Lease Buybacks Explained
From time to time businesses just need to boost their cash flow and a small loan or line of credit is not a viable option. Even if businesses aren’t necessarily be in a financial bind but would like to free up some capital, leveraging already purchased business equipment is a very good way to free up money without going into debt. This allows businesses the ability invest in other opportunities or use the money to plan and prepare for future needs.
Lease buybacks allows businesses who own equipment to sell said equipment to leasing companies for cash. The leasing company then leases the same equipment back to the original owner, charging them a monthly fee to use the equipment. The original owner not only receives the cash from the sale, but also still maintains access to the equipment for professional use. This method allows businesses to sell equipment and get cash without interrupting their daily day-to-day operations. The original owner still has access to the equipment and all of it’s features.
However, under lease buyback agreements, the original owner downs’t have to worry about maintaining or repairing the equipment and when the lease expires, they have the option to renew the lease or upgrade to a newer model. This allows businesses to stay current and with the most up-to-date model. Lease payments are considered a business expense regardless of the value of the equipment and the payments are fixed, regular and capable of adding to any company budget or accounting software.
If you need cash immediately and do not want to give away equity and control in your company to free up your cash flow, leasebacks are a fantastic idea. Remember, buying equipment and machines for your business are investments, make sure you get the most out of your investment.