What is sale back finance, and how you can make it work for your business
Do you need to improve working capital or raise funds for your business? Sale back finance might be a solution for you.
When your company has outstanding debts or needs to raise capital to continue growing, why not make your existing equipment work harder for you? With a Naritas sale back equipment finance solution, SMEs can use their capital equipment to improve their working capital and access cash.
What is sale back finance?
In a sale back finance agreement, you sell unencumbered assets to a financier, and finance them back. You can choose to lease back the asset on a rental agreement or finance it on a secured loan. The difference between the two options relate to ownership, whereby on a rental agreement, the financier owns the asset and your repayments are made out of your operating expenses, whilst on a secured loan, the asset appears on your balance sheet (you own it) and the financier takes security over the asset for the term of the loan.
Both options give you full use of the equipment whilst you make regular monthly repayments over a period of years that suit your company’s cash flow requirements. Sale back finance typically works well with high value, slow depreciating equipment like heavy machinery, trucks and trailers or specialist equipment with a strong resale market. One of our panel lenders for example, Classic Funding Group, recently worked with a large-scale civil contracting company that needed to raise half a million dollars to pay development cost for a new project.
The customer ‘sold’ four of their dump trucks and one bulldozer back to Classic, and financed them on a secured loan for five years. This freed up hundreds of thousands of dollars which could be put towards the development costs, allowing the company to progress with their expansion plans. The best part? Classic turned around the entire process in eight days.
Where else would you use sale back finance solutions?
As well as using sale back finance for expansions, companies can use these solutions to free up capital for:
- Repaying debts, such as to the Australian Taxation Office or shareholders
- Replacing existing finance facilities
- Purchasing new property or land for a business expansion
Many businesses have assets that are not realising their full financial potential. By working with a trustworthy and efficient partner, you can boost cash flow and greatly increase your working capital in a matter of days. It’s a way to make the most of everything your company owns, and spur progress or growth whilst retaining full use of your crucial assets.
Need assistance with financing your business?
The team at Naritas are experts in delivering timely guidance & commercial finance approvals. We have over 100 lenders on our panel & a high quality team of dedicated commercial credit advisers to steer you efficiently through the approval process.