Sale-Leaseback: Turning Equipment You Already Own Into Working Capital
If the business owns trucks, machines or medical equipment outright, that equity can be borrowed against without selling anything you use. How a sale-leaseback works, what it costs, and when it beats an advance.
A business that has paid off its equipment is sitting on capital it cannot spend. A sale-leaseback turns that equity into cash: a lender buys the equipment from you at an agreed value, pays you the proceeds, and leases it back to you on a fixed schedule. You keep using it. At the end of the lease you buy it back, usually for a nominal amount.
What it costs
Because the lender holds title to a real asset, the pricing is closer to a term loan than to an advance. Terms run two to five years, payments are monthly, and the rate depends on the asset's age, resale market and your statements. Older or specialised equipment advances less of its value; late-model trucks and standard machinery advance more.
What qualifies
Titled or serialised assets with a resale market: commercial vehicles, construction and agricultural machinery, manufacturing equipment, medical and dental equipment, restaurant kitchens at scale. Computers, furniture and anything that loses most of its value on day one generally do not.
When it beats an advance
A sale-leaseback makes sense when the need is larger than a few months of deposits can carry, when the use of funds pays back over years rather than weeks, or when open advances are already eating the daily cash flow. Because the payment is monthly and the term is long, it can also be the instrument that consolidates several advances into one manageable payment, with the equipment as the reason a lender is willing to do it.
What to have ready
A list of the equipment with year, make, model, serial or VIN and a photo of each; proof you own it free of liens; and the usual three months of statements. A lender will value the assets from that list, often within a day, and the deal can close in one to two weeks.
The caution
You are giving up title until the lease ends. Read the buyback clause, the early-termination terms and what happens if a payment is missed. A well-structured sale-leaseback is one of the cheapest forms of capital available to an equipment-heavy business; a badly read one can cost you the equipment.
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