Sale & Leaseback to unlock cash flow

Sale & Leaseback: A Smart Financing Solution for Australian Businesses

In today’s fast-paced business environment, maintaining strong cash flow is essential for growth and sustainability. One innovative financing option that’s gaining popularity among Australian businesses is the Sale and Leaseback solution. This method not only unlocks capital but also allows businesses to reinvest in operations, reduce debt, or pursue expansion opportunities.

What Is Sale & Leaseback?

A Sale and Leaseback is a financial strategy where a business sells an asset you already own —such as equipment, vehicles, or property—to a financial institution or investor, and then leases it back. This means the business remains in possession of the asset, while freeing up the capital tied up in it. You’ll continue to use the asset during the agreed lease period while making monthly rental payments.

The process is relatively straightforward:

• Sell the Asset: You sell the equipment you already own, vehicles, or property to a financial institution. You can keep using your equipment with no disruption and at the end of the lease if you want you can arrange it so you are the full owner again.

• Lease Agreement: You enter into a lease agreement for the same asset.

• Keep Using the Asset: Even though you’ve sold it, you continue using the asset for the duration of the lease.

Why Consider Sale & Leaseback for Your Business?

Here are a few key reasons why Australian businesses should consider Sale & Leaseback as a financing option:

1. Unlock Cash Flow
   When your capital is tied up in expensive assets, it can limit your ability to seize growth opportunities. Sale and Leaseback allows you to convert your assets into cash, giving you the liquidity needed to reinvest in other areas of the business such as new equipment, hiring staff, or entering new markets.

2. Debt Reduction
   Businesses can use the capital from a Sale & Leaseback to reduce existing debt. This can help improve your balance sheet and lower interest costs, allowing you to better manage your financial obligations.

3. Access to Capital Without New Loans
   Instead of taking out a new loan—which often requires high interest payments or stringent approval processes—Sale & Leaseback allows you to raise funds from the assets you already own. This can be a more flexible and accessible alternative to traditional financing methods.

4. Retain Asset Control
   Despite selling the asset, your business remains in possession of it through the lease agreement. This allows you to continue using the equipment, property, or vehicles without disruption to your operations.

5. Tax Benefits
   In many cases, lease payments are tax-deductible as operating expenses. This can create further financial efficiencies and help businesses reduce their tax burden, providing an additional incentive to consider this financing option.

6. Improved Cash Flow Predictability
   If you decided to go fixed monthly lease payments, Sale & Leaseback provides predictability in cash flow management. Unlike loan repayments, which may vary, the fixed lease terms allow you to plan your budget with greater certainty.

7. Possibility of Selling Above Market Value
   In some instances, businesses may receive more than the asset’s current market value when selling it through a Sale & Leaseback arrangement. This can provide an additional cash boost, which can be used to reinvest in the business.

Who Can Benefit From Sale & Leaseback?

This solution is ideal for a variety of businesses in Australia, including those in manufacturing, construction, logistics, retail, and even service-based industries. Whether you’re a small business looking to boost cash flow or a large company seeking to finance growth, Sale & Leaseback offers a flexible alternative to traditional loans or asset liquidation.