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Sale and Leaseback Financing Transaction for Heavy Equipment Heavy Duty Trucks, Construction Equipment and Machinery and Equipment
by
J.M Casa
A sale and leaseback financing deal for assembly line equipment heavy duty trucks, construction equipment and machinery and equipment is where the company sells it free and clear assets and leases it back at the same time. These transactions can stretch anywhere from $50,000 to $6,000,000. This piece of writing will encompass the following types of industries and discuss its particulars:
Construction equipment, manufacturing equipment, production equipment, yellow iron, dump trucks and trailers, agricultural and farm equipment, and other heavy trucks
Many seasoned lenders have come up with many industries standards to make the available credit pretty much typical. The first area that the lender will take into account is the the value of the free and clear asset that is going to be sold and leased back. Each lender’s procedure is somewhat alike but they usually value the acquired asset somewhere between 50%-70% of the auction value. This auction value will come from trade publications and other standards in the industry for these individual assets.
Once the auction value of the asset and/or assets is established, the financial institution will look at the applicant’s credit. Some financial institutions will consider the credit immaterial as they spotlight on the auction value of the asset. Otherinstitutionswill acquire}the credit and grade them according. These institutionswill come up with a score and give the applicants different lending rates depending upon their credit and the asset involved.
Thefinancial institutionwill finance these bought assets anywhere from 24-85 months back to the applicant. Also, the lenderwill tender residual buyout clauses anywhere from 25% residual to fair market value of the asset at the end of the lease. This will maintain the applicant’s monthly payment as little as possible.
Sale and Leaseback Financing – What is required ? Usually, what is required from the applicant is:
Personal financial statements, a lease application, a review telling about the transaction and its particulars, and a comprehensive equipment list, identifying the assets to sold and leased back Obviously – bills of sale and title work will have to be performed by the lender.
The proceeds of these funds can be used for working capital, debt re-structuring, equipment acquisitions, and paying off judgements and other liens.
Non-bankable type transactions, home ownership isn’t required, and poor credit In conclusion, we propose you shop around for the best deal for yourself and understand all the facts of the transaction. Hopefully, this article about “Sales and Leaseback” financing assists you with your decision making.
In conclusion, a asset rich company with qualifying assets with poor credit and working capital and cash flow problems should consider this type of transaction.
Happy hunting for your financing
J.M Luna has over thirty years experience in the financing field. This includes accounting and taxes, leaseing, hard asset money and commercial lending..
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Sale and Leaseback Financing Transaction for Heavy Equipment Heavy Duty Trucks, Construction Equipment and Machinery and Equipment