Sale leaseback financing is a great option for small businesses that need to access capital quickly. It’s an alternative form of financing that allows business owners to use their existing real estate or equipment as collateral in exchange for cash. By selling their assets and then leasing them back, business owners can free up the money they need to expand their operations or cover other expenses without having to take on additional debt.

Understanding Selling and Leasing

When considering sale-leaseback financing, it’s important to understand the difference between selling and leasing. When you sell your assets, you are transferring ownership of them to a third party. The buyer then becomes the owner and is responsible for any taxes or fees that come along with owning the asset. When you lease an asset, you are essentially renting it from the owner. You have the right to use and occupy the asset, but you do not take ownership of it.

Leveraging Assets for Capital

With sale-leaseback financing, small business owners can use their eligible assets as collateral in exchange for cash upfront. The buyer of the asset takes over ownership, while the seller enters into a lease agreement with them for continued use of that asset. The business owner then pays a monthly lease payment to the buyer until all of the obligations outlined in the agreement are fulfilled, at which point they can reclaim ownership of their asset.

The Benefits of Sale-Leaseback Financing

Sale-leaseback financing is beneficial for small businesses that need to access capital quickly and don’t want to take on additional debt. It’s also a good choice for those who want to retain ownership of their assets and maintain control over them. The terms of the lease agreement can be tailored to suit the business’s needs, so they won’t have to worry about getting locked into a long-term contract.

Before you decide if sale-leaseback financing is right for your business, it’s important to understand the risks and rewards associated with it. While you may be able to access the money you need quickly, there are potential tax implications that come with selling your assets. Make sure you thoroughly research all of the pros and cons before making a decision. If your business needs sale-leaseback financing, contact the team at Rai Commercial Capital today.