Machinery Sale and Leaseback

Key highlights

• Unlock capital from owned machinery while keeping it in production
• Well suited to manufacturers, processors and heavy-industry operators
• Deploy funds into cash flow, growth, wages, stock or tax bills
• Compare leaseback against unsecured and secured funding at once
• Ask your accountant how repayments and any tax effects apply

Turning machinery into working capital

For businesses that run substantial machinery, a great deal of capital can sit locked inside plant that has been fully paid off. Machinery sale and leaseback releases that value: a financier buys the machinery you own outright, pays you a lump sum, and leases it straight back so production never pauses. The cash becomes flexible working capital you can direct wherever it is needed most. This suits operators who have equity in their machinery but need liquidity rather than more equipment. How much you can raise depends on the machinery's value, age, hours and condition, and on lender assessment. As always, amounts and terms are indicative and subject to lender criteria, so it is wise to compare before committing.

Machinery that lenders will consider

Lenders tend to favour machinery that is identifiable, well maintained and retains solid market value. Common examples include manufacturing and processing lines, CNC machining centres, injection moulding and fabrication equipment, food and beverage production machinery, packaging plant, and heavy workshop equipment. The machinery generally needs to be owned outright, in good working order, and with useful life remaining. Very old, obsolete or highly specialised machinery may draw less appetite or a lower advance, since it is harder to value and resell. Because financiers assess machinery differently, one may offer considerably more than another against the same asset. Comparing the market helps you find the strongest structure, and approaching many lenders at once tends to reveal options a single-lender approach would overlook.

How manufacturers use the released cash

Manufacturers and processors often face lumpy cash flow: large raw-material outlays, long production cycles, and customers on extended payment terms. The capital released through a machinery leaseback helps bridge those gaps. Owners commonly use it to buy materials ahead of a production run, cover wages through a slow order period, fund a plant upgrade or factory fit-out, take on a larger contract that needs upfront outlay, or settle a pressing supplier or tax obligation. Because the funds are unrestricted, you decide where they deliver the most value. Whether the arrangement makes sense depends on the return you expect from deploying the cash against the cost of the lease, so it is worth modelling that carefully before you proceed.

Leaseback versus other funding routes

Machinery leaseback is one option among several for raising working capital. An unsecured business loan needs no asset and funds quickly, but is usually capped around $500,000 and priced higher. A secured loan backed by property can reach larger amounts at sharper rates. A line of credit offers flexible, draw-as-needed funding for fluctuating needs, while invoice finance unlocks cash from unpaid invoices. Leaseback specifically monetises owned machinery, which can support a larger amount than an unsecured facility alone. The right choice depends on what you own, how predictable your income is, and how much flexibility you need. Comparing total cost, term and conditions across several lenders gives the clearest view, which is exactly where seeing the whole panel at once helps.

Eligibility and assessment

To arrange a machinery sale and leaseback, lenders generally want an active Australian ABN, evidence you own the machinery outright, and a current valuation. Most look for a minimum trading history, often around six to twelve months, and consistent turnover that comfortably covers the repayments. Low-doc pathways may accept bank statements or BAS instead of full financials for some applicants. Your credit profile, existing commitments and the machinery type all shape the offer and the advance. Because each lender applies its own criteria, the same application can produce different outcomes across the market. Everything here is indicative and subject to a full assessment, so treat it as a guide to what to expect rather than a fixed outcome for your business.

How much, how fast

Across the funding we compare, indicative amounts range from around $5,000 up to $5 million, with a machinery leaseback advance driven by the asset's value and lender appetite. Terms commonly run from a few months to five years. For eligible applicants, some facilities can move quickly, with same-day pre-approval and funds potentially within 24 to 48 hours, though a formal valuation may add a little time. Pricing spans a wide band: rates start from around 7.49% p.a. for stronger secured facilities, with unsecured and short-term products higher depending on turnover, term, security and profile. All figures are indicative and subject to lender criteria and assessment, so compare carefully before you decide.

If your machinery is fully paid off but your cash flow is stretched, a machinery sale and leaseback could unlock capital you can put to work. Overdrive Business Loans compares more than 80 banks and non-bank lenders on one application, so you can measure leaseback against unsecured, secured and line-of-credit funding and choose what fits. Simon Kendrick will walk you through the numbers and any commitment, with an obligation-free quote and only a soft credit check to start, so your score stays intact. For eligible applicants, funding may be arranged within 24 to 48 hours. Get in touch for a no-pressure chat, and check with your accountant about how any leaseback would affect your tax position.