Common questions about equipment and real estate sale-leasebacks.
What is a sale-leaseback?
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A sale-leaseback is a transaction where a business sells an asset it owns — typically equipment or real estate — to a financing company and then immediately leases it back. The business retains full use of the asset while converting it into cash. The former owner becomes the lessee; the financing company becomes the lessor. Sale-leasebacks are used to unlock capital from owned assets without disrupting operations.
What assets can be used in a sale-leaseback ?
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Common sale-leaseback assets include: manufacturing and industrial equipment, commercial vehicles and fleets, medical and dental equipment, technology and IT infrastructure, commercial real estate, and restaurant and hospitality equipment. Generally, any asset with a meaningful residual value and an established secondary market can be sale-leased back. Alliance specializes in equipment sale-leasebacks from $25,000 to $10,000,000+.
How much cash can I unlock through a sale-leaseback?
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The advance amount in a sale-leaseback is based on the orderly liquidation value (OLV) of the asset — what it would realistically sell for in a secondary market. Lenders typically advance 80–100% of OLV. For newer equipment (under 3 years old), this can approach the original purchase price. For older equipment, a third-party appraisal determines current value. Alliance can arrange an indicative value assessment before you commit.
How is a sale-leaseback different from equipment financing?
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Equipment financing provides new capital to purchase new or used equipment. A sale-leaseback converts equity in equipment you already own into cash — no new purchase required. Sale-leaseback is the right choice when you own equipment free-and-clear (or with significant equity) and need liquidity without selling the asset permanently.
Do I lose ownership of my equipment in a sale-leaseback?
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Technically, yes — you transfer legal ownership to the lessor. However, you retain full operational control and use of the equipment throughout the lease term. At the end of the lease, you typically have the option to repurchase the equipment at fair market value or a fixed pre-agreed buyout price, renew the lease, or return the asset. Most Alliance sale-leaseback clients exercise their buyout option.
What are typical sale-leaseback lease terms and rates?
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Sale-leaseback lease terms typically range from 12 to 84 months, with monthly payments structured to fit your cash flow. Rates depend on asset type, condition, term, and lessee credit profile. Most equipment sale-leasebacks price in the range of 6–14% effective annual rate. Alliance presents a full payment schedule and total cost comparison before you sign.
Is a sale-leaseback treated as debt on my balance sheet?
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Under IFRS 16 (applicable to public companies and many private companies following IFRS), a sale-leaseback results in a right-of-use asset and lease liability on the balance sheet. However, the cash proceeds reduce debt elsewhere. For businesses following ASPE (Accounting Standards for Private Enterprises / US GAAP), treatment depends on lease classification. Alliance recommends discussing balance sheet treatment with your accountant before proceeding.
How quickly can a sale-leaseback be arranged?
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Most equipment sale-leasebacks through Alliance can be arranged in 5–15 business days from application to funding, depending on asset type and whether an appraisal is required. Real estate sale-leasebacks typically take 30–60 days due to title, survey, and legal requirements.
Who should consider a sale-leaseback?
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Sale-leaseback is ideal for: businesses that own equipment outright and need liquidity without taking on traditional debt; businesses that want to redeploy capital from idle assets into growth; companies in turnaround situations that need to strengthen their balance sheet; and businesses that want to reduce capital tied up in depreciating assets. If you own equipment with significant remaining value, a sale-leaseback is worth exploring before taking on additional unsecured debt.
