Unlock Cash Flow with Sale-Leaseback Financing

If your business owns valuable equipment—trucks, trailers, CNC machines, commercial kitchen gear, or medical devices—but you’re short on working capital, you may be sitting on a hidden source of liquidity.

That’s where equipment sale-leaseback financing comes in.

This underused strategy lets you sell your equipment to a lender for cash—then lease it back so you can continue using it without disruption. It’s a smart move for companies looking to:

• Reinvest in growth
• Bridge payroll or vendor payments
• Bid on new contracts
• Or simply strengthen cash flow during tight quarters

In this guide, we’ll break down exactly how sale-leasebacks work, when they make sense, and how they compare to traditional refinancing or loans.

What Is a Sale-Leaseback?

A sale-leaseback is a two-part financing agreement:

1. You sell equipment you already own to a lender (typically at fair market value).
2. You lease it back through monthly payments, so your operations stay uninterrupted.

The asset remains in your hands—you keep using it just like before—but now it’s generating cash flow instead of sitting as locked-up equity.

This structure is commonly used in transportation, construction, manufacturing, medical, and food service industries.

Why Businesses Use Sale-Leaseback Financing

Many Canadian businesses run asset-heavy operations but have limited access to capital through banks—especially if they need to:

• Catch up on tax, payroll, or vendor obligations
• Fund equipment repairs or insurance premiums
• Expand crews or inventory ahead of a busy season
• Pay off high-interest debt (e.g. merchant cash advances)

Rather than borrowing new money, a sale-leaseback releases capital from assets you already own.

Common Equipment Eligible for Sale-Leaseback

Pros of Sale-Leaseback Financing

✅ Immediate cash injection – Get working capital in days
✅ No operational disruption – Keep using the equipment
✅ Doesn’t dilute ownership – Unlike equity financing
✅ More accessible than bank loans – Flexible underwriting
✅ Improves balance sheet liquidity – Converts fixed assets to cash
✅ Works with used or private-sale gear – Age-flexible if equipment has value

Cons or Limitations to Consider

⛔ You no longer own the equipment outright – Though you regain ownership at lease-end if structured that way
⛔ Monthly lease payments resume – Adds back a payment obligation
⛔ Not every asset qualifies – Very old or low-value gear may not be eligible
⛔ May involve inspection or third-party valuation – Especially for used assets

When Does a Sale-Leaseback Make Sense?

This structure is ideal when:

• You own equipment with market value and no lien
• You need quick access to capital (24–72 hours)
• You’re not ready to give up or sell the equipment
• You have a short-term cash need but long-term growth outlook
• You want to avoid traditional loans or adding more debt

It’s especially popular with:

• Transportation fleets trying to fund additional drivers
• Contractors preparing for new job site mobilizations
• Medical clinics upgrading diagnostic systems
• Manufacturers balancing inventory financing

Real Case Study: Food Wholesaler Uses Sale-Leaseback to Fund Growth

Business: Toronto-based food distributor
Challenge: Needed $95,000 to launch a new delivery route and hire staff—but bank line was maxed out
Assets Owned: Two 5-ton refrigerated trucks (paid off)

What They Did:

• Entered a sale-leaseback on both trucks
• Received $92,000 cash within 3 business days
• Structured as a 36-month lease with $1 buyout per truck

Result:
They launched the new route in under two weeks, increased order volume by 22%, and used the extra revenue to reinvest in inventory. Equipment usage continued uninterrupted.

How Sale-Leasebacks Compare to Other Financing Options

What You’ll Need to Qualify

Lenders typically want:

• Proof of equipment ownership (no liens)
• Serial numbers and condition photos
• Equipment inspection or valuation
• Business registration and photo ID
• 3–6 months of bank statements

Turnaround can be as fast as 24–72 hours once documents are submitted.

Explore full details on our Refinancing & Sale-Leaseback Services.

FAQs: Sale-Leaseback Equipment Financing

Do I lose the equipment?
No—you continue using it through a lease. In most cases, you can buy it back at the end of the term for as little as $1.

What’s the difference between a leaseback and a loan?
Loan = debt on new asset.
Leaseback = you unlock equity from an asset you already own.

Can I refinance the equipment again later?
Yes. You may be able to restructure, buy it out early, or refinance the lease again if business conditions change.

Does it affect my credit?
It appears as a lease obligation. If managed well, it can actually strengthen your borrowing profile by improving cash flow.

Want to turn your equipment into working capital—without giving it up?
Speak to a credit analyst about sale-leaseback options or use our calculator to model monthly payments.

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