Sale leaseback financing is an effective way for businesses to access capital without taking on additional debt. By selling the real estate that their business operates from and then leasing it back, companies can unlock cash flow while still retaining control of their property. This type of financing has been used by a variety of businesses, but it’s important to understand the ins and outs before making a decision.
The Benefits of Sale Leaseback Financing
The primary advantage of sale leaseback financing is that it provides businesses with a unique way to access cash. By selling their real estate and then leasing it back, companies can unlock an influx of working capital without dealing with the limitations associated with traditional financing options. This type of financing is also appealing because it allows companies to retain control over their property. Additionally, because companies do not divest from their equipment and lease it back from the lender, the payments can be claimed on taxes and used as deductibles, allowing them to recuperate the costs of the financing.
Understanding the Potential Risks
Finally, companies should keep in mind that sale leaseback financing is a long-term commitment. This means businesses will need to plan for the future and have realistic expectations about their cash flow. Sale leasebacks can also become a burden if the company decides to move or relocate in the future since they’ll be responsible for any costs associated with the transition.
When considering sale leaseback financing, it’s important to weigh all the pros and cons before making a decision. Every business is different, so be sure to speak with an experienced financial advisor or real estate professional who can help you find the right solution for your company. If your business needs access to working capital, contact the team at Hemingway Financial Group today.