The Corona crisis has us all firmly in its grip; not a day goes by without it being reported. Drastic and unprecedented restrictions in social life and suddenly occurring worst-case scenarios in one’s own company – no one is spared.
All areas of our lives are currently being significantly affected by the Corona pandemic. In addition to the effects on our social life, the pandemic is also massively affecting the economy in Germany and worldwide. Supply bottlenecks, for example, for electronic parts such as computer chips, triggered, among other things, by the port closures in China, raw material shortages in the semiconductor industry and the loss of important suppliers are causing long waiting times. Also in the furniture industry, the raw material shortage and missing workers in logistics are a problem.
Especially in times like these, when you spend so much more time at home than before, it is clear that the demand for new furniture and furnishings is increasing. The same applies to buying a bicycle; cycling was one of the few things that was still allowed during the lockdown, it is fun for the masses and almost everyone could afford it. These supply bottlenecks and thus the long waiting time for a longed-for product are straining everyone’s already frayed nerves.
Due to supply bottlenecks and raw material shortages, one must currently expect long waiting times for many products more often.
While consumers “only” have to wait longer for their new car and prices are certainly rising significantly, the situation is far more devastating in the commercial/trade sector. For some entrepreneurs, things are getting tighter and tighter. Many are afraid of insolvency simply because they cannot finish manufacturing their goods due to the delayed delivery of others and are therefore unable to supply their own customers. As a result, they are not generating any sales, but the ongoing costs such as salaries, rent and electricity etc. still have to be paid.
How do you get fresh capital? In this situation, you can of course try to negotiate with your bank. Another way is . Sale and Lease back, also called SLB, this type of financing can help very quickly in such a situation and is becoming increasingly popular. It is a purely object-based financing model. A valuable asset that is free from the rights of third parties (e.g. machine or property) is sold by the entrepreneur to the lessor and simultaneously leased back to the entrepreneur. This releases capital, which creates leeway in difficult times. The most important point, however, is that the machine remains in the company or the company in its premises. This means that production and work can continue without interruption.
Sale and Lease back offers many advantages and can help bridge difficult times.
SLB offers even more advantages in addition to releasing liquidity to bridge supply bottlenecks. Through the sale, the economic ownership passes to the lessor and the asset disappears from the balance sheet. If the liquidity gained as a result is used to reduce debt or repay loans, the balance sheet improves for the entrepreneur, as the balance sheet total decreases (= balance sheet reduction). This means that amounts are eliminated on the asset and liability sides of the balance sheet, but the equity ratio increases at the same time. Unlike the installments for a corporate loan, the leasing installments can usually be deducted from tax as operating expenses.
The Sale and Lease back contract can be individually and optimally tailored to the customer and his needs. You are flexible in determining the contract term, a possible residual value or in the area of the preferential right of repurchase.
Supply bottlenecks will be with us for quite some time; some even see Christmas presents in danger, but with SLB there is a light at the end of the tunnel for entrepreneurs who have hidden reserves in the form of, for example, machinery in production and want to convert them into more equity. So that they can master difficult situations in a short time and act successfully. (S. Adelhardt)
