Quick answer: Refinancing or a sale-leaseback may release equity from eligible business equipment, subject to valuation, existing liens and the business’s repayment capacity. Compare net cash after payouts and fees with the full replacement payment schedule and any change in ownership or security.
Why businesses use sale-leaseback
A sale-leaseback converts owned equipment into cash today while you keep using it under a lease. For many Canadian SMEs, it’s a faster, more flexible way to fund growth than stretching a bank line or selling assets outright. Explore the structure here: Refinancing & Sale-Leaseback.
Core advantages
- Immediate liquidity without downtime
Convert fair-market value into working capital and continue operating the same equipment. Model net proceeds and payments with the calculator. - Lower monthly payments vs. a straight loan
Because leases can include a residual/buyout, the monthly obligation is often lighter than an equivalent fully-amortizing equipment loan. See equipment leases. - Preserve bank capacity
Raise cash without consuming bank LOC headroom. Keep your line of credit free for payroll, fuel, or materials. - Speed and structuring flexibility
Approvals and fundings are typically quicker and can be tailored (term, residual, seasonal payments), especially for asset-heavy firms in transportation and construction. - Potential tax treatment benefits
Depending on structure, lease payments may be expensed; ownership paths enable depreciation. Always confirm with your accountant, then model both outcomes in the calculator. - Consolidate liens and clean up titles
Close with existing lien payouts packaged inside the transaction, simplifying your capital stack. If you need even more runway, blend with asset-based lending or a working capital loan.
Quick comparison
| Feature | Sale-Leaseback | Equipment Loan |
|---|---|---|
| Cash today | High (advance on FMV) | None (already own the asset) |
| Monthly payment | Often lower (residual) | Higher (fully amortizing) |
| Ownership during term | Lessor holds title | Borrower holds title (lien) |
| Use of bank LOC | Preserved | Unaffected, but no new cash |
| End-of-term options | Buyout, extend, or upgrade | Own free and clear |
BDC’s equipment-financing guide emphasizes the complete financing structure when comparing offers.
“Don’t focus only on interest rates”
For the equipment decision discussed here, compare the amount financed, payment schedule, collateral and remaining obligations alongside the quoted rate.
Best-fit situations
- You own equipment with clear resale value and need cash quickly.
- You prefer lower payments now with a known buyout later.
- You want to keep bank lines open for operating needs.
- You’re planning a scheduled upgrade at term-end.
Short case example
A GTA hauler owned three tractors outright but needed cash for new contracts. Mehmi structured a sale-leaseback, paid out a small lien, and delivered net proceeds for onboarding drivers and fuel floats. With a 10% buyout and 60-month term, payments fit cash flow; the fleet kept running and revenue expanded. If you’re replacing units, remember we also sell equipment directly—browse Inventory.
FAQ
Is a sale-leaseback cheaper than refinancing?
Not always. It’s usually more flexible and can lower monthly payments via residuals. Price it against business refinancing.
Can I finance fees and taxes?
Often yes, which preserves cash. Model both ways with the calculator.
What assets qualify?
Mainstream, liquid equipment typically advances best. Check Eligible Equipment.
What if I need even more liquidity?
Pair the leaseback with asset-based lending on AR/inventory or a working capital loan.
How do payments compare to a loan?
Leasebacks often run lower monthly due to a buyout; loans build equity each payment. Compare in minutes with the calculator.
Can startups use sale-leaseback?
If you already own assets, yes. If not, consider equipment loans or leases for acquisition.
Ready to run the numbers? Use the calculator and feel free to contact our credit analysts via Contact Us for a tailored proposal.
Are you looking for a truck? Look at our used inventory.
Authoritative references
- Innovation, Science and Economic Development Canada — Canada Small Business Financing Program:
The Canada Small Business Financing Program makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders.
Program eligibility, lender criteria, tax treatment, and product terms can change. Verify current official guidance and the final financing documents before making a decision.