Raising the capital for a major investment like the expansion of your business or the purchase of new equipment can be difficult, but it does not have to be. If you understand all your options, you can usually find some way to combine accessible financial tools, your current assets, and your cash reserves to get the equipment or extra staff you need. When you own older machines outright, one of your most useful options is the equipment leasing buyback.

What Is a Buyback Lease?

This unique product is a combined sale and lease deal that gets you to access to capital while also keeping your old machines in the shop for a little longer. An investor buys the equipment from you and simultaneously negotiates the lease terms for your new lease to keep it in the shop. Once the lease term is over, the new owner handles removal and has the right to resell or release the equipment to another party. It is an ideal way to manage staged upgrades and other equipment expansion plans.

What Equipment Qualifies for a Buyback?

For the buyback to appeal to the investor, your equipment needs to carry a significant value by virtue of having a fair amount of useful life left. Machines like CNC mills are a great choice because they often last decades when they are properly maintained, whereas laptops or mobile devices would be unlikely to qualify because they last only a couple of years before becoming obsolete.

Negotiating Your Equipment Leasing Agreement

Since you own the equipment that you wish to lease, you have a lot of power in the negotiation of both the sale and lease agreement, but there are limits to what you can ask. The deal has to be balanced for the investor as well. You can expect more latitude in terms of lease terms and costs than you would expect from other types of lease agreements, though.

The key is to make your needs clear and to allow for the investor’s exit strategy. For example, if your lease runs out the life expectancy of the equipment then it also needs to wind up recouping the whole cost of the purchase for the investor. As long as you are reasonable about those considerations, you can basically pick and choose the length of the lease and the monthly payment to suit your business. There are very few other ways to raise capital without debt, so take some time to consider a buyback lease today.