Are you looking for the Equipment Sale leaseback lenders to finance your new business venture, acquire new equipment, or inject capital into your business using your existing collateral? If so, you may be considering a sale-leaseback agreement. With this type of arrangement, you sell your equipment to a lender and then lease it back from them. This can be a great way to get the funding you need without having to take out a traditional loan.
But how do you find the best equipment sale leaseback lenders? There are a few things you need to keep in mind when searching for a lender. In this blog post, we’ll give you some tips on how to find the best equipment sale leaseback lender for your needs. So if you’re ready to learn more about finding the best equipment sale leaseback lender, keep reading!
What is a sale-leaseback lender?
Equipment sale-leaseback lenders are a type of lender that provides financing to businesses by purchasing their equipment and leasing it back to them. This type of financing can be beneficial for businesses because it allows them to free up capital that can be used for other purposes, and it can also provide them with a more affordable way to acquire the equipment they need. As opposed to traditional bank financing, this type of lender will use the value of the collateral, as opposed to financial strength or credit scores.
The right lender has experience with your industry
When searching for the right equipment sale leaseback lenders, the way the lender values your existing equipment will be critically important. For example, if equipment sale leaseback lenders do not have experience in your particular industry, they may undervalue your equipment, resulting in a lower deal size.
It is also important to mention that a good majority of equipment sale leaseback lenders work mainly with brokers. A great equipment sale leaseback broker will have access to a wide variety of lenders to match your unique situation to the best program available.
Luckily, YellowIronLender.com can refer you to excellent brokers with longstanding relationships with equipment sale leaseback lenders. The best first step is to have your deal evaluated by submitting an asset list.
Expect a higher effective interest rate
Generally, the effective interest rate or lease payment amount on a transaction from an equipment sale and leaseback lender will be higher than a full document, credit-based transaction. As with any lending instrument, the rate is dictated by the risk of the transaction. Although the deal is secured by the collateral of the equipment, it is generally considered a higher risk due to decoupling the transaction from the credit history of the business and/or borrower. Business owners should not expect effective interest rates on lease payments to be anywhere near prime rates.
However, with the expected higher effective interest rate or lease payment, these transactions can be funded quickly and require little to no documentation – a huge benefit for certain businesses.
Review the terms of the lease agreement with your broker
The amount of the lease will be determined by the available lending collateral in all equipment and assets involved and will be used as the amounts in your lease. As mentioned above, that is why it is important to use an equipment sale leaseback lender who is familiar with your types of assets.
When you receive an equipment lease agreement, you should first read it over carefully to make sure you understand all the terms and conditions. If there are any terms that you do not understand, you should ask your broker to explain them to you.
This step is definitely where having an excellent broker will be beneficial to understanding your transaction and keeping things running smoothly. Your broker is a mutually beneficial party trying to find the best equipment sale leaseback lender for your unique situation.
Make the final decision
In summary, your broker will help you find the right equipment sale and leaseback lenders for your specific industry, deal size, and business requirements. The best place to start is to send a broker your asset list to discuss next steps.