Equipment Financing for Canadian Businesses (2026)
Need machinery, vehicles, or equipment without draining cash? Equipment financing and leasing let you spread the cost. Here's how it works in Canada and how to choose.
Need machinery, vehicles, or equipment without draining cash? Equipment financing and leasing let you spread the cost. Here's how it works in Canada and how to choose.
Buying equipment outright can swallow the cash a growing business needs for everything else — payroll, inventory, marketing, and the next opportunity. Equipment financing lets you acquire machinery, vehicles, or technology now and pay over time, with the equipment itself usually serving as the security. For most Canadian businesses it's faster and more flexible than tying an equipment purchase to a property mortgage. Here's how it works, what lenders look at, and how to choose between financing and leasing.
The short answer
Equipment financing is a loan or lease used to acquire business equipment, where the equipment itself typically secures the deal — so approval leans on the asset and your business's cash flow rather than real estate. It preserves working capital, can offer tax advantages, and closes faster than most commercial lending. Some equipment may also qualify under the Canada Small Business Financing Program (CSBFP). See equipment financing options or ask Maya to map out a deal.
Finance vs. lease
The first decision is whether to own the equipment or simply use it. Both spread the cost; they differ in ownership, payments, and end-of-term outcome.
Equipment loan (financing)
You borrow to buy the equipment and own it outright once the loan is repaid. Each payment builds equity in the asset. This is best when you'll use the equipment for most of its useful life and want it on your balance sheet — heavy machinery, manufacturing lines, long-lived vehicles, or production gear that holds value.
Equipment lease
You pay to use the equipment over a term, with options to buy it out, return it, or upgrade at the end. Leasing usually means lower monthly payments and little or no down payment, and it shifts obsolescence risk. It suits fast-depreciating or quickly-outdated equipment — most technology, certain medical or diagnostic gear, and anything you expect to refresh on a cycle.
| Finance (loan) | Lease | |
|---|---|---|
| Ownership | You own it once repaid | Lessor owns it during the term |
| Down payment | Often required (e.g. 10–20%) | Often little to none |
| Monthly payment | Higher | Typically lower |
| End of term | You keep the asset | Buy out, return, or upgrade |
| Best for | Long-life, value-holding equipment | Fast-depreciating or evolving tech |
What qualifies: new and used equipment
A wide range of business assets can be financed — production machinery, commercial vehicles and trailers, construction and agricultural equipment, restaurant and kitchen lines, medical and dental equipment, IT hardware, and more. Both new and used equipment can qualify:
- New equipment is the easiest to finance — clear value, full useful life ahead, and often manufacturer or dealer programs.
- Used equipment is financeable too, but lenders weigh age, condition, remaining useful life, and resale market. Older or highly specialized assets may need a larger down payment or a stronger overall file.
Widely-used equipment with an active resale market is simplest because the lender can recover value if needed; niche, custom-built, or rapidly-obsolete gear is assessed more cautiously.
What lenders assess
Because the equipment is the security, underwriting blends the asset with your business profile:
- Cash flow — can the business comfortably cover the payment? Lenders look at revenue, margins, and existing debt service.
- Credit — business and often personal credit history, especially for newer companies.
- Equipment value and useful life — type, age, condition, and how the asset's life compares to the financing term. Lenders generally won't amortize beyond the equipment's useful life.
- Time in business — established operators get easier approvals; startups may need more down or a personal guarantee.
Typical terms and down payment
The figures below are illustrative ranges to set expectations, not quotes — your terms depend on the equipment, your financials, and the lender.
| Item | Typical range (illustrative) |
|---|---|
| Down payment (financing) | 0–20%, often around 10% |
| Term | ~2–7 years, aligned to useful life |
| Security | The equipment itself; sometimes a personal guarantee |
| Approval speed | Often faster than property-based lending |
CSBFP eligibility for some equipment
The Canada Small Business Financing Program (CSBFP) is a federal program that helps small businesses access loans through participating lenders by sharing the lender's risk. It can cover the purchase of certain equipment and other eligible asset classes, subject to program rules, maximum loan limits, and eligibility criteria for the business. Not every business or every piece of equipment qualifies, and terms are set by the lender within the program framework — but where it fits, CSBFP can make financing accessible for newer or smaller businesses. Ask whether your purchase qualifies, or ask Maya to check it against your situation.
Tax treatment notes (not tax advice)
Equipment financing can carry tax advantages, though the details depend on your structure and the deal — and this is general information, not tax advice. In broad terms: interest on an equipment loan, and lease payments on a true lease, may be deductible as business expenses, and owned equipment may qualify for capital cost allowance (CCA) depreciation. How a lease is characterized for tax can differ from its accounting treatment. Always confirm the specifics with your accountant before relying on any tax outcome.
A worked example (illustrative)
Suppose a contractor wants a $120,000 piece of equipment with a useful life of about 7 years. Figures are illustrative only:
- Finance route: 10% down = $12,000, financing $108,000 over 5 years. Higher monthly payment, but the contractor owns the asset at the end and it stays on the balance sheet.
- Lease route: little or no money down, lower monthly payments, and at term end the contractor can buy it out, return it, or upgrade.
If the equipment holds value and will run for years, financing to own often wins. If it's likely to be superseded or the priority is the lowest monthly outlay, leasing can be the better fit. Either way, the cash that would have bought it outright stays available for the business.
The process, step by step
- Define the equipment — get a quote or invoice with make, model, and price (new or used).
- Gather financials — business statements, cash-flow picture, and credit details.
- Choose finance or lease — based on useful life, payment goals, and tax considerations.
- Submit and underwrite — the lender reviews cash flow, credit, and the asset.
- Approve and fund — often quickly, since the equipment secures the deal.
How it fits with property and operating financing
Equipment financing pairs naturally with a commercial property purchase: use a commercial mortgage for the building and equipment financing for the machinery inside it — whether that's pumps at a gas station, kitchen and laundry at a hotel, or racking and machinery in an industrial building. Keeping them separate preserves your real-estate borrowing capacity. For working capital alongside the equipment, compare a business line of credit vs term loan, review the basics of how to get a business loan in Canada, or explore broader business loans. You can model property scenarios with our commercial mortgage calculator.
Frequently asked questions
What is equipment financing?
A loan or lease to acquire business equipment, where the equipment itself typically serves as security — so approval is based on the asset and your cash flow rather than real estate.
Should I lease or finance equipment?
Finance (and own) equipment you'll use for most of its useful life and that holds value; lease fast-depreciating or quickly-outdated equipment, or when you want lower payments and the flexibility to upgrade.
Can I finance used equipment?
Yes. Used equipment is financeable, though lenders weigh its age, condition, remaining useful life, and resale market — older or highly specialized assets may need a larger down payment or a stronger file.
Does equipment financing qualify under the CSBFP?
Some equipment can be eligible under the Canada Small Business Financing Program, subject to program rules, loan limits, and business eligibility. It's worth asking whether your specific purchase qualifies through a participating lender.
Is equipment financing tax-deductible?
Interest and, for true leases, payments may be deductible, and owned equipment may qualify for capital cost allowance. This is general information, not tax advice — confirm the specifics with your accountant.
How fast is equipment financing approval?
Often faster than other commercial lending, because the equipment secures the deal — though timing depends on the asset, whether it's new or used, and your business's financials.
Need equipment without draining cash? We'll structure financing or a lease that preserves your working capital and borrowing capacity. See equipment financing, contact us, or ask Maya.
Mortgage content produced by Mortgage Squad Advisors' team of FSRA-licensed mortgage advisors and reviewed under the supervision of the brokerage's Principal Broker (FSRA Brokerage #13737) before publication.
Ask Maya about this article
Instant answers · 50+ languages · no credit pull