If your business owns valuable equipment — trucks, trailers, plant, workshop machinery, medical gear, or commercial-fitout equipment — you may be sitting on a hidden source of working capital. Instead of leaving that value locked up on the balance sheet, some Australian businesses use equipment refinance or sale-leaseback to convert owned assets into cash while keeping operations moving.
This guide explains how equipment refinance works, what a loan against equipment involves, how equipment sale leaseback is structured, and how to decide which option suits your goals. If you’re planning to stabilise cash flow, fund growth, bridge a short-term gap, or restructure expensive debt, a broker can help you assess lenders and policy fit through an asset finance broker approach that matches your business position and the assets you own.
Important note: approval is never guaranteed. Lender policies vary, valuations can change outcomes, and the right solution depends on your cash flow and risk tolerance. This is general information and should be considered alongside advice from your accountant and finance professional.
If you’re specifically looking to restructure an existing facility, or you want to draw funds against owned machinery, Unconditional Finance can help assess options through an equipment loan broker strategy tailored to how your assets are used in the business.
Before choosing a structure, focus on total cost and cash flow impact — not just the headline rate. Fees, loan term, and any balloon/residual payment can materially change what “affordable” looks like month-to-month.
One common misconception is that these strategies only suit large fleets. In practice, many small-to-medium businesses use plant and equipment equity to fund new contracts, cover seasonal gaps, or consolidate higher-cost liabilities — provided the deal is structured conservatively.
To understand the application steps and typical lender requirements, you may also find this useful: equipment finance application steps.
What is equipment refinance?
Equipment refinance is the process of replacing an existing asset finance facility or accessing cash against equipment you already own. In plain terms, you’re either:
- Refinancing an existing loan (refinance equipment loan) to change the lender, adjust repayments, or restructure the term; or
- Borrowing against owned equipment (loan against equipment) to release a portion of its market value as working capital.
This is often described as an equipment asset based loan, or a business loan using equipment as collateral. The lender typically takes security over the equipment, and the amount advanced depends on the asset’s value, age, and resale strength — plus your ability to service the repayments.
For businesses with multiple assets (trucks, trailers, forklifts, excavators, CNC machines, manufacturing lines), refinance can also be used to consolidate facilities into one repayment schedule to simplify cash flow management.
What is equipment sale-leaseback?
An equipment sale-leaseback is a two-part arrangement that turns owned equipment into cash while you continue using it:
- You sell equipment you already own to a financier, typically at fair market value (supported by valuation or appraisal).
- You lease it back via regular payments, so your operations continue without disruption.
The key idea is that the asset stays in your hands operationally — it doesn’t leave the yard — but it stops being “dead equity”. Instead, it becomes a source of liquidity you can redeploy into the business.
Sale-leaseback is commonly used in transport, construction, manufacturing, agriculture, and service industries where equipment is essential to revenue generation and selling it outright would damage capacity.
Why businesses use refinance and sale-leaseback to unlock working capital
Businesses typically pursue equipment refinance or sale-leaseback when they have assets but need flexibility. Common use cases include:
- Reinvesting in growth (additional staff, inventory, expansion, marketing, new premises fit-out)
- Bridging short-term working capital gaps (payroll, supplier terms, insurance, registration)
- Mobilising for a new contract or project (tools, safety gear, materials, project costs)
- Consolidating higher-cost debt (including short-term facilities that strain cash flow)
- Funding repairs and maintenance to keep revenue-producing assets running
- Supporting a turnaround plan (sometimes referred to as a machinery turnaround loan)
Instead of seeking a larger unsecured facility, these strategies can use owned assets to reduce lender risk. That can expand options for businesses that are asset-rich but cash-flow tight — as long as the repayments fit comfortably within serviceability.
Comparing your options: refinance vs sale-leaseback vs new purchase finance
When refinance is usually the better fit
- You already have a loan and want improved structure, term, or repayment profile
- You want to release equity from owned assets while keeping ownership
- The equipment is relatively straightforward to value and finance
When sale-leaseback is usually the better fit
- You own equipment unencumbered (no liens) and want to unlock cash quickly
- You want to keep operating with the same equipment without disruption
- You’re comfortable with the financier owning the asset during the lease term
When a new purchase loan/lease is usually the better fit
- You’re acquiring new or used equipment rather than releasing capital from existing assets
- You’re focused on the best terms for the new asset rather than liquidity
- You want the loan matched to the equipment’s useful life and warranty profile
A broker can help map your objective to the right structure — especially if the goal is to strengthen the balance between immediate cash needs and long-term repayment obligations.
What lenders typically need (and how approvals can move faster)
While requirements vary, lenders usually want a clear picture of (1) the asset, (2) the business, and (3) the ability to repay. Typical information includes:
- Proof of ownership and any existing finance status (confirming whether there’s a lien)
- Asset identifiers (VIN/serial numbers), photos, condition details, and usage (hours/kilometres)
- Valuation, inspection, or appraisal (more common for specialised or used machinery)
- Business registration and director ID
- Recent bank statements (often 3–6 months) and/or BAS/financials depending on the lender
- Details of existing liabilities and repayment commitments
In many cases, the fastest outcomes come from preparing asset details upfront, ensuring ownership is clean, and presenting serviceability clearly. Where there are gaps (for example, irregular income), your broker may need to provide supporting context such as contracts, invoices, or an accountant letter.
Key costs, terms, and risks to understand before you proceed
Valuation and equity limits
The amount you can access is usually based on a conservative percentage of the asset’s current market value. If the valuation comes back lower than expected, the available funds may be reduced. Older or niche equipment can also attract lower funding ratios due to resale risk.
Rates, fees, and total cost
Pricing depends on asset type, age, your credit profile, and the facility structure (loan vs lease). Establishment fees, documentation fees, and potential early payout costs on existing loans can materially affect total cost, so comparisons should be made on “all-in” numbers, not just rates.
Repayment profile and residuals
Extending the term can reduce monthly repayments, but often increases total interest. Some structures use residual/balloon amounts to lower repayments — which creates a lump sum at the end. Make sure the residual aligns with your plan (retain, sell, refinance, or pay out).
Operational dependency risk
If the asset is critical to producing revenue, missing repayments can create operational disruption. These strategies should only be used where cash flow can service repayments with a buffer, not where the business is already under severe strain.
Accounting and tax considerations
Refinance and sale-leaseback can affect how assets and obligations appear in your accounts. Treatment varies by structure and business circumstances. Speak with your accountant before proceeding, particularly if you’re comparing ownership vs lease structures and their tax implications.
FAQ
Can I borrow against equipment I already own?
Yes, many lenders allow a loan against equipment that is owned outright or has significant equity. The amount available depends on market value, age, condition, and your ability to service repayments. Lenders typically apply a conservative funding ratio and may require a valuation or inspection before approving funds.
What is equipment sale-leaseback?
Equipment sale-leaseback is where you sell owned equipment to a financier and lease it back so you can keep using it. You receive a lump sum of working capital and repay via lease payments. In many structures, you can regain ownership at the end of the term, depending on the agreement.
How does equipment refinancing work?
Equipment refinancing replaces an existing loan or creates a new facility secured against owned equipment. The lender assesses the asset and serviceability, then advances funds based on an approved percentage of value. Repayments are made over an agreed term, similar to other asset finance facilities.
What equipment is typically eligible for refinance or sale-leaseback?
Common examples include trucks, trailers, forklifts, excavators, agricultural machinery, manufacturing equipment (including CNC machines), and some specialised business equipment. Eligibility depends on resale value, identifiable serial/VIN numbers, age, and condition.
Is sale-leaseback faster than a traditional business loan?
It can be, because the facility is supported by a tangible asset with a clear value. Timeframes depend on how quickly ownership proof, asset details, and valuations can be completed. Clear documentation typically speeds up assessment.
Does sale-leaseback mean I lose the equipment?
No — you keep using it through the lease. Ownership transfers to the financier during the lease term, but your operations continue with the same equipment. End-of-term options vary, so it’s important to confirm the buyout or exit structure upfront.
Can I refinance again later or pay out early?
Often yes, but it depends on the lender and contract. Some facilities allow early payout or restructure, while others may have break costs or minimum terms. If flexibility is important, raise it before signing so the structure matches your plans.
Is equipment refinance cheaper than unsecured working capital?
Often it can be, because the lender has security over an asset. However, pricing varies based on asset type, credit profile, and structure. It’s best to compare total cost, not only the interest rate, and account for fees and any early payout costs.
How much can I unlock from my equipment?
It depends on the asset’s market value and the lender’s funding ratio, which can be lower for older or specialised equipment. A valuation, condition assessment, and your cash flow all influence the final amount approved.
If you’re considering refinancing or sale-leaseback, the safest approach is to start with your objective (growth, cash flow smoothing, debt consolidation, or contract mobilisation), then confirm the asset value and the repayment comfort zone. A broker can help you compare structures and lenders so the outcome supports long-term stability — not just a short-term cash injection.