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Sale & Lease Back

Turning hidden reserves into equity thanks to a targeted sale & lease back strategy
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Sale and lease back: the modern form of financing is gaining popularity

Sale & lease back is a form of financing in which a company sells assets (e.g. vehicles, machinery, property or land) to a leasing company and then immediately leases them back at a predetermined interest rate (usually 7 to 14 per cent p.a.). As a result, the leasing company receives liquidity without any restrictions on its operating business, as the leased assets never physically leave the company. At the end of the leasing contract (usually 48 months), the company has the option of buying the goods back from the leasing company.

There are three factors that have an influence on the repurchase price:

  • The wear and tear of the goods (calculated using the depreciation table)

  • The interest rate during the lease term

  • The customer's wish

A higher monthly leasing instalment usually leads to a lower repurchase price (vice versa). The type of leased product also has a major influence: a computer has a shorter useful life and a higher depreciation rate than a car - consequently, the repurchase price for the computer is also lower. In recent years, this form of financing has gained immense popularity, especially in the SME sector.

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Sale and Lease Back: Convert your fixed assets into directly available capital

Sale-and-lease-back is one of the most modern forms of leasing. Financing makes it possible to capitalise hidden reserves in the company and thus increase your liquidity.

Real estate, machinery, vehicle fleets and more - this fixed capital is important for companies, but not flexibly available when quick liquidity is required. Sale-and-lease-back changes that. By selling hidden reserves and then leasing them back directly, you quickly have essential equity at your disposal. The advantages of this form of financing include low risk and tax benefits. Small and medium-sized companies in particular like to utilise this form of financing.

Would you like to benefit from the advantages of sale-and-lease-back financing? Then we will be happy to advise you: we will compare the offers of various renowned providers and find the best solution for you.

The sale and lease back process in detail

When a company needs money, the classic option is often a bank loan. Sale-and-lease-back is an alternative form of financing. As the name sale-and-lease-back suggests, this form of financing consists of two components: Sale and lease.

1
Sale

As an alternative to a bank loan, a company can sell its hidden reserves, i.e. its fixed assets. These can be tangible assets such as property, machinery or the vehicle fleet as well as intangible assets such as patents. In order to increase the company's liquidity, such assets are sold to a sale-and-lease-back provider and immediately leased back.
If it is a machine, for example, it may already be fully or partially depreciated. When a hidden reserve is sold, the company's fixed assets decrease and the equity ratio increases at the same time. The company has increased its liquidity many times over.

2
Leasing

The sale of the goods is directly linked to the subsequent lease. They remain in the seller's possession without interruption and can be used as before. The ongoing leasing costs can be claimed for tax purposes. As an operating expense, they reduce the profit proportionately and therefore also the tax burden.
The sale-and-lease-back method is therefore not only a particularly low-risk and flexible form of financing, but is also easy for companies to implement in practice. However, the respective conditions and key points of the financing can vary between providers.

Sale & Lease Back for companies

"By providing customised financing, we give companies of all sizes access to fast and uncomplicated financing."

Do you have any questions? Contact us and we will be happy to help you personally.


Joachim Haedke
Joachim Haedke
Managing Partner


Sale and lease back - examples from corporate practice

For many companies looking into the subject of sale and lease back, this form of financing initially seems abstract. However, it can be used in a variety of ways and is therefore suitable for a wide range of companies.

Modernes Bürogebäude
Real Estate Sale and Lease Back

Owning property usually ties up an enormous amount of equity. If a cost-intensive expansion is planned or the company is in financial difficulties, such a capital reserve can make all the difference. Sale-and-lease-back financing makes it possible to utilise these reserves. Properties that are eligible for this form of financing include classic office buildings, warehouses and production halls as well as specialised laboratories. Whether it is a new build or a property that has been in use for many years - the decisive factor is above all the structural condition.

Volume
from 7-8 million euros
Term
individual

These are just a few examples of areas in which companies can benefit economically from sale-and-lease-back financing. With our support, you can find out how you can best utilise this form of financing for you and your company.

The advantages of Sale and Lease Back at a glance

  • Rapid increase in liquidity

    The sale and the leasing directly associated with it quickly turn hidden reserves into equity that you can use flexibly.

  • Improving the balance sheet

    Minimising your company's outstanding receivables reduces the assets/liabilities on your balance sheet.

  • Outsourcing of the dunning and accounting process

    In the course of invoice sales, you can also outsource dunning and accounting so that you can concentrate fully on your operational business.

  • Maximising planning security

    When the invoice is sold, the invoice default risk is also transferred to the factor. You therefore gain planning security and minimise the risk of spontaneous liquidity losses.

Sale and Lease Back FAQ

Sale and lease back is an increasingly popular financing model for good reason. Before you decide in favour of this type of financing, however, you should obtain comprehensive information. We have summarised some of the most important points for you below:

Sale and lease back is a financing option in which a company sells an asset, such as property or machinery, and simultaneously leases it back. As a result, the company receives an immediate inflow of capital and continues to use the asset by making lease payments.

Depending on the specific industry, there are different ways for companies to utilise sale-and-lease-back financing profitably. It is suitable for the following sectors, for example:

  • Sale lease back for tradesmen

  • Sale lease back for small businesses

  • Sale Lease back for mechanical engineering

  • Sale lease back for the IT and telecommunications industry

  • Sale lease back in e-commerce

  • Sale lease back for haulage companies

  • Sale Lease back for printing companies

  • Sale Lease back for publishers

Sale and Lease Back offers companies several advantages:

  • It allows them to free up capital from their assets to invest in other business activities.

  • It improves liquidity and cash flow, as comparatively low rental payments are incurred instead of high purchase prices.

  • It also allows flexibility as the company can continue to utilise the assets without having to own them.

  • It can also offer balance sheet benefits by reducing debt and increasing equity.

Finanzierung.com finds the most favourable sale and lease back provider for you

Are you already convinced of the advantages of sale-and-lease-back financing or would you like a personal discussion? Our financing experts will be happy to take the time for your enquiry - free of charge and without obligation. Get in touch with us!

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