Working Capital, Where is it in 2008? Try an Equipment Sale - Leaseback to Get Working Capital
It's true, a business type working capital loan is getting harder and harder to come by amidst the current economic climate. What's a business owner to do? Well, there are a few options outside of an unsecured working capital loan. The unsecured loans are still available, but basically only to businesses that don't really need it or can do without it. You know, they are well established and have been in business for years, the owner/owners have excellent personal credit, they've already established business credit & have a good rating with the Dun & Bradstreet, they have money in their business account, etc. In essence, they can do with or without a cash infusion. One way newer businesses or business owner's with poor credit can get working capital is to do a sale-leaseback.
A sale and leaseback is basically as follows: It's an arrangement where business equipment is purchased by a lessor from the company owning and using it. At this point, the lessor becomes the owner and leases it back to the original owner and the original owner continues to use the equipment. You make lease payments to buy back equipment you once owned outright. Don't forget to ask your cpa about any tax benefits available to you particularly in a sale-leaseback situation. This is a fast and easy way to get your hands on some working capital. Your payments will be the lowest if your credit is still good, but there are sale-leaseback options for even the lowest of credit scores (under 500 is still possible).
This can be excellent for construction companies that battle with a winter slowdown (or a halt in some snowy areas). You know the game; you just get going in the spring, you really get cranking in the summer, you pay down some of the credit cards, you set a little money aside for the inevitable winter, you crank it out as long as you can through the fall, and then like time was standing still-winter is back. At first it presents a relief from constant 10-14 hour days. You've got that money set aside. You're cool. Then, here comes good ol' saint Nick. Oh yeah, Christmas and gifts for everyone. You slowly drain the account and you start to charge up the credit cards to preserve cash. You're still in decent shape, but the real work is still another two to three months away. All of the sudden the snow showers are replaced by spring showers. You can work again, but you're short on the cash you need to get that first job started. It's frustrating, but that's where a sale-leaseback can really come in handy. It helps to get that money ball rolling again.
Granted, the cycle will start again. That's easy enough to predict. When it does, do your best to plan ahead and make sure that you set yourself up so that when spring comes, you can crank out all the jobs you have lined up. If you're not set up financially like you'd like to be and you own some equipment with no liens or very little relative to the current auction value, try a sale-leaseback. The transactions can get done pretty quickly and with a relatively small amount of paperwork.
About Vitality Finance Group
For all of your equipment financing needs or to pursue a sale-leaseback to get some capital, contact us or apply online at (877) 834-3247 or http://www.VitalityFinanceGroup.com
If your credit needs to be cleaned up, check out the following website. A do-it-yourself approach may be best. It's easy with the right tools and it's a heck of a lot cheaper than a credit repair agency. http://www.credit-repair-guide-review.vfgfair.com