Most Australian business owners think about equipment finance as something you do when you are buying new gear. Truck arrives, finance kicks in, repayments start. That is one half of the conversation. The other half, which barely anyone outside the lending industry talks about, is what happens when you already own the gear.
Sale-back finance is the answer to that question. You take an asset your business already owns, sell it to a lender, lease or finance it back, and walk away with a lump sum of working capital. The asset stays in your yard, your workshop, or your transport fleet. You keep using it exactly the same way you always have. Only now, the equity you had locked up in the gear is sitting in your bank account, doing useful work.
It sounds odd the first time you hear it. It is not. Sale-back finance is a well-established product in Australian commercial lending, used by serious operators every day to fund growth, clear tax debt, smooth cash flow, and refinance expensive borrowing. This guide walks through six powerful plays for using it properly, how it stacks up against the alternatives, the tax treatment, and the moments when it is the wrong call.
What Sale-Back Finance Actually Is
Sale-back finance, also known as sale and leaseback, is a transaction where your business sells a fixed asset to a finance provider and immediately enters into a new lease or chattel mortgage on the same asset. The legal title to the asset moves to the lender. The physical asset stays exactly where it was. You keep operating it, generating revenue from it, and looking after it as if nothing has changed.
The reason for doing it is almost always working capital. A trucking business with $400,000 of trucks on the road, fully owned, can sell those trucks for around $300,000 (depending on valuations), then finance them back over three to five years. The business now has $300,000 in cash to deploy into wages, fuel, expansion, ATO debt, or whatever else it needs. The trucks keep earning. The new finance is serviced from the same revenue they always generated.
For lenders, this kind of deal is attractive because the security is identifiable, valuable, and already proven in service. They are funding gear that is demonstrably earning. For business owners, the appeal is liquidity without disturbing operations.
How Sale-Back Finance Differs from Other Working Capital Options
This product sits in a different lane to most cash flow tools. Understanding the differences is critical to choosing the right one.
Compared to a business line of credit, sale-back finance is a one-shot lump sum rather than a revolving facility. It works when you need a sizeable amount of capital up front and want certainty of repayment structure. Line of credit works better when you need ongoing flexible access to smaller amounts. Many businesses run both at once, because they solve different problems.
Compared to invoice finance, this approach releases value from physical assets rather than from outstanding customer invoices. Invoice finance is brilliant when your money is tied up in unpaid invoices on 30 or 60-day terms. The right tool here is for when your money is tied up in owned equipment instead.
Compared to an unsecured business loan, sale-back finance generally offers lower rates because the lender has identifiable asset security. The trade-off is the asset is on the lender’s PPSR register until the new finance is paid out. For businesses who have been knocked back for unsecured borrowing, it is often a viable alternative. Our piece on business loan rejection covers the rejection patterns and what works instead.
The closest cousin is straight equipment refinance, where you take existing financed gear and shift the loan to a new lender at better terms. Sale-back is the more aggressive version of equipment refinance, where you pull cash out at the same time.
What Equipment Qualifies
The general test is that the asset must be identifiable, valuable, and substantially used for business purposes. Lenders want to fund gear that holds resale value and is essential to the business operation.
Heavy vehicles are the most common category. Trucks, prime movers, trailers, tipper trucks, refrigerated units, and tankers all fund well. Our truck finance landing page covers the heavy vehicle category specifically.
Plant and earthmoving equipment is the next big category. Excavators, dozers, loaders, bobcats, mobile cranes, telehandlers, and scissor lifts all have strong resale markets and clear PPSR-registrable identity. This is particularly relevant for tradies and construction operators who have built up significant owned plant over time. Our equipment finance for tradies guide covers the broader tradie funding picture.
Manufacturing and industrial equipment qualifies if it is identifiable and holds value. CNC machines, presses, lathes, injection moulders, conveyor systems, and industrial robots all fund. The line is drawn where assets become heavily customised, fixed installations, or specialised to the point of having no resale market.
Yellow goods and primary production equipment funds well. Tractors, harvesters, headers, balers, sprayers, irrigation systems, livestock handling equipment, and farm machinery generally have established resale channels.
Already-financed equipment can also qualify, with an important wrinkle. The new lender effectively pays out your existing financier and provides a fresh facility, often releasing additional cash on top. This is one of the more powerful applications: refinancing into a new lender while extracting working capital in the same move.
Borrowing ranges with our lender panel run from $10,000 right through to $1,000,000-plus for established operators. Most deals fall in the $50,000 to $500,000 range, depending on the asset mix.
Play 1: Generate Growth Capital Without New Hard Security
The most powerful application of sale-back finance is funding growth without taking on new hard collateral. Most growth finance options require fresh security: a director’s guarantee on a new loan, a mortgage over property, or significant personal exposure. This product uses security you already have, in a form that is already pledged to the business.
For example, a manufacturing business with $400,000 of paid-off plant could release $250,000 of working capital, then use that capital to open a second site, hire new staff, or build inventory ahead of a major contract. No house on the line, no additional personal guarantee beyond what is required by the new finance, and the plant keeps producing through the entire transaction.
This is the play most owners do not know exists. They think the only way to fund expansion is to borrow against the family home or take on unsecured debt at uncomfortable rates. There is a third path that uses business assets to fund business growth.
Play 2: Pay Off ATO Debt Without Wrecking Cash Flow
ATO debt is one of the most common reasons businesses approach us about sale-back finance. The ATO charges general interest charge on overdue tax debt at rates that have climbed significantly in recent years. The longer ATO debt sits, the more it costs, and the harder it becomes to negotiate workable repayment plans.
A business with $80,000 of ATO debt and a fleet of owned trucks can convert the trucks into liquid capital, pay the ATO out in one hit, and replace the daily compounding ATO interest with a structured commercial finance arrangement. The cash flow shape changes from open-ended ATO pressure to predictable monthly repayments. Penalty interest stops. The business can plan again.
The trap to avoid here is using the proceeds to clear ATO debt without fixing the underlying problem that created it. If your business is structurally unable to meet its tax obligations, this approach buys you time but does not solve anything. The right play is to use the breathing space to fix the cash flow shape, often by combining the funding with structural changes like better invoicing terms, improved collections, or expense reductions. Our piece on business cash flow problems covers the wider product mix.
Play 3: Bridge a Working Capital Gap
Seasonal businesses and project-based businesses regularly face cash flow shapes that look fine on the annual P&L but ugly in the monthly cash position. A landscaping business that does most of its work between September and April has a winter shortage that needs covering. A construction sub-contractor working on a 12-month contract with milestone billing has a 60-day cash gap between progress payments.
Sale-back finance offers a way to bridge those gaps without stacking new loans on top of existing borrowing. Use the equity in owned equipment to cover the shortfall, then ride out the gap and continue to service the new finance from normal trading cash flow once the busy season returns.
The math works because the typical term is 24 to 60 months, which spreads the repayment over multiple seasonal cycles. The peak season cash flow services the finance comfortably. The off-season is no longer an emergency.
Play 4: Refinance Expensive Existing Equipment Loans
If your business has equipment loans taken out when you were a younger ABN, when rates were higher, or when your credit position was weaker, sale-back finance can be a refinance play in disguise. The new lender pays out the existing financier, takes the asset onto their own books, and gives you fresh terms.
The savings can be substantial. We have seen businesses move from 14 percent equipment loans taken out three years ago to sub-10 percent arrangements now that the business has a longer trading history and stronger financials. Combined with the option to pull additional cash on top of the refinance, the move can drop monthly repayments and provide growth capital in one transaction.
The new finance structure usually offers chattel mortgage tax treatment, which means the GST credit on the buy-back leg is recoverable through your next BAS and the interest portion of repayments is tax deductible. Our chattel mortgage vs lease guide covers the structure differences in depth.
Play 5: Fund Working Capital When the Bank Has Said No
Major banks have tightened their unsecured business lending appetite significantly over the past few years. The ABS Lending Indicators consistently show non-bank lenders growing their share of business lending as banks pull back. Businesses that would have qualified for $200,000 unsecured loans five years ago are now being knocked back, even with strong trading numbers. The banks want hard security, longer trading histories, or both.
This is where sale-back finance becomes one of the most reliable workarounds. The security profile is exactly what specialist non-bank lenders want: tangible assets, established trading, identifiable value. Approval rates are generally higher than on unsecured business loans because the lender’s risk is materially lower.
For businesses with credit history issues, the same logic applies. The asset security gives the lender enough comfort to look past some credit blemishes that would kill an unsecured application. Our bad credit business loans page covers the wider options when credit is the issue.
Play 6: Combine with Invoice Finance for Compound Effect
The most aggressive working capital play available to Australian SMEs is combining sale-back finance with invoice finance. The principle is simple: extract capital from your owned equipment one way, extract capital from your outstanding invoices the other way, and use both streams of liquidity to fund significant business growth.
This is the play that scales businesses fastest. A wholesale distribution business with $300,000 of owned forklifts and trucks plus $400,000 of outstanding 60-day invoices can put both to work simultaneously. The equipment side releases, say, $200,000 immediately. An invoice finance facility on the receivables advances another $300,000 against the invoice ledger. The business now has half a million dollars of working capital deployed into growth, sourced entirely from assets it already owned and invoices it had already issued.
This is exactly the play many of our broker panel lenders specialise in across their working capital product suites. The two products together turn idle business assets into actively deployed capital. Our equipment finance pillar guide sits alongside our existing invoice finance content as part of the broader working capital picture.
The Tax Treatment You Need to Understand
Sale-back finance has two distinct tax events that need to be understood before signing.
The sale leg of the transaction is treated as a disposal of the asset for tax purposes. If the asset has been depreciated below the sale price, you may have a balancing adjustment to recognise (taxable income equal to the gap). If the asset is sold below its tax written-down value, you may have a deductible loss. The GST consequences depend on how the sale is structured and whether the lender is GST registered. The ATO’s guidance on financial supplies and GST covers the technical detail.
The leaseback or finance-back leg is treated as a new finance arrangement. Under a chattel mortgage structure, you reclaim the asset for tax purposes, depreciation deductions resume, and interest on the new finance is deductible. Under a finance lease structure, the rental payments are partially deductible. The choice between the two structures matters for the tax outcome.
The combined effect of the two events is usually broadly neutral for tax purposes, but the specific outcome depends on the asset’s tax history, the sale price, the finance structure, and the business entity type. This is the kind of decision that needs a sit-down with your accountant before you commit. It is not a tax minimisation strategy in its own right. It is a working capital strategy with tax consequences that need to be planned for.
When Sale-Back Finance Is Not the Right Move
This product is a powerful tool but the wrong call in several scenarios. Knowing when it does not fit is as important as knowing when it does.
If you are about to claim the instant asset write-off on the asset, sale-back finance can disrupt the tax treatment. The new ownership chain changes how the deduction flows. If you have a major IAWO claim planned, do that first and then consider the funding option later. Our guide to the instant asset write-off covers the timing implications.
If the asset has high resale value coming, you are giving away upside. A piece of plant about to be discontinued, an asset with collector or rarity value, or equipment in a market with rising prices may be worth more in your hands than as security. The product prices the asset today, not in two years.
If your business is already heavily leveraged, this move can push the cash flow over the edge. Adding new repayments to an already-stretched cash flow does not fix anything. It magnifies the problem. Sometimes the right answer is to reduce expenses, restructure debt, or sell the asset outright rather than turn it into a new finance commitment.
If a line of credit would solve the same problem, take the line of credit. Sale-back finance is heavier machinery. Use the right tool for the job. Borrowing against business assets carries real risk. Read our Warning About Borrowing page before committing to any arrangement.
How to Apply
The application process is broadly similar to standard equipment finance but with more focus on the asset valuation and the existing finance position (if any).
What lenders need from you. A list of the assets to be funded, with make, model, year, serial number, and condition. Recent business bank statements (typically three to six months). Your most recent BAS. Director ID and ABN history. Existing finance contracts on the assets (if any). For larger deals, tax returns or accountant-prepared financials.
The valuation step is unique to sale-back finance. The lender will arrange an independent valuation of the assets, sometimes physical and sometimes desktop, depending on the value and the lender’s appetite. The valuation determines the maximum amount the lender will advance. Typical loan-to-value ratios are 60 to 80 percent of independent valuation, which is materially below the asset’s retail or replacement value.
Settlement times are usually a week to two weeks end to end. Faster than refinancing through a major bank, slower than a clean unsecured loan. The bottleneck is usually the valuation step rather than the credit assessment. For background on what general lender due diligence looks like, the ASIC Moneysmart business loans page is a neutral starting point. Our sale-back finance page walks through how we work with our lender panel on these deals. If you would like to talk through whether this product suits your specific situation, we are happy to review your asset list, current finance position, and funding goals across our lender panel without obligation.
Final Thoughts
Sale-back finance is one of those products that quietly powers the growth of serious Australian businesses while staying invisible to the mainstream conversation about small business funding. It is not the right answer for every business or every situation, but in the specific cases where it fits, the leverage is substantial.
The equipment you already own is not just gear sitting in the yard. It is capital with potential energy, waiting to be put to work. The right finance structure converts that potential into the working capital your business needs to grow, smooth out cash flow, clear bad debt, or refinance expensive borrowing. Used carefully, with the right lender and the right structure, it is one of the most powerful working capital tools available to Aussie business owners who know how to ask for it.
If you think this might be the right move for your business, the next step is a no-obligation conversation with our team. We can review the assets on your books, your current finance position, and your capital needs, then identify the lender on our panel best matched to your situation. There is no cost to explore the option, and you stay in control throughout. Visit our sale-back finance page to get started or learn more about how we work.
Disclaimer
The information in this article is general in nature and does not take into account your objectives, financial situation or needs. It is not personal advice, tax advice, legal advice or a recommendation to apply for any product. Before acting on any information, you should consider whether it is appropriate for your circumstances and seek independent financial, legal and tax advice where appropriate.
Get A Loan Finance Pty Ltd is not a lender. We work with a panel of lenders and finance providers. Product features, eligibility criteria and availability can change without notice.
