Sale and leaseback · Manufacturing
Sale and leaseback for manufacturing
Manufacturing finance is capital equipment lending combined with working capital for raw materials, covering CNC machines, presses and packaging lines as well as the gap between buying stock and being paid for finished goods.
How a sale and leaseback works for manufacturing
Manufacturers often hold significant equity in machines bought outright in better years. A sale and leaseback converts that equity into working capital while the machines keep running — useful when a large order requires materials you cannot fund from the current balance. Lenders will value the plant on age, make and condition, and will generally advance less on highly specialised equipment with a thin resale market. Weigh the finance cost against what the released capital will earn; if it funds a profitable order, the arithmetic usually works.
The cash-flow pattern we plan around
Cash out for raw materials, then weeks of work in progress, then 30–60 day terms on finished goods — a cycle that lengthens as the business grows.
What manufacturing typically fund
- CNC machines, lasers and press equipment
- Packaging and materials handling lines
- Raw materials and imported componentry
- Forklifts and factory logistics
- Factory fit-out, power upgrades and compliance works
Sale and leaseback for manufacturing: the numbers
| Typical amounts | $20,000 – $2,000,000 |
|---|---|
| Term | 12–60 months |
| Indicative rates | 8.5% – 18% p.a. |
| Repayments | Monthly |
| Speed | 3–10 business days including valuation |
| Documents manufacturing usually need | ABN, GST registration and two years of financials · Supplier quote or proforma invoice for the machine · Debtor ledger and aged receivables report |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
Key terms
Manufacturing equipment finance
Manufacturing equipment finance is secured lending for production machinery such as CNC machining centres, laser cutters and packaging lines, often structured to fund supplier progress payments and to commence repayments on commissioning.
Working capital cycle
The working capital cycle is the time between paying for raw materials and receiving payment for the finished goods made from them, during which the business funds the value of that inventory itself.
What is sale and leaseback?
Sale and leaseback is a transaction where a business sells an asset it owns to a financier and simultaneously leases or finances it back, retaining full use of the asset while converting its value into cash.
How much can you raise through equipment leaseback?
Financiers generally advance 60–80% of an asset’s assessed market value, based on age, condition, hours and resale demand rather than the original purchase price. A valuation or inspection is usually required.
What is a PPSR search?
A PPSR search checks the Personal Property Securities Register for existing security interests over an asset. Financiers run one before a leaseback to confirm the equipment is genuinely unencumbered and can be sold.
Questions from manufacturing
How do manufacturers finance machinery that is built to order overseas?
Progress payments to the manufacturer are funded through a trade finance facility or by the equipment lender, and the whole amount converts to a chattel mortgage when the machine is installed and commissioned. Tell your broker the payment schedule early so the structure is in place before the deposit is due.
How do manufacturers fund raw materials and work in progress?
Trade finance pays suppliers for raw materials with 90 to 180 days to repay, invoice finance advances against finished goods invoices on 30 to 60 day terms, and a line of credit fills the gaps. Together they fund the whole cycle from materials to payment, and the facilities grow with turnover.
Can I release capital from machinery I already own?
Yes. A sale and leaseback or refinance secured on unencumbered CNC machines, presses, lasers and lines can release 60 to 80 per cent of their valuation for working capital or expansion, with the machines staying on your floor. Lenders like recognised brands with strong secondary markets.
Does a supply contract help a manufacturing finance application?
Yes. A contract or purchase orders from a major customer for the product the machine will make are strong evidence of earnings and often move an application from a deposit to no deposit, or from full financials to a lighter assessment. Include them with the machine quote.