What is a Sale/Leaseback?
The term ‘sale leaseback’ is a shortened term for ‘sale and leaseback’. In a sale leaseback transaction, the owner of an asset sells it to someone else, usually a finance company, then immediately leases the asset back from the buyer.
Is a Sale – Leaseback Right for You?
The biggest advantage of a sale leaseback is that it allows the owner of an asset to free up cash/capital. As with a regular lease, a sale leaseback gives you the ability to purchase equipment your business needs without using up your cash or line of credit.
The equipment needn’t move an inch during the process.
A sale leaseback can improve your balance sheet. By selling the asset, you put cash back into your company and instead have smaller recurring monthly payments over the course of the lease. This can benefit your cash flow and keep your other lines of credit open for inventory and other uses. You get basically all the same advantages as having put the equipment on a lease in the first place.