
3. Capital from a sale leaseback transaction can be used to achieve an even greater return on equity
4. Debt your company currently has can be paid down or, in some cases, eliminated - capital could also be used to purchase new assets
5. If the leaseback transaction involves real estate, your business is simply addressing capital through its core business - you're probably not in the real estate business
6. In certain circumstances, your company can maximize efficiency in times of low interest rates for refinancing
7. Numerous tax/accounting/financial statement benefits can accrue from properly executed leaseback financing
These transactions work best when they are balanced in terms of the lender's needs and your firm, the borrower. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can help you complete a transaction that makes sense for your firm.
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Stan Prokop
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