The power of sale and leaseback when raising finance for your small business

If you're interested in sale and leaseback contracts then it should not be difficult to find an appropriate finance provider. There are lease options accessible for almost any equipment a company may possibly want starting from vehicles to plant & machinery. Even though it may not be immediately apparent, the finance provider giving the lease financing is in most cases not the same business that is selling you the asset. You can typically obtain a referral from the company selling the equipment to their favoured finance company.

Like all areas of commercial procurement you should try to source several quotes when choosing an equipment leasing supplier. You typically will get a quotations directly from the equipment retailer if the situation is uncomplicated. The costs charged by the recommended finance provider should be close to market rates. Always be realistic and realise that you may not get the most effective proposal for your situation. The solution is to get a minimum of one other quote and if possible multiple quotes from different leasing corporations as they will have completely different criteria between them that may lead to a stronger deal for you.

When seeking equipment leasing proposals it's suggested that you use an asset finance broker to do the research for you. This is typically a smart option given that an asset finance broker is a professional who devotes their working time making sure that they are aware of the numerous lease choices available and consequently which options should be most appropriate for you. Sometimes using an asset finance broker who specialises in your area can be the simplest solution to making sure that you obtain the best deal.

Asset finance can be viewed as a wide-ranging expression describing the varied methods that are used to enable the acquisition of equipment for a firm. In a few instances the assets are not really legally owned by the business because the finance provider keeps title to the equipment. The key purpose from the business owners point of view is that they have the utilization of the equipment in return for ongoing payments. In general what is relevant to a company is that they will utilise an asset, irrespective of whether they actually own it or not, to permit their firm to operate effectively and produce higher levels of profitability.

One form of asset finance is where a business enters into an Operating Lease. In this situation the equipment belongs to the finance provider who actually hires the asset to the business over an agreed timescale (usually one to 5 years). At the end of the fixed term the finance company will either sell the asset within the used market or lease it once more. This means that the lease costs can be kept low because the total asset value does not need to be recovered by the finance provider in the first term. At the end of the lease term the asset is either given back to the lessor or a further lease agreement could be agreed.

A conventional kind of asset finance is called Contract Hire. This is another kind of operating lease and is often adopted for acquiring vehicles. Most contract hire contracts include several possible service features such as maintenance, replacement during repair, management, etc. When contract hire is employed the finance provider owns the asset. The manner in which the rental payments are determined is based on a residual value of the asset after a predetermined timescale has terminated. This means that the price calculations incorporate a charge to recover the asset depreciation throughout the course of the hire timescale.

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It is logical to seek several quotes for sale and leaseback. You often will get a quote directly from the equipment vendor if the case is simple. The prices charged by the recommended finance provider should be close to market prices.

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