Sale and Leaseback

How sale and leaseback works

The sale releases capital while the lease creates a new rental obligation. The funder will assess ownership, valuation, condition and the proposed lease. Any existing finance may need to be settled and the commercial sale terms must be separated from the ongoing right to use the asset.

Practical UK business example

A manufacturer owns production machinery outright. A funder considers buying it and leasing it back, allowing the manufacturer to keep using it while releasing capital for a new order.

Illustrative example only; not a finance quotation or a client case study.

Why it matters

It may turn capital tied up in equipment into working cash without moving the machinery. The benefit must be weighed against rental commitments and the loss of ownership.

Limitations and common misconceptions

It is not the same as simply borrowing against an asset. Sale recognition, tax and VAT can be complex, especially under modern lease accounting. Professional advice and the contract determine the treatment.

Explore asset refinance to discuss how the structure relates to your business.