Quick answer: A sale-leaseback lets you sell equipment you already own to a financier for cash and lease it back so operations never pause. Adding an option to repurchase (fixed buyout, $10 purchase, 10% residual, or FMV/call option) gives you a clear path to own the asset again at or before term end.
Financing options to compare
| Option | Best suited for | Repayment structure | What to compare |
|---|---|---|---|
| Term loan | Defined one-time business need | Fixed scheduled payments | Total cost, term, fees, prepayment |
| Business line of credit | Recurring or uneven cash-flow needs | Revolving balance | Draw rules, interest, renewal, security |
| Secured financing | Larger requests backed by eligible assets | Structure varies | Collateral value, lien position, covenants, fees |
Terms, eligibility and costs vary by lender and borrower profile. Compare the full financing agreement rather than relying on a single payment or rate.
Quick answer: Learn how a sale-leaseback with a repurchase option works in Canada—cash now, keep using the asset, fixed buyouts, risks, and best-fit use cases.
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.
What it is (plain language)
A sale-leaseback lets you sell equipment you already own to a financier for cash and lease it back so operations never pause. Adding an option to repurchase (fixed buyout, $10 purchase, 10% residual, or FMV/call option) gives you a clear path to own the asset again at or before term end. See program basics: Refinancing & Sales-Leaseback and Equipment Leases.
When it’s the right tool
- You need immediate liquidity for payroll, deposits, materials, or growth, but can’t lose use of the equipment.
- You want lower monthly payments via a residual/buyout versus a fully-amortizing loan.
- You prefer to preserve bank LOCs for working capital.
- You plan to re-own or upgrade at a defined point.
Model payments quickly with the calculator, or compare with equipment loans and business refinancing.
How it’s structured
- Fair Market Value (FMV): Establish current value of the asset being sold.
- Advance rate (LTV): Typical proceeds are a % of FMV (varies by asset/age/marketability).
- Term & rate: 24–72 months are common; payments based on cap cost, rate, and buyout.
- Repurchase option: Fixed (e.g., 10% or $10) or FMV; some structures allow early purchase windows.
- Covenants: Use, maintenance, insurance, and location controls are standard.
- Tax/accounting: Leases may be expensed while loans use interest + depreciation—confirm with your accountant, then test in the calculator.
Check eligibility by asset class: Eligible Equipment. If you also need liquidity on AR/inventory, combine with Asset-Based Lending or a Working Capital Loan.
Quick comparison
| Structure | Cash Today | Monthly Payment | Ownership During Term | End-of-Term Path | Best For |
|---|---|---|---|---|---|
| Sale-Leaseback + Repurchase | High (advance on FMV) | Often lower (uses residual) | Lessor holds title | Buyout (fixed or FMV) to re-own | Cash now + clear re-ownership plan |
| Equipment Loan | None (already own asset) | Higher (fully amortizing) | Borrower holds title (lien) | Own free and clear at maturity | Lowest total cost, long-term hold |
| Business Refinancing | Moderate (term debt) | Varies | Borrower holds title (lien) | Own at maturity; restructure as needed | Consolidations, rate/term resets |
Explore alternatives: Business Refinancing and Equipment Leases.
Documentation you’ll need
Invoice or proof of ownership, serial/VIN list, photos/condition, lien statement (if any), recent bank statements, insurance details, and a simple use/maintenance plan. If you’re planning recurring purchases through the year, consider an Equipment Line of Credit.
Case example (Ontario hauler)
A fleet owned three tractors free-and-clear and needed cash to onboard drivers and fuel for new lanes. Mehmi arranged a sale-leaseback with a 10% fixed buyout over 60 months, wiring proceeds and keeping trucks on the road. Twelve months later, stronger cash flow allowed an early repurchase and a rate-down refinance on two units. If you’re upgrading instead, remember we also sell equipment directly—browse Inventory.
Industry fit
- Transportation & Trucking: tractors, day cabs, straight trucks, trailers. Learn more
- Construction & Contractors: excavators, loaders, lifts. Learn more
- Manufacturing & Wholesale: CNC, processing, material handling. Learn more
FAQ
Is the repurchase price fixed or FMV?
Both exist. Fixed (e.g., 10% or $10) provides certainty; FMV can be cheaper or costlier depending on market at term. Confirm in your lease.
Can I buy back early?
Often yes—via scheduled “early purchase options.” Ask for a written schedule before closing.
What LTV/proceeds can I expect?
Depends on asset age, hours/mileage, and resale depth. Newer, liquid assets advance higher. Start with Refinancing & Sales-Leaseback.
How do payments compare to a loan?
Leasebacks often yield lower monthly payments due to the residual; loans typically deliver lower total cost over life. Test both in the calculator.
What are the main risks?
Loss of title during term, covenants on use/relocation, and prepayment/buyout costs. If total cost is priority, compare a straight equipment loan.
What if I need more cash than the leaseback provides?
Blend with Working Capital or Asset-Based Lending.
Ready to structure a sale-leaseback with a repurchase option? Feel free to contact our credit analysts via Contact Us, or run scenarios in the calculator.
Are you looking for a truck? Look at our used inventory.
Learn more About Us and the services we provide across Canada.