Lease buybacks Explained
One of the greatest assets to a business is often the most overlooked in times of need. What asset is that? Equipment. The value of a businesses equipment can often be leveraged in times of need and increase cash flow to the business by taking advantage of lease buybacks. What are they and in what ways can they benefit your business?
Lease buybacks allow a business owner to sell equipment he owns already to a leasing company for cash. The leasing company, in turn, leases the same equipment back to the original owner. This gives the business owner access to the equipment he needs for daily operation and also cash needed to expand or purchase new equipment, without affecting the businesses profits or going into debt. There are other major benefits from lease buybacks.
The business owner will no longer have to be concerned about the cost of maintenance and repair of the equipment. With the lease contract the responsibility of maintenance now falls to the leasing company. Leasing also opens opportunities for equipment upgrades. When the lease contract expires the leasing company will give the business the choice to renew with the existing equipment or take advantage of any upgraded models instead. This allows the business to have access to the most state of the art tools.
Business owners are also well aware of the issue of value depreciation of equipment, and dread tax time for fear of that lower value. That is no longer a concern with a lease buyback. The business can deduct the lease payments as a business expense, regardless of any depreciation in value. And the lease payments are easy to budget because they are fixed and regular. Lease buybacks also largely eliminate the need for advances from your lines of credit. If new equipment is needed, instead of worrying about a business loan or going into greater debt with an existing line of credit, the lease buyback would provide the capital needed to move forward.
There are many benefits and very few disadvantages to completing lease buybacks. If you are a business owner in need of more cash on hand, investigate your options to increase cash flow with buybacks and help your business grow. You will see greater return on investment, worry less about maintenance and repair and have upgrade options available when you want. It is a win-win situation for both the business owner and the leasing company.