EQUIPMENT
SALE LEASEBACK

Leverage your existing equipment assets and free up liquidity
for working capital purposes.

WHAT IS AN EQUIPMENT SALE LEASEBACK?

An equipment sales leaseback is a financing structure where a company sells an asset typically to an equipment lender and then leases it back from the buyer. This financing structure allows the seller to continue using the equipment by making lease payments to the lessor according to the terms of the lease agreement. One benefit of a sales leaseback is that the seller receives a lump sum of working capital that can be reinvested in the business. The funds can be used to pay down debts or improve cash flow without losing the use of the equipment. This is advantageous in private equity equipment financing, as it allows private equity-owned companies to optimize their capital structure and helps strengthen the portfolio company’s balance sheet.

ACCESSING WORKING CAPITAL THROUGH A SALE LEASEBACK

Leveraging equipment for working capital through a sale leaseback begins with the lender appraising the equipment to determine its fair market value. Next, the financing structure’s tenor, payment schedule, and interest rate are discussed and finalized. The current asset owner then sells the equipment to the lessor and, in return, receives a lump sum of capital. Immediately after the sale, the asset is leased back under the specified terms, allowing continued, uninterrupted use of the equipment.

The working capital obtained from an equipment sale leaseback can be used to reinvest back into the portfolio company, pay down debt, or enhance cash flow.

CHOOSE WINGSPIRE EQUIPMENT FINANCE

We make the process of leveraging existing equipment into cash simple and hassle-free.



LESS RESTRICTIVE THAN TRADITIONAL LENDERS

There are no corporate guarantees, blanket liens, or financial covenants required.



INDUSTRY AND EQUIPMENT AGNOSTIC

We provide financing for diverse industries and can leverage all types of equipment.



TAILORED END OF LEASE OPTIONS

We offer a variety of flexible end of lease options to fit your specific business needs.

BORROWER PROFILE:

TRANSACTION SIZE

$3MM-$50MM+

CREDIT PROFILE

CCC+ to BB-

ANNUAL REVENUE

$100MM+

MINIMUM EBITDA

$10MM

THE ADVANTAGES OF A SALE-LEASBACK

Maximize liquidity and maintain operational efficiency with the benefits of an equipment sale-leaseback.

IMMEDIATE ACCESS TO CAPITAL

The transaction provides a lump sum of cash that can be used for new investment opportunities or to payoff debt that have higher costs.

ABILITY TO MONETIZE EQUIPMENT

Gives you the power to leverage existing equipment assets and quickly turn their value into working capital for the business.

IMPROVE FINANCIAL RATIOS

The lease structure can enhance your business’s financial ratios by strengthening cash flow and improving liquidity.

CONTINUAL USE OF THE ASSET

Allows you to unlock capital while retaining use of the  equipment, ensuring operational continuity without the need for new investments.

END OF TERM OPTIONS FOR A SALE LEASEBACK

At the end of the equipment sales-leaseback term, you may have several end-of-term options to consider, depending on how the sales leaseback transaction was initially structured. A sales leaseback typically involves a long-term lease, giving you time to decide how to proceed when the lease concludes. You can also typically negotiate with the lessor to incorporate an early buyout option in the agreement. This gives you the ability to repurchase the equipment at a predetermined fixed price before the lease ends.

Here are the typical end-of-term options for an equipment sale leaseback:

Renew the Lease: Work with your lender to extend the lease term and continue to make payments.

Return the Equipment: Return the asset to your finance lender with no further obligations.

Purchase the Equipment: Negotiate a purchase price and buy the equipment back.

HOW DOES A SALE-LEASEBACK DIFFER FROM A TERM LOAN?

In a sales leaseback, the asset is sold to a buyer and then leased back, allowing the business to continue using the asset without ownership. A term loan uses the asset as collateral without transferring ownership. Term loans also usually come with financial covenants, requiring the borrower to maintain certain financial ratios. Sales leasebacks typically do not have such covenants. Additionally, a sales leaseback provides immediate capital from the sale of the asset, whereas a term loan provides capital through borrowing, subject to repayment terms and interest.

PARTNER WITH THE RIGHT FINANCE LENDER

Wingspire Equipment Finance is a leading provider of equipment financing solutions, including sales leaseback transactions. As a non-bank financial solutions provider, we boast a team with deep expertise in complex equipment finance transactions. Our combination of extensive experience, carefully crafted finance solutions, and the flexibility to work with diverse credit profiles, positions us as the ideal partner for private equity-owned companies exploring an equipment sales leaseback.