Businesses sometimes need access to extra capital for a number of reasons. There are times when unexpected expenses arise, and digging into financial reserves can place a strain on cash flow. Other times, extra working capital can help correct issues with day to day operations, such as meeting payroll, or covering time-sensitive costs. And there are times when opportunities arise, and having a little extra working capital is needed, without going through the process of taking out a full loan. In these cases, many business owners turn to leaseback financing.

What Is Leaseback Financing?

Business equipment has an intrinsic value. Instead of taking out loans, leaseback financing uses the value of your equipment to create a source of working capital. Unlike loans, the capital from leaseback financing does not have a designated purpose, so you can use it for anything you need. If you need to correct cash flow issues or jump on a fast moving business opportunity, leaseback financing is a great option when loans are not in the picture.

Leaseback Financing Is Not a Loan

Leaseback financing does not place any debt on the books. In a leaseback financing agreement, you equipment is “sold” for working capital. You still retain full use of the equipment, even after you receive financing. Afterwards, your business “leases” the equipment back through the financing agreement. The lease installments repay the financing. However, because the financial agreement is structured around a simple sale, it is not considered a loan, and therefore does not negatively impact credit ratings or place debt on the balance sheets.

How Much Is My Equipment Worth?

Leaseback financing takes a number of factors into consideration to figure out the amount of financing available. The condition of the equipment is a major factor. Obviously equipment in better condition will be worth more than equipment that is damaged or rusted. Newer models also make a big difference, especially in highly technical industries. Specialization also plays a big factor. Whether it is a medical practice, a construction company, a manufacturing facility, or anything in between, the more specialized the equipment, the higher the value, in most cases. 

Learn More About Leaseback Financing

If you are in need of fast working capital, but want to avoid taking on unnecessary debt, contact LMC Alternative Capital. We offer the most comprehensive leaseback financing program nationwide, and can arrange funding agreements that are fast and affordable.