A sale-leaseback is a straightforward commercial financing transaction. Your business sells owned equipment to a lender and leases it back. The equipment stays on your site doing what it always did. The capital that was locked up in those assets becomes working capital.

It sounds clever, and sometimes it is. Other times it's the wrong tool.

When a sale-leaseback works

The structure works when the business is viable, the equipment has meaningful value, and there's a clear use for the capital. Common situations we see:

Funding growth, like a new contract or expansion that needs working capital. The leaseback provides runway without diluting ownership.

Consolidating equipment debt that's become unwieldy. Several payments at several rates roll into one structured payment that matches actual cash flow.

Lowering monthly debt service through consolidation and terming out. Stretching a manageable balance over a longer term reduces what a business has to carry every month.

Catching up on CRA arrears, supplier balances, or other urgent obligations when the business is fundamentally sound but cash got tight.

Stabilizing through a slow quarter or a transition between projects, where the path forward is clear but timing is uncomfortable.

Restructuring debt after a partner buyout, an ownership change, or an operational reset.

When a sale-leaseback doesn't work

A sale-leaseback is not debt relief, and it's not a fix for a business that isn't actually viable going forward. If the underlying operation has structural problems and there's no plan to reverse them, borrowing against equipment just delays a harder conversation. Same goes for an industry-wide collapse or eroded margins with no path forward.

The other red flag is using a leaseback to chase the next leaseback. If a business has already pulled equity from its assets multiple times to plug operating losses, adding another layer rarely ends well.

We're asset-based, and equipment isn't the only asset we work with

Current Financial is an asset-based lender. The collateral drives what we can do on a file. For a sale-leaseback, that's normally the commercial equipment. But when the equipment alone doesn't get us to the loan-to-value a file needs, we can layer in a second-position mortgage against real estate to bridge the gap. That opens up more deals that would otherwise stall on LTV alone.

How we underwrite it

Underwriting starts with the equipment: type, age, condition, market value, and useful life. Then the business: history, cash flow, payment behaviour, and what the leaseback proceeds are actually being used for. And then the structure: term, advance rate, security, and supporting documentation.

If the file doesn't support a workable structure, we say so. We would rather give a clear no than a yes that breaks.

Approvals depend on the deal. We don't guarantee outcomes and we don't provide legal or tax advice.

What to bring

If you think a leaseback might fit, the conversation starts faster with: equipment details (year, make, model, current condition, ownership confirmation), recent financials and bank statements, a clear use of proceeds, and any existing security registrations against the equipment. If a second mortgage might be part of the structure, bring details on the property too.

Talk to a credit specialist about a sale-leaseback on commercial equipment.