Monthly Archives: October 2019

Sale Leaseback: What to know when freeing up capital in equipment

Many agriculture businesses use a sale leaseback to free up capital from their existing tractors, combines, harvesters, grain trucks, trailers and other heavy equipment when they need capital for investing or getting through the off season.


How a Sale Leaseback works

Combine Harvesting
Free up capital in your equipment

A sale leaseback allows a business to keep the equipment working, even though it sells the equipment to a direct lender, like Stride Capital. The equipment is then leased back immediately with a fixed payment paid to the financing company over a set term, freeing up capital for the company to invest or use to cover expenses. If the equipment currently has a lease or loan against it, the new payment is usually lower. If the equipment is ‘free and clear,’ meaning there is nothing owing on the piece, the new payment may also have tax benefits that can be capitalized on prior to the end of the year. Sounds easy enough, but finding a lender who can complete a sale and leaseback transaction quickly may not be so simple.


Top 3 things lenders look for

Not all agriculture equipment is equal and there are a few things that lenders will look for.

1. Unencumbered or ‘free & clear’ equipment

A lender will need to know how much equity is in the equipment. This is determined based on how much the company is willing to lend against the asset(s) vs. how much is owing on the equipment. When the unit is ‘free and clear,’ as in there are no loans or nothing owed against it, this maximizes the amount of equity that can be freed up. If the unit is encumbered, it can still free up the remaining equity available, and it can mean a lower payment than what is currently paid on the gear.

2. Equipment Age

Lenders will need information about the make and model of a unit, and the date the equipment was manufactured. Most lenders are reluctant to finance equipment more than a few years old. Equipment is riskier to finance as it ages, and finding companies that will finance older, used equipment can be difficult. Select companies like Stride Capital look at the full picture, without age being a restrictive qualification for sales leasebacks.

3. Usage

Lenders tend to conduct sales leasebacks on tractors, harvesters, combines etc. without understanding how much the equipment has been used. Based on the age and average use, the equipment may be undervalued if it wasn’t used often or its intended use is assessed without knowing the true working history and intent. Owners of equipment know how hard the gear is working and what type of lifespan it has left. That’s why at Stride Capital, we take the projected usage of the equipment being pledged as collateral to determine the right structure for your business today and moving forward.


Sale leaseback transactions are a great way to get working capital when you need money to make it through a slow season. Stride Capital knows how the cycles of agriculture can affect farmers, and we can offer fast solutions for Western Canadians, without placing restrictions on equipment based on age or usage. We will work hard to understand the full picture to lend you the maximum value on your equipment.

Contact us today to find out more about sale-leasebacks or discuss all your business financial needs.