Accessing Operating Capital in Today’s Market
April 14, 2022
It’s no secret that the world of finance has been changed by COVID. This is new territory for all of us. And though we’re starting to see a hint of light at the end of this two-year tunnel, the simple truth is we don’t fully know how the pandemic has impacted commercial lending long-term.
While banks are lending and loan demand has remained constant, some of the federal loan programs that were established at the beginning of the pandemic to help small businesses stay afloat have either ended or stopped accepting new applications. Factor in the fragile state of affairs in eastern Europe – turmoil that creates uncertainty and generates a ripple effect felt across global economies – and it can be a scary time to be shopping for a loan.
However, if you are in the market for a loan, there are still many great alternative financing solutions currently available that continue to be attractive options for businesses across many different industries. Though rates aren't always as low as what a bank can offer, this can often be offset by the flexibility a reputable lender like Acquipt can provide, as well as faster funding and competitive terms wrapped into a consistent monthly payment.
At Acquipt, this same flexibility allows us to get creative customizing lending solutions that are tailored to our customers’ needs. One particular option we can help with is a sale-leaseback. Just what is it and how does it work? Let’s take a closer look.
Tapping the Equity in Your Equipment
Picture this: You have a piece of equipment you own that’s still in great shape and continuing to perform well for your business. But you’re growing, and you need to expand your fleet to keep up with that growth, or simply need access to liquid capital. Yet, for whatever reason (there can be so many), securing a loan is proving difficult.
That’s where a sale-leaseback could be a viable solution for your needs. Working with a commercial lender or leasing company, you can sell an asset and immediately lease it back so it never leaves your operation as you enjoy fast access to cash. And because there’s less risk to the lender because your equipment functions as collateral, you may qualify for a leaseback even if you’re having difficulty getting a traditional loan.
While this option has been quite popular in the commercial real estate market for years, you can actually execute a sale-leaseback on all sorts of owned assets, including commercial construction and farming equipment like tractors as well as storage assets like shipping containers. Sounds just about perfect, right? There are a couple of things to take note of before you start window shopping.
First, you need to understand the liquidation value of the equipment you’re looking to sell and lease back – this not only directly affects your ability to even secure this type of financing, but it also factors into the amount of money you’re able to borrow, as well as your repayment terms. And second, your owned piece of equipment must be completely paid off and free of any liens, but that should probably go without saying. If you think you meet the criteria for a leaseback, this is where Acquipt can help.
Making It Work with Acquipt
The best way to determine if a sale-leaseback is the right financial tool for your business right now is to connect with an Acquipt lending professional to talk through your options. Our team members can sit down with you to help analyze the value of your equipment asset (or assets), discuss the types of sale-leaseback options available to you and hash out terms. You might even discover other financing options available to you that could be an even better fit for your business.