Using Sale-Leaseback Financing for Working Capital

Sale-leaseback financing is a popular option for businesses looking to access working capital. This type of financing allows companies to unlock the equity they’ve built up in their assets by selling them and then leasing them back from the buyer. It can be used as an alternative source of funding when traditional bank loans are not available or suitable.

How Sale-Leaseback Financing Works

Sale-leaseback financing gets its name from the fact that it involves two distinct transactions. In the first part of the process, a business sells its assets to an investor or leasing company for cash. The buyer then leases those same assets back to the business, usually with a fixed monthly payment agreement and an agreed termination date. This means that although the asset is no longer owned by the business, it can still benefit from its use.

Financing Without Debt

One of the main advantages of sale-leaseback financing is that it allows businesses to access working capital without having to take on traditional debt or equity financing. As mentioned earlier, these types of transactions usually involve fixed payment plans, meaning that a company’s cash flow will not be affected. Furthermore, the money received from the sale of assets can be used for whatever purpose the business requires, such as working capital or expansion.

Increased Flexibility

Another benefit of this type of financing is that it provides businesses with more flexibility than traditional loans or equity investments. Since the asset being sold remains in use by the business after it’s been sold, there is no need to worry about repaying the money or having someone else own a stake in the company. In addition, there are usually tax benefits associated with sale-leaseback financing as well.


Finally, sale-leaseback financing can also provide businesses with an additional source of security if they are facing financial trouble. By selling their assets and then leasing them back, businesses can ensure that they have access to their capital even if they’re experiencing difficulty with other forms of financing.

Sale-leaseback financing is an attractive option for businesses looking to access working capital without taking on additional debt or equity investments. It provides businesses with flexibility, and a fixed repayment plan, and can be used as an additional source of security in times of financial trouble. If you’re looking for an alternative source of working capital, sale-leaseback financing may be the right choice for you.