An equipment sale-leaseback lets you sell equipment you already own to a lender or lessor for a lump sum of cash, then lease it back and keep using it. It unlocks the trapped equity in paid-off machinery, trucks, or heavy equipment for working capital — without a conventional loan. You trade ownership for liquidity: lease payments (generally tax-deductible) replace owning the asset outright. It's most attractive when the alternative is a high-rate short-term loan or merchant cash advance.
If your business owns valuable equipment outright but is short on cash, a sale-leaseback turns that hard asset back into working capital while you keep operating the same gear. It's a staple for equipment-heavy businesses — construction, trucking, manufacturing — that have real value sitting in their fleet or shop floor. Here's how it works and when it's the right call.
How a Sale-Leaseback Works
Three steps: (1) a lender/lessor appraises and buys equipment you own, paying you a lump sum; (2) you immediately lease it back under a fixed-term lease and keep using it without interruption; (3) at the end of the lease you typically have an option to buy it back (often for a nominal or fair-market amount, depending on the lease type). Functionally it's a loan secured by equipment you already own — but structured as a lease, which changes the tax and balance-sheet treatment.
When It Makes Sense
- You own valuable, paid-off equipment and need cash for growth, payroll, a slow season, or a big opportunity.
- You want to avoid a high-cost short-term loan or MCA — leasing back your own equipment can be cheaper than those alternatives.
- You'd struggle to qualify for unsecured credit — the equipment secures the deal, so approval leans on the asset.
- You want to consolidate higher-rate debt into a single, predictable lease payment.
Pros & Cons
| Pros | Cons |
|---|---|
| Immediate liquidity from assets you already own | You give up ownership and pay to use your own equipment |
| No separate loan; equipment secures it (easier to qualify) | Total cost can exceed the cash you receive |
| Lease payments generally tax-deductible as an expense | You may lose depreciation benefits of owning |
| Predictable fixed payments; buy-back option at term end | Advance is a percentage of appraised value, not full value |
Always run the all-in cost against your alternative. Compare with a straight equipment loan or lease and with working capital options before committing.
What Equipment Qualifies
Lenders want titled or serialized, long-lived equipment with clear resale value that you own free-and-clear or with minimal remaining financing — heavy construction equipment, trucks and trailers, CNC and manufacturing machinery, and similar. They appraise it and advance a percentage of value. Older, highly specialized, or fast-depreciating assets get lower advances; clean title and good condition get the best terms. Tax treatment varies by lease structure, so confirm the details with your accountant.
Next Step
If you're equipment-rich but cash-tight, a sale-leaseback may beat a high-rate loan. Get matched with sale-leaseback lenders to see what your equipment can free up and at what cost.