Quick answer: Yes if you own equipment, you can absolutely unlock cash from it without losing the use of it . That’s basically what equipment refinancing and asset-based lending are built for.
Here are the main ways it works in Canada, from a credit analyst’s perspective.
1. Equipment refinancing: borrow against what you already own
If you’ve paid down loans/leases or bought equipment in cash, you likely have equity sitting in that gear. Equipment refinancing lets you turn some of that equity into cash:
- A lender appraises your equipment and advances a percentage of its value (often ~50–75% for strong assets).
- You get a lump sum or structured facility.
- You repay over time, while continuing to use the equipment in your business.
Canadian lenders describe this as a way to improve cash flow, reduce monthly payments, or access working capital using existing equipment rather than taking on pure unsecured debt.
Typical use cases:
- Pay off expensive short-term loans or merchant cash advances.
- Fund inventory, payroll, marketing, or expansion.
- Bridge a seasonal cash dip without selling productive assets.
You still own and operate the equipment; you’ve just re-mortgaged it, similar to refinancing a house.
2. Sale-leaseback: technically you sell it, but you never stop using it
This one is a bit semantic: legally you do sell the asset, but in practice you don’t lose it for a day.
How it works:
- You sell your existing equipment (trucks, machines, etc.) to a lender at fair market value.
- You immediately lease it back on a fixed term.
- You get cash today, keep the equipment on site, and make lease payments going forward.
Industry guides describe sale-leaseback as a way to turn equipment into liquid capital while retaining operational use, often used to fund growth, pay down other debt, or shore up working capital.
This is ideal if:
- Your equipment is largely paid off and still in good condition.
- You need a sizeable cash injection but can’t afford to lose the gear.
- Banks are hesitant to extend more unsecured credit.
You’ve effectively swapped ownership for liquidity, but from a day-to-day standpoint, nothing changes on the shop floor—your team keeps using the same assets.
3. Asset-based lending: line or term loan backed by equipment
With asset-based lending (ABL), a lender advances funds based primarily on the value of your assets, not just your income statement:
- Collateral can include equipment, inventory, receivables, and sometimes real estate.
- Facilities can be revolving lines or term loans.
- Advance rates on equipment are typically in the ~50–70% of appraised value range.
For small businesses that are asset-rich but cash-tight, ABL is often more accessible than a traditional bank line, because the decision leans more on collateral quality than perfect ratios or pristine credit.
It’s especially useful if:
- You have a mix of machines, trucks, or production equipment that’s largely paid down.
- You want an ongoing borrowing base you can tap as needed, rather than a one-off refinance.
You still own the equipment; you’ve just pledged it as security to unlock a larger or more flexible facility.
4. Using equipment to support working-capital loans
Even when a product is marketed as a “working capital loan”, lenders will often give better terms if they can register security over equipment:
- Government-backed programs like the Canada Small Business Financing Program allow loans secured by equipment and leasehold improvements, explicitly to help small businesses access financing they couldn’t otherwise get.
- Private secured-loan providers in Canada promote using equipment as collateral to access faster, larger working-capital loans than an unsecured product would allow.
In practice, that means you might:
- Use equipment as collateral for a working-capital term loan or line of credit,
- Then use that facility to handle payroll, inventory, marketing, or project ramp-up.
Again, you’re not selling the asset—you’re leveraging it.
When does this actually make sense?
Unlocking cash from existing equipment can be smart when:
- The equipment is critical and productive (you’d never really want to sell it anyway).
- There is real equity in the assets (they’re not already heavily financed).
- The new financing meaningfully improves cash flow (lower payments, longer term, or better cost than your current debt).
- You have a clear plan for the cash: paying off expensive debt, funding profitable growth, or stabilizing operations.
It’s much less helpful if you’re just kicking the can down the road with no operating changes.
How Mehmi typically helps small businesses do this
At Mehmi Financial Group, we see three common scenarios:
- Equipment refinancing – replacing old loans/leases with better terms or pulling out equity to fund growth or pay off high-cost debt.
- Sale-leaseback on owned assets – unlocking a lump sum while you keep using trucks, machinery, or other equipment day to day.
- Asset-backed working-capital facilities – combining your equipment with receivables or other assets to support a line of credit or working-capital loan.
If you’re wondering how much cash your current fleet or equipment might support—and whether refinancing or a sale-leaseback would actually improve your position—feel free to contact our credit analysts. We can look at your equipment list, existing loans, and cash-flow needs and map out options that keep you operating while freeing up capital.
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.
Source perspective
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.