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Step-by-step method to calculate a sale-leaseback in Canada: FMV, LTV, net proceeds, payment, residuals, taxes, and ROI. Use our calculator.
A sale-leaseback turns owned equipment into cash without losing its use. You sell the asset to a financing partner and immediately lease it back. You unlock working capital today and repay over time through lease payments, with a buyout option at term-end.
Mehmi Financial Group structures Refinancing & Sale-Leaseback deals for Canadian SMEs across transportation, construction, manufacturing, hospitality, agriculture, and more. We also sell equipment directly from our in-house inventory if you’re upgrading or replacing gear.
Helpful links as you prep numbers:
Gross advance = FMV × LTV
Net proceeds = Gross advance − existing lien payout − fees
Fees vary by file (origination/admin, PPSA/registration, appraisal where applicable). Taxes may be financed or paid up front depending on structure. If your equipment has a lien, that lien is typically paid out at closing.
Two common structures exist. Confirm which one your funding partner uses before you model:
Payment formula (balloon/residual lease):
Monthly Payment = (C−R(1+i)n) i1−(1+i)−n\big(C - \dfrac{R}{(1+i)^n}\big)\;\dfrac{i}{1-(1+i)^{-n}}
Where:
C = capitalized cost (FMV or advanced amount)
R = residual/buyout at term-end
i = monthly rate (APR ÷ 12)
n = number of months
You can test scenarios instantly with our Calculator, then have our team quote a firm approval.
Assumptions
| Item | Calculation | Amount (CAD) |
|---|---|---|
| Fair Market Value (FMV) | — | $220,000 |
| Gross Advance (75% LTV) | 220,000 × 0.75 | $165,000 |
| Origination (2% of advance) | 165,000 × 0.02 | −$3,300 |
| Doc / Registration | Fixed | −$595 |
| Existing Lien Payout | Provided by lender at closing | −$60,000 |
| Estimated Net Proceeds | 165,000 − 3,300 − 595 − 60,000 | $101,105 |
| Scenario | Cap Cost (C) | Residual (R) | Term (n) | Rate (APR) | Indicative Monthly | Total Paid + Residual* |
|---|---|---|---|---|---|---|
| Full-Capitalized Lease | $220,000 | $22,000 (10% FMV) | 60 | 11% | ≈ $4,506.67 | ≈ $292,400 |
| LTV-Principal Lease (residual on cap) | $165,000 | $16,500 (10% of cap) | 60 | 11% | ≈ $3,380.00 | ≈ $219,300 |
| LTV-Principal Lease (residual on FMV) | $165,000 | $22,000 (10% FMV) | 60 | 11% | ≈ $3,310.83 | ≈ $220,650 |
*Totals exclude taxes/fees and are for structure-to-structure comparison only.
Takeaway: the structure you choose changes both cash today and payment shape. Full-capitalized leases often show higher payments but may mirror equipment’s full cost; LTV-principal leases lower payments but cap the financed base.
If your assets are already leveraged or if you mainly need revolving flexibility, compare with Business Refinancing or a Line of Credit. For a simple working-capital top-up, consider a Working Capital Loan.
Leases and sale-leasebacks can be treated differently for tax and accounting depending on buyout value, term, and structure. Many Canadian SMEs expense lease payments; ownership paths may involve depreciation and interest. Confirm treatment with your accountant and model both cash and after-tax impact using our Calculator.
An earthworks contractor owned two loaders and a dozer. Growth opportunities required cash for mobilization and crews before receivables hit.
How do I pick the right residual?
Choose a residual that matches expected resale value and your buyout plan. Common SME choices are $10 buyout or ~10% of cap cost.
What LTV can I expect?
It depends on asset type, age, condition, and marketability. Older/specialized assets often see lower LTVs; newer mainstream units may see higher.
Can I include taxes and fees in the lease?
Often, yes. Many clients finance taxes/fees for cash-flow relief; others pay them at closing. We’ll structure it either way.
Is a sale-leaseback only for “clear title” equipment?
No. If a lien exists, we typically pay it out at closing and net you the difference (see the table above).
What if I need more cash than the LTV allows?
Blend tools: add a Working Capital Loan or Asset-Based Lending against receivables/inventory.
How fast can it close?
Approval and funding timelines vary by lender, application completeness, and required conditions.
Use the Calculator to model FMV, LTV, term, rate, and residual — then our credit analysts will structure the most cost-effective sale-leaseback for your situation. If you’re upgrading instead, we also sell equipment directly from our in-house Inventory.
Are you looking for a truck? Look at our used inventory.
Feel free to contact our credit analysts to get a firm quote, or read more about us here: About Us.
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