Sale and Leaseback

• Sale and Leaseback

  • The business sells assets such as machinery to a finance company and then lease them back from the company.
• Advantages:

  Selling the asset can generate large amounts of capital for the business.
• Advantages:

  Business is no longer responsible for repairs and maintenance of the equipment.
• Disadvantages:

  Business assets are reduced, which make it difficult to secure future finance.
• Disadvantages:

  Renting can turn out more expensive than purchasing.