What is a Lease Buyback?
For almost every company, equipment is an aspect that cannot be avoided. Equipment is used in offices, retail stores, and heavier machinery in construction businesses. The equipment for construction is necessary to make profit, but oftentimes, companies may prefer to have the money used on equipment to be free, and available for other things. Equipment factoring is one of the most applicable options for these cases, and that’s where lease buyback comes in.
The Definition of a Lease Buyback:
Lease buybacks allow the company to leverage the value of the equipment already in their possession and recorded. The company then sells the equipment to a leasing company, who will pretty much immediately leases the property back to the business. This provides the business with a bit of extra financing to use towards the business, making it possible to expand or even open another location. Lease buybacks are available to any company utilizing equipment, and not exclusive to just those with large or expensive assets.
• Future Upgrades: After the lease buyback agreement is over, leasing companies will often offer the opportunity to lease updated equipment in the place of the older pieces. This is a chance to keep the business up do date and modern, so that it is ensured that all equipment is running at its full potential.
• Maintenance and Repair Responsibility: An appealing aspect of lease buyback deals is that all responsibility for repairs and upkeep of the machinery will be transferred to the leasing company. This can be especially helpful in a time of tight financing, as the businesses is not responsible for any issues the equipment may acquire.
• Finance Preservation: A lease buyback allows for companies to create a stable base, and save enough money to consider growth and the future. Lease buyback deals make it possible to preserve the cash your businesses has been saving, and grow the savings steadily.
• Tax Savings: For smaller companies, the benefits of lease buyback deals are many, but the savings it provides on taxes is especially beneficial. Generally, lease payments are recognized as a business expense, which means it is completely written off every year. This is advantageous, because it is usually much more than only being able to deduct upkeep and depreciation on the equipment.
If your business is in need of new equipment or better cash flow, consider lease buyback deals today. Equipment financing is a phenomenal way to expand your business with a strong base, and creating a steady flow of income.