When Time Waits For No Sale Leaseback Financing Might Be the Perfect Alternative to Cash Flow Replenishment ! Sale Leaseback Financing

Information on sale leaseback financing in Canada. The lease back option provides a solid cash flow alternative to working capital and cash flow replenishment


Sale leaseback financing
is a solid alternative for Canadian businesses that wish to refinance business assets, or real estate, with a view toward enhancing working capital or for generating capital for business needs.

In certain cases it simply might make sense for owners to cash flow some of their business assets for personal needs. But how does the owner/financial manager evaluate the lease back option? Let’s dig in.

While the term ‘ lease ‘ is inherent in our subject title we point out to clients that many of these types of transactions can also be accomplished via a bridge loan. Depending on the type and timeframe of the financial need the balance sheet could well reflect a ‘ bridge loan’ versus a lease. The ultimate gain, ‘ cash flow’, is still the same. Generally speaking a bridge loan is shorter term in nature while a ‘ lease ‘ often denotes a multi year payback arrangement at a fixed rate.

Clients of course are always asking us what the financing rates are for a lease back. We hate to on our ‘ lawyers cap ‘ and say , well ‘ one hand ..’ but the real answer here is that the rate on such a transaction boils down to the credit quality of the asset and the business, or a mix thereof.

As important as the ‘ rate’ is in any transaction it’s equally important to understand the legal terms and conditions of your transaction, as well as ensuring you and your accountant are on board relative to the tax and accounting treatment of the transaction. A quick example here to consider is that in some cases the sale of the asset to the lender or lessor might actually trigger a tax liability if the asset sold has a much higher price than it’s carried in your financials.

A very typical transaction these days is for owners and financial managers to consider the sale leaseback option for additional growth capital. If the business can’t secure that financing from traditional bank or commercial finance company sources the leaseback options becomes a solid solution.

In some cases it makes perfect sense to consider retiring existing debt that came at a higher interest rate with the proceeds of a sale leaseback transaction. We recently completed a transaction for clients that allowed the sale leaseback to retire debt that was incurred in a management buy out.

Properly structured the lease back or bridge loan strategy can ‘ fix up ‘ your balance sheet as it relates to key issues such as debt to equity or current ratios, as well as depreciation that was previously being taken on the asset as an expense.

If time can’t wait for your company’s needs for cash flow replenishment seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with a lease back option that makes sense from all points of view.

Author: Stan Prokop – 7 Park Avenue Financial :

Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :


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