Published 2026-01-20. Figures are cited on /sources. Modelled numbers are labelled illustrative.
Sale-leaseback equipment — how it works
You own a paid-off machine. A lessor purchases it at fair market value. Cash hits your operating account. You keep using the asset under a lease. At term end, title reverts or is repriced. Production does not stop. The operating line is not the source of funds. That is the whole product.
On an illustrative $400,000 CNC, the cash available today is $400,000 before fees and any holdback the lessor documents. Monthly cost depends on term, residual, and rate. Typical equipment schedules land in the 7–9% range. The calculator on the equipment page is illustrative. The lessor’s term sheet is the quote. Novaline is not the lessor.
Why distributors use it
Working capital is trapped in iron that has already been paid for. A bank line that is already funding AR cannot also fund a seasonal inventory build. Equity is a last resort for a cash-cycle problem. Sale-leaseback is invoice-adjacent: it is cash against an asset you already own, not against a story about next year’s sales.
Asset-based finance industry assets are in the $450 billion range. That is market scale, not a Novaline AUM claim. The relevant fact for a shop floor is narrower: lessors will buy a CNC, a press, a forklift fleet, a packaging line, or a trailer if they can underwrite it. They will not buy a machine that will be obsolete inside the term.
The comparison versus cash and the bank
Cash purchase uses the operating account permanently. Opportunity cost is whatever that cash earns in inventory turns. If turns earn more than 7–9%, financing the machine is usually the correct trade. If they do not, write the cheque. A bank line is cheaper than a lease when you have unused headroom earmarked for capex. If the line is already funding receivables, using it for a mill is how DSO and capex fight each other.
Arithmetic over adjectives: $400,000 at 8.5% for 48 months with a $40,000 residual is a monthly lease payment you can put next to the gross margin on the work that machine produces. If the machine does not earn the lease, do not sign it. If it does, and the cash can turn inventory twice, the lease is cheaper than looking cheap.
Who this is not for
Assets that will be obsolete inside the term. Companies with unused cheap bank headroom already earmarked for capex. Distressed files looking for a 24-hour advance against iron the lessor cannot inspect. Consumer equipment. Commercial real estate — we refer that to licensed brokerage partners.
If you need cash against invoices rather than machines, that is factoring: 1.5–4.5% per 30 days on approved invoices, advance rates to 90%+. If you need a revolver against AR and inventory together, that is a line of credit. Do not sale-leaseback a mill to paper over a collections problem. The mill will still be there. The aging will too.
How to get paid faster as a wholesale distributor — the adjacent question
Sale-leaseback does not shorten DSO. Payment processing does: 48 hours versus 45-day terms, and 0.45–1.5% off qualifying commercial volume. Factoring advances the invoices that should stay on terms. The three products are one cash cycle. Buy the one the arithmetic names. Start with the fee audit if card mix is material. Start with the asset list if the mill is paid off and the line is full. Start with the aging if the payers are creditworthy and slow.
We work with $2M–$25M distributors. Send the asset list. We will tell you if a lessor can underwrite it, and we will tell you if they should not.
A $400,000 mill, written as arithmetic
Fair market value $400,000. Residual $40,000. Term 48 months. Rate 8.5% illustrative. The lease payment is the number to put next to the gross margin on the work that mill produces. If the mill is paid off today, cash available is $400,000 before documented fees. If that cash turns inventory twice at a contribution above the lease cost, the lease is cheaper than looking cheap. If the mill will be replaced in 30 months, do not sign a 48-month schedule. Obsolete inside the term is the kill criterion.
Do not use the operating line for this if the line is already funding AR. That is how capex and DSO fight. Do not sale-leaseback to paper over a collections problem. Factoring is 1.5–4.5% per 30 days on approved invoices; it is the product for slow creditworthy payers. Processing is 0.45–1.5% off qualifying commercial volume and 48-hour settlement. Three products. One cash cycle. Buy the one the aging and the asset list name.
Asset-based finance at $450B of industry assets means the lessor market exists. It does not mean every CNC clears. Inspection, serial numbers, and a use case a credit officer can repeat are the file. We package that. We are not the lessor. Commercial real estate is referred to licensed brokerage partners.
When cash is still the correct answer
When unused cheap bank headroom is already earmarked for capex. When the after-tax lease cost exceeds what the cash earns in turns. When the asset is a laptop class, not a mill class. When the company is distressed and the lessor cannot inspect. We will say cash. A page that cannot say cash is a sales page.
If the mill is the right trade, send the asset list. If the aging is the right trade, send the aging. If the statement is the right trade, run the fee audit. That is the whole firm.
Sale-leaseback, restated without a brochure: title moves to the lessor at fair market value; cash hits the operating account; you keep the machine under a lease; at term end title reverts or is repriced; production does not stop. Typical schedules 7–9%. Calculator illustrative. Lessor’s term sheet is the quote. Novaline is not the lessor. $450B is the industry, not our AUM.
Paid-off CNCs and invoices that are performing and still tying up the line. Start with which tool the arithmetic names. Do not sale-leaseback a mill to pay a slow OEM. Do not factor invoices to buy a mill. Do not surcharge the OEM to avoid a lease. The wrong product is expensive even when it is legal.
Who this is not for, again: obsolete-inside-the-term assets, unused cheap bank headroom already earmarked for capex, distressed files a lessor cannot inspect, consumer equipment, commercial real estate. Who it is for: $2M–$25M distributors and manufacturers who own iron that is paid off and a line that is already funding AR. Send the list. We will tell you if a lessor can underwrite it, and we will tell you if they should not.