Sale-Leaseback equipment loans are a perfect way to infuse any business with needed capital leaving the line of credit or other credit facilities for different needs and preserving the cash position. It is simple, a company in any industry has a cash crunch, and they have $1,500,000 in equipment owned free and clear by the business. We would value the equipment, write a check to the owner and then lease the equipment back to the company for a 1,2, or 3-year term. So simple, nothing changes in the business from an operational standpoint other than the influx of capital, which can potentially change the trajectory of a company or allow them to take advantage of a growth opportunity.
A large food processing plant had an opportunity to acquire one of its smaller competitors that had fallen on tough times and closing its doors. Buying this competitor out would be an excellent strategic move that made good sense; unfortunately, cash flow was tight, and the company’s line of credit was not sufficient to make the offer.
In discussions with the senior management team and CFO, we considered a short-term lease on $1M of their existing pieces of equipment, which would provide sufficient liquidity to make an offer and buy the competitor company at 20-cents on the dollar and take over their customers and all assets.
In business, you never know when an opportunity will present itself, and in most cases, an equipment lease can be a solution for needed liquidity and tax advantages.
A small manufacturing operation specializes in producing a product for the construction industry. A large order from an existing client is received well beyond the current production capabilities, putting everyone on edge. The cash in the company needs to be maintained to hire and train the new staff to meet the production needs.
This company has been very frugal and has over $5,000,000 in current production-related equipment and needs approximately $650,000 to buy the additional equipment to add the 3rd shift for production. A sale-leaseback of a portion of the gear turned out to be the perfect solution. It was structured to remain off-balance sheet as an operating lease and became the ideal short-term solution with funds wired within a few days