Lease buybacks allow a business owner to sell equipment he owns already to a leasing company for cash. The leasing company, in turn, leases the same equipment back to the original owner. This gives the business owner access to the equipment he needs for daily operation and also cash needed to expand or purchase new equipment, without affecting the businesses profits or going into debt. There are other major benefits from lease buybacks.
The business owner will no longer have to be concerned about the cost of maintenance and repair of the equipment. With the lease contract, the responsibility of maintenance now falls to the leasing company. Leasing also opens opportunities for equipment upgrades. When the lease contract expires the leasing company will give the business the choice to renew with the existing equipment or take advantage of any upgraded models instead. This allows the business to have access to the most state of the art tools.
After the lease buyback agreement is over, leasing companies will often offer the opportunity to lease updated equipment in the place of the older pieces. This is a chance to keep the business up to date and modern so that it is ensured that all equipment is running at its full potential.
An appealing aspect of lease buyback deals is that all responsibility for repairs and upkeep of the machinery will be transferred to the leasing company. This can be especially helpful in a time of tight financing, as the business is not responsible for any issues the equipment may acquire.
A lease buyback allows companies to create a stable base, and save enough money to consider growth and the future. Lease buyback deals make it possible to preserve the cash your businesses have been saving, and grow the savings steadily.
For smaller companies, the benefits of lease buyback deals are many, but the savings it provides on taxes is especially beneficial. Generally, lease payments are recognized as a business expense, which means it is completely written off every year. This is advantageous because it is usually much more than only being able to deduct upkeep and depreciation on the equipment.
Take maintenance and repair responsibility.
Tax savings.
Helps you with future upgrades.