Sale and Leaseback: Raising Capital From Existing Assets

Most business finance conversations start with "I need to buy something." Sale and leaseback starts from the opposite direction: you already own the asset - equipment, a vehicle, or even commercial property - and you want to turn the equity tied up in it into cash, without losing the ability to use it.

How it works

You sell an asset you own outright (or hold significant equity in) to a financier, who then leases it straight back to you. You keep using the asset exactly as before - nothing changes operationally - but instead of holding it as an owned asset, you now make regular lease repayments, and the upfront sale proceeds are released to your business as working capital.

• Releases equity from an asset already fully in use
• No disruption to day-to-day operations
• Can fund growth, working capital or another opportunity without new borrowing against different security

• You no longer own the asset outright once sold
• Lease repayments become an ongoing cost against that asset
• Tax and accounting treatment needs to be considered before proceeding

How this differs from a standard equipment loan

A regular equipment loan or chattel mortgage funds the purchase of a new asset. Sale and leaseback works in reverse - it unlocks capital from an asset you already own, rather than financing something new. The two can even work together over an asset's life: finance the purchase initially, then later use sale and leaseback once equity has built up, if the business needs capital for something else.

What kind of assets suit this structure

Equipment, vehicles, machinery and commercial property are the most common candidates, provided the asset has a clear, reliable resale value that a financier can assess. The stronger and more liquid the asset's market, the more straightforward the arrangement tends to be to price and approve.

Who this actually suits

Sale and leaseback tends to make sense for businesses with meaningful equity sitting in fully-owned equipment or property that would rather redeploy that value - into growth, working capital, or covering a temporary cash flow gap - than leave it tied up in an asset they are already using productively. It is not exclusive to large businesses; the same logic applies at any scale where the numbers make sense.

The takeaway

Sale and leaseback is less about financing a new purchase and more about recognising that an asset you already own represents capital you could put to work elsewhere. Whether it is the right move depends on the asset's resale value, the lease cost against what you would otherwise pay to raise the same capital, and how the tax and accounting treatment plays out for your specific situation.

Finance is subject to lender approval, lending criteria, terms, conditions, fees and charges. The information in this article is general and does not take into account your personal or business needs.

Last reviewed: 14 September 2026. This article was prepared using information available from the Australian Securities and Investments Commission and Moneysmart. This content provides general information only. It should not be treated as personal financial, tax, legal or credit advice.