Equipment Financing Jobs Chicgao Sale Leaseback
An equipment financing jobs chicgao sale leaseback financing on the equipment and machinery a firm owns is often the fastest way for a business to raise working capital or pay down its debt.
There are three main components to equipment financing jobs chicgao sale leaseback financing. You sell your equipment to a finance company (The Lessor), which will lease it back to you (The Lessee) without interruption for a fixed monthly payment (The Rent). The amount of the advance will be determined by your financial status, credit score, and collateral.
Increasing liquidity, optimizing cash flow, and improving balance sheet presentation are all potential benefits of equipment sale leasebacks. Leveraging your current assets for growth or reorganization is a strategic way to acquire capital for a business that needs flexibility in financial matters.
There are dozens of companies we work with who may not be familiar with how sale-leaseback financing works or completely understand what it means.
Regardless of your situation, we can structure a solution to fit your needs and simplify the process.
What is an equipment financing jobs Chicago sale-leaseback?
Equipment sale-leaseback, also known as an equipment sale and leaseback, is an arrangement in which a company will sell its currently owned essential use equipment and machinery to an investor (lessor) and immediately lease (rent) the equipment and machinery back for a specified period of time following the sale. Equipment and machinery will continue to be used without interruption, but the company (lessor) no longer owns them.
The FASB (Financial Accounting Standards Board) states that a sale-leaseback transaction involving real estate, including real estate with equipment, must qualify as a sale under FASB Statement No. 66, Accounting for Sales of Real Estate, as amended by this Statement before it is appropriate for the seller-lessee to account for the transaction as a sale. The transaction should be accounted for under the deposit method or as a financing if it does not qualify as a sale under Statement 66.
How does an equipment financing jobs chicgao sale leaseback work?
An equipment sale leaseback is a straightforward financing agreement in which a company that now owns essential business equipment and machinery decides to sell the assets to an investor and in return enters into a lease agreement to make rental payments for a fixed period of time. During the term of the lease, the current owner of the equipment will become the Lessee and the investor the Lessor.
In response to a frequent question, we decided to break down an equipment leaseback into the normal steps.
Step 1 – Discovery:
Come on, let’s chat, get to know one another, and build a relationship. We might ask one another these questions during our first conversation .
- What are the company’s short and long term financing goals/needs?
- In what financial position does the company find itself at the present time?
- Are you looking for a short term lease (bridge financing) or a long term lease agreement?
- When did your assets become yours? If so, at what price?
- Does the equipment and machinery have a lien or are they free and clear?
- Would you prefer off-balance sheet financing (Operating Lease) or debt financing (Capital Lease)?
Step 2 – Proposal Agreement:
Having jointly determined which sale leaseback solution is best suited for your company, we will issue a proposal detailing the general terms of the transaction. As soon as both parties accept the proposal, the due diligence process will begin.
Step 3 – Equipment Appraisal:
In order to determine the assets Fair Market Value (FMV), Orderly Liquidation Value (OLV) and Forced Liquidation Value (FLV), an independent third party appraisal will be ordered on your behalf, for which you will be charged upfront. After the appraisal is completed, a copy will be provided to you. It usually takes 3 to 5 days to complete an appraisal, depending on the number of locations and assets.
Using what value do you base the advance on? The answer to this question depends on a few factors… If your company has a bankable credit rating and the equipment was acquired within the last few months, Fair Market Value may be possible. Most other companies use the Forced Liquidation Value (FLV).
Step 4 – Closing Documentation:
Your investor will finalize the closing documents and send them to you for legal review and signature. Funding can usually take place the same day as the investor receives the original signed documents.
Depending on how quickly or slowly you wish to move, the entire process can take 10 days to 3 weeks
Companies That Do Equipment Sale Leasebacks
Banks
Since the financial collapse of 2008, banks have been regulated to death. Due to this, small businesses and mid-sized companies have a hard time obtaining financing from a bank. Banks traditionally prefer NEW equipment acquired within the last 90 days over USED equipment acquired over the past few years. It is therefore nearly impossible to obtain an equipment sale leaseback for used equipment, which is commonly the case, unless your credit is exceptional.
Independents
The equipment sale leaseback market is generally where you will find the most competitive solution for your business. Why? Simple – Independent finance companies typically do not have as many regulations imposed upon them as banks, and are therefore able to customize a financing solution that is most suitable for your needs. Although they charge higher interest rates than banks, they excel in creative structuring and can close your deal in a few weeks.
So how do I know which one to chose?
We recommend to our clients that they first reach out to their existing bank relationship and examine their options. Relationships are important to us… If they can’t help, contact us and we’ll help facilitate the financing with our independent and private investment groups.
In the event that your company is considering completing the leaseback process for equipment, we can assist and work across all industries and equipment types.
