Most business owners think of finance as a way to buy something new. But there is another option that often gets overlooked when cash is tight: releasing the money tied up in gear you already own.
That is what sale and leaseback does.
How it works
In simple terms, a lender purchases an asset you already own, then leases it straight back to you. You keep using the equipment exactly as before, and in return you receive a lump sum of cash into the business. You then make regular payments over an agreed term.
Nothing changes on the floor. The oven keeps cooking, the machine keeps running, the ute keeps working. What changes is that the value sitting inside that asset is now available as working capital.
When it makes sense
Sale and leaseback can suit a business that:
- Owns valuable equipment or vehicles outright
- Needs cash for growth, stock, wages or an unexpected cost
- Would rather not take on a traditional overdraft
- Wants to smooth out a lumpy cashflow patch
It is a way to make assets that are just sitting there start working for you again.
What to weigh up
Because you are converting an owned asset into a financed one, you take on repayments where there were none. That is a fair trade when the cash does more for the business than the idle equity did, but it is worth mapping out. It is also smart to consider how the arrangement is treated for your circumstances, which is a good conversation to have with your accountant.
The takeaway
If your business is asset-rich but cash-poor, you may be sitting on funds you did not realise you could access. Sale and leaseback turns equipment you already rely on into breathing room. The Geared team can talk you through whether it fits your situation.
