Business and Investment sidenote

This arrangement allows the business owner to raise capital while retaining the use of the assets that are needed in the business. A sale-leaseback can offer the creation of significant source of funds that can be used for a variety of purposes. This includes paying off a specific lender, as working capital, to buy-back capital stock, buying out a partner, or upgrading assets, etc.

In sale-leaseback financing, is accomplished by conveying the title of the asset, at an agreed upon value, to a financial institution in exchange for a lump-sum payment. The business owner then makes lease payments to the finance company in exchange for the cash insertion.

Benefits. Many companies can benefit from this type of transaction. If you don’t qualify for traditional bank financing or want to preserve your existing bank credit line, sale lease-backs can be used to finance growth, restructure troubled financials, provide tax benefits and enhance balance sheets.

This is an approach to raise cash. All business owners know that cash is king. From a tax perspective, sale lease-back offers the possibility to structure the transaction as a taxable sale, which can be offset by net operating losses that, may otherwise expire if unused. It may also offer unique economic or tax benefits for companies that have been unable to utilize net operating loss carry forwards for federal income tax purposes.

Since lease payments are not considered preference items, companies that are in an Alternative Minimum Tax (AMT) situation may benefit as well. This article should not be considered tax advice. Business owners should always seek professional tax advice from their CPA or Tax Attorney before making tax decisions based on a sale lease-back transaction.

Business Qualifiers: If you have been in business for at least 18 months, have a personal FICO Score of 620+, own the equipment outright, no open tax liens, no open bankruptcies and have financial statements that indicate that you can service the lease payments, you are a viable candidate for sale-leaseback financing.

Each finance company has its own minimum transaction size and funding parameters, so it is best to compare terms from each. Note: Restaurant owners typically will have to be in business 2 years, with a personal FICO score of 650+ before the financial institution will consider a sale lease-back transaction.

Eligible Equipment: Most durable equipment is eligible for sale-leaseback financing. Some examples: All types of IT equipment, computers, laptops, servers, network switches, routers, telephone systems, copiers, faxes, machinery, dry-cleaning equipment, telecommunications equipment, cubicle stations, auto repair equipment, diagnostic equipment, construction equipment, health club equipment, and all manner of medical equipment… just to give you an idea.

Gaming and beauty salon equipment typically are not eligible for sale-leaseback transactions. Some finance companies specialize in certain types of equipment. Others will consider a wide variety of equipment.

Application Process: It is surprising simple compared to other forms of financing. Contact the financing company for their 1 to 2 page application. Provide a list of the equipment that you wish considered. (Depending on the age of the equipment, there may not be a requirement for an appraisal of the residual value). Fax the application to the finance company. Expect a response in 24-48 hours. If you approve their proposal, you can have funds in-hand in 10-14 days.

It should be noted that you are selling a company asset to a finance company and then leasing it back. As such, the application/approval process is more straightforward than the typical debt-financing transaction and therefore a much faster funding process.

In summary: If you are in need of a cash infusion for your company, own equipment outright and are willing to sell equipment to a specialty finance company, but retain it for use in your business, then sale lease-back financing is a financing tool that is available to the business owner.

People tend to fear from the word bad debt. It tarnishes the image of a person. But not everyone gets into bad debts knowingly. There may be some problems which may have led to bad debts. Bad debts are the leading reasons of creating blemish in your credit report. So, if you want to apply for loans in case of financial urgencies then there may be lesser people willing to give you a loan. But thanks to bad debt loans that one can easily get financial assistance in spite of an adverse credit history. Sometimes, it may so happen that you want to clear all the previous debts but can’t do that. At such times, bad debt financing can be useful to consolidate multiple loans.

Bad debt loan can be availed for personal as well as business use. These loans may be secured or unsecured depending upon the terms and circumstances. If you have an adverse credit history then you will be given the option of secured loan. And the valuable assets like home, car etc. must be kept as security with the lender. In case of poor credit history, you will be charged higher interest rates. However, if you have good financial position in present then you can get the terms in your favour.

One can use a bad debt loan for many purposes like debt consolidation, holiday, wedding, starting a new business, buying an asset etc. If you want to opt for unsecured loans, then too you can do that. Mostly, business people opt for unsecured debt loans. This is risk free financing and helps the borrower to take up his work smoothly. This loan amount can be used for smooth working of the business. And these are unsecured loans and so you are not required to keep any valuable assets as security.