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Sale and Leaseback – raise cash for assets you own

A sale and leaseback agreement is a popular way of freeing up cash which has been tied up by a capital purchase for use in the business

The capital asset is sold to a leasing company for an agreed price and rented back over an agreed period (usually between 3 and 5 years) so your business continues to use the asset but can also recover the capital paid for it

Any capital asset can be considered for a sale and leaseback agreement – the rule of thumb is that it has to be owned outright (not the subject of any finance agreement) and has to have a current market value

If the asset is under 6 months old we can normally raise the full original purchase value under the agreement, for older assets the funders will take a view on the amount to advance

The procedure is very straightforward, once the value has been agreed the sale and leaseback document is drawn up for signature, detailing the schedule of payments which are usually made monthly or quarterly over the agreed period

You then raise an invoice on the funder and will receive full payment as soon as the agreement goes live and the regular payments commence one month or 1 quarter later

At the end of the sale and leaseback agreement the asset still belongs to the leasing company who will normally transfer title back to you for a one-off token administration fee