If you’re a business owner, you understand the importance of having capital to keep your business running. There are times when you need extra capital and you may not necessarily want to get a traditional business loan. Taking advantage of leaseback financing is a great way to streamline your business assets like the building your organization uses in exchange for extra cash. Here are some of the benefits of using leaseback financing for your business.
Increased Value
Unlike a typical mortgage, a leaseback can be approved for up to 100% of the appraisal value, which increases the real estate value of the property. It’s often or this reason that business owners participate in this type of financing.
Maintain Property Control
In most cases, even though you’re technically leasing the building, you will still be responsible or any taxes and insurance for the property. This gives you some leverage over the property along with a certain amount of control that a typical building tenant wouldn’t have. It also affords your business certain tax benefits since you’re still responsible for the taxes. Some find that this type of financing has greater tax advantages than outright ownership because lessees are able to write off their total lease payment rather than just interest.
Flexible Lease Terms
Since in leaseback financing you are leasing back the property you sell, you have a bit of flexibility when it comes to the terms of your lease. So, if you plan to expand in the near future you may decide that a shorter lease term is best for your business, or if you don’t want to uproot your business, a lease running between ten and twenty years is fairly common. You may even be able to negotiate other terms into your lease like renovations, or repairs that you otherwise would have had to pay for as the building’s owner.
Great Alternative to Traditional Financing
Leasebacks are a great alternative to traditional financing because you can often save on the appraisal fees and closing costs that come with a traditional loan and they’re also much faster to process from start to finish. They may even offer lower interest rates than your current mortgage which means more money in your bottom line for other projects, equipment or upgrades.
There are numerous benefits to leaseback financing that you should consider if you’re looking to free up capital, maximize your tax benefits and increase the property value of your business. When properly utilized, this type of financing can be a smart business decision that allow you to expand and grow.