Leaseback working capital on molding presses you own
Molders own expensive, long-lived equipment and operate on capital-hungry terms. A leaseback fits the situation well, provided you understand what is collateral and what only looks like it.
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Why molders are looking at this now
The industry’s own benchmarking describes a difficult few years. Reported figures show capacity utilization falling from 79% to 59%, machine hours per day from 19 to 16, and capital equipment investment at top-performing shops dropping from $1.7 million to $540,000. Revenue at those shops fell from $20.3 million to $16 million and growth slowed from 7% to 4%, while turnover at non-top shops rose from 10% to 22%.
That is the context in which leasebacks come up: paid-off equipment, softer utilization, and a need for manufacturing financing that does not depend on a bank’s appetite for a plastics processor’s income statement. It also sharpens the caution.
A leaseback is a good answer to a timing problem and a poor answer to a utilization problem.
If presses are running 16 hours a day instead of 19 because the work is not there, converting equity into cash adds a payment to machines that were already not covering their keep.
The appraisal does more work here
In categories like machine tools, value can be triangulated from hundreds of published asking prices. Nearly every U.S. press dealer lists inventory as “call for price,” so public price discovery is thin. The ranges that do circulate come mostly from dealer marketing and should be read as indicative:
Ranges published by used-equipment dealers. Treat as directional, not as appraisal values.
- Use an appraiser who knows plastics processing equipment. A generalist will undervalue a well-specified all-electric machine and overvalue a tired hydraulic one.
- Document the full configuration. Tonnage, shot size, screw and barrel condition, control generation, robot or take-out, hot runner controllers, and auxiliaries. Chillers, dryers, granulators, and take-out robots commonly represent a meaningful share of installed value.
- Expect the advance against the conservative end of a range. Thin comparables push underwriting toward caution.
One thing working in your favor: all-electric machines defend their value on operating economics. Compared with hydraulic, they are commonly cited as using 40% to 70% less energy, with lower maintenance cost. On a 200-ton machine running continuously, that is roughly $13,000 to $17,500 a year at ten cents a kilowatt hour. An appraiser and a buyer both understand that.
The molds are usually not yours
Industry custom is clear: the party who paid for the tool owns it, even though it sits in your plant and you maintain it. Production molds are commonly customer-funded.
A $60,000 steel tool on your floor is not your asset, cannot be pledged, and can leave for a competitor when the program moves.
A useful exception exists on insert-based tooling, where the customer typically pays only for the insert and the unit mold base remains the molder’s property. If a meaningful share of your tooling is built that way, those bases are yours and belong on the schedule. Two takeaways: do not include customer-owned tooling on a leaseback schedule (it will be excluded, and it makes the file look imprecise), and get ownership stated explicitly in writing on every tool. Ambiguity there is expensive at exactly the moment a program is in dispute.
Model the tax before you sign
A leaseback is a sale. If the machines were expensed under Section 179 or bonus depreciation, your adjusted basis may be near zero, and proceeds above basis are a gain, generally taxed as ordinary income rather than capital gains to the extent it represents recaptured depreciation. That does not make the deal wrong; it means your spendable proceeds are meaningfully less than the advance. Know by how much before you commit the money to anything. On a several-hundred-thousand-dollar advance against a heavily depreciated press line, this is not a rounding error.
General information only, not tax advice. Recapture and lease classification depend on the specific structure. Confirm with your CPA before signing.
Get every quote on the same value standard
Advance rates get quoted against different yardsticks, which is why you will hear anything from 50% to 100% and none of it is comparable. An advance of 80% of Orderly Liquidation Value and one of 50% of Fair Market Value can be the same dollar amount. Make every quote use the same standard or you are not comparing offers.
Given how thin published press comparables are, the gap between standards tends to be wider here than average, so this question matters more than usual.
The bottom line
Presses are durable, valuable, and frequently paid off. That is good raw material for a leaseback. Just go in knowing three things: the appraisal is the transaction, customer-owned tooling is not collateral, and recapture will reduce what you net. And be honest about which problem you are solving. If utilization is the issue, our piece on the three mistakes we see molders make is the more useful place to start.
Frequently asked questions
Can I do a sale-leaseback on injection molding presses?
Yes, provided you own them free and clear and they appraise. Presses are durable, long-lived assets and are commonly paid off, which makes them reasonable leaseback collateral. Expect a third-party appraisal by someone who knows plastics processing equipment, a UCC lien search, a full equipment schedule including auxiliaries, recent bank statements, and a tax return.
Are the molds in my plant part of the collateral?
Usually not. Industry custom is that the party who paid for the tool owns it, even though it sits in the molder’s plant, and production tooling is commonly customer-funded. Those molds cannot be pledged and can leave when a program moves. An exception exists on insert-based tooling, where the customer typically pays only for the insert and the unit mold base remains the molder’s property.
Why is appraisal so important for molding equipment?
Because public price discovery is unusually thin. Nearly every U.S. press dealer lists inventory as call for price, so value cannot be triangulated from published comparables the way it can with machine tools. That makes the appraisal effectively the transaction, and an appraiser familiar with plastics processing equipment more important than in most categories.
Do all-electric presses hold value better than hydraulic?
Generally yes, largely on operating economics. All-electric machines are commonly cited as using 40% to 70% less energy than hydraulic equivalents, which on a 200-ton machine running continuously can mean roughly $13,000 to $17,500 a year at ten cents per kilowatt hour, alongside lower maintenance cost. Those savings are visible to buyers and appraisers, which supports resale value.
Will a leaseback on depreciated presses create a tax bill?
It can. Because a leaseback is structured as a sale, proceeds above your adjusted tax basis are a gain, and gain attributable to prior depreciation is generally taxed as ordinary income rather than capital gains. If the presses were expensed under Section 179 or bonus depreciation, basis may be very low, which means spendable proceeds are meaningfully below the advance figure.
Want to know what your press line supports?
Send the equipment schedule with tonnage, year, and auxiliaries. We will give you a realistic range before you commit. Or run the numbers yourself first in the Quote Builder. No credit pull, no obligation.
This article is general information about commercial equipment financing and is not tax, legal, or financial advice, nor a commitment to finance. All figures are illustrative examples, not offers or quotes. All financing is subject to credit approval and underwriting. Rates, terms, and approval depend on the complete business and credit profile.