Sale Leaseback
Definition
A sale leaseback (or sale-leaseback) is a financial transaction where a business sells an asset it owns — typically equipment or real estate — to a financing company and immediately leases it back for continued use. This arrangement converts a fixed asset into liquid cash while allowing the business to continue using the asset without interruption. Sale leasebacks are commonly used with commercial vehicles, heavy equipment, real estate, and machinery. Benefits include immediate cash infusion, potential tax advantages (lease payments may be fully deductible), and no need for traditional loan qualification.
Example
A trucking company owns a fleet of 20 trucks valued at $2 million. They sell the fleet to a leasing company for $1.8 million and lease the trucks back at $40,000/month for 5 years. The company gets $1.8 million in immediate cash for expansion while continuing to operate the same trucks.
Related Terms
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Equipment Financing
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