Sale-Leaseback: When It Makes Sense (And When It Doesn't)

The mechanics

You sell owned equipment to a finance company and simultaneously lease the same asset back. The equipment never leaves your yard or shop floor; ownership and payment obligations change.

Proceeds are tied to supportable current value, not to what you originally paid.

When it fits well

• Equipment was purchased with cash and that capital is now needed elsewhere
• A specific project or contract requires funding on a known timeline
• The bank line is committed and you would rather not disturb it
• The assets are titled or serialized, in good condition, with clear liens

When it is the wrong tool

A sale-leaseback converts asset value into cash and adds a payment obligation. If revenue cannot support that payment, it postpones a problem rather than solving one.

• Assets near end of useful life will not support meaningful proceeds
• Unclear or contested title stops the transaction
• Chronic operating shortfalls need an operating fix, not asset conversion

Documentation to gather

• Original invoices or proof of purchase
• Titles or ownership documentation and current lien status
• Photos, serials or VINs, and current hours or mileage
• Business identity information; financials may be requested

Bring your CPA in early

Sale-leaseback accounting can be nuanced under current standards, and the treatment affects how the transaction appears on your statements. Have that conversation before you commit, not after documents are signed.