How Canadian businesses with B or C credit can still secure competitive equipment leases using asset-based lending, sale–leaseback, and smart structuring.
Short answer: Even with “B” or “C” credit, Canadian businesses can still access competitive equipment financing by leaning less on personal credit and more on the strength of the assets, the structure of the deal, and the story behind the business. In practice, that means using tools like equipment leases, asset-based lending, and sale–leaseback, and letting a specialist like Mehmi package your file so good equipment and solid cash flow outweigh old credit bruises.
A lot of good operators carry “B” or “C” credit today. You’re not alone, and it doesn’t automatically disqualify you from decent equipment financing.
Recent data from Equifax shows that over 300,000 Canadian businesses missed at least one credit payment in early 2025, a sign that many otherwise viable companies have blemished files after a tough few years. (Mortgage Professional) At the same time, federal data shows small business credit approvals remain high overall — about 89% of small businesses were approved for some form of debt financing in 2024, even as conditions tightened. (ISED Canada)
On the personal side, Equifax scores in Canada typically range from 300 to 900, with “good” credit starting around 660 and below-660 often considered fair or poor. (Publications Canada) Banks and traditional lenders reserve their very best pricing for “A” clients, but that doesn’t mean “B or C” clients are shut out.
What changes is how the deal needs to be structured:
That’s where Mehmi lives: bridging the gap between what banks want to see on paper and the actual value of your equipment and contracts in the real world.
Key point: “B” and “C” credit are shorthand labels, not official grades. Different lenders slice the world differently, but the gist is the same: A = very strong, B = near prime, C = challenged. For asset-backed equipment deals, those labels matter — but they’re not the final word.
In simple terms:
Database work by the Bank of Canada confirms what every underwriter knows: riskier borrowers are charged higher risk premiums, and high debt service squeezes cash flow closer to delinquency. (Bank of Canada) That’s why pure “rate shopping” with B or C credit can backfire — you get stuck with a low headline rate but a structure that’s too tight for real life.
The good news is that equipment changes the conversation:
So with B or C credit, the goal isn’t to pretend you’re an A-file. The goal is to present a deal where the equipment, cash flow, and structure clearly offset the credit blemishes.
Key point: If your credit isn’t perfect, you can still land competitive equipment financing by strengthening everything else: the asset, the down payment, the term, the security, and the story.
Think of lenders balancing three big levers:
With B or C credit, you likely can’t change your past overnight. But you can:
That’s exactly what a specialist like Mehmi does: design structures where a lender looks at the package and says, “The credit is a bit bruised, but the assets and structure make sense.”
Key point: Well-structured equipment leases can be very forgiving of B or C credit when the underlying assets are strong and working hard.
A Mehmi equipment lease is usually the starting point for B/C files because:
If the equipment is mission-critical and has a good secondary market (e.g., excavators, highway tractors, CNC machines, medical devices), a leasing specialist can often still price the deal competitively for your risk bucket — even if your bank has already said no.
Mehmi’s broader equipment financing overview covers everything from yellow iron to medical and hospitality gear, with credit programs calibrated to different risk levels.
Key point: Asset-based lenders care more about what you own and what you’re earning than about a flawless credit score.
In asset based lending (ABL):
This is especially useful when:
ABL is increasingly common in Canada’s private credit markets because asset-secured loans are treated as less risky than unsecured lending. (Private Capital Solutions) For B or C credit borrowers, that’s a huge advantage.
Key point: If equipment is tied up in high-cost loans or merchant cash advances, a sale–leaseback can both unlock equity and move you into a cleaner, more competitive structure.
A refinancing or sales leaseback works like this:
This can be a lifesaver if B or C credit pushed you into very high effective rates during the pandemic or a rough patch. Industry reviews of alternative lending show many MCAs and short-term products effectively costing in the mid-teens to 30%+ once you factor in fees and short amortization. (Medium)
Refinancing that debt into an equipment-backed lease or ABL facility, even at a mid-range rate, can materially reduce your monthly burden and make your capital stack much more palatable to future lenders.
Key point: If you’re growing and know you’ll buy more equipment, an equipment line of credit and vendor programs can lock in competitive terms before your next purchase — even with non-A credit.
With a equipment line of credit:
Layer in a vendor program with your key equipment suppliers, and the process gets even smoother:
For B/C credit businesses, the win is that you stop applying cold every time you need equipment. Instead, you’re operating inside a pre-underwritten framework where pricing is defined and competitive for your risk profile.
Key point: With B or C credit, you keep pricing competitive by not forcing every problem into an equipment deal. Use separate tools for working capital so the equipment facility stays clean.
If you try to cram payroll, tax arrears, and old debt into an equipment lease, lenders see the whole file as “messy” and price for that extra risk. Instead, pair equipment financing with the right working-capital tools:
If an MCA is already in the mix, Mehmi can help you understand whether a merchant cash advance should be refinanced or simply sunset as quickly as possible.
By segregating equipment finance from short-term cash fixes, you make it easier for lenders to price fairly — instead of loading your equipment deal with a “working capital risk premium”.
Key point: You may not get “top of the rate sheet” pricing, but you can often move from “hard money” rates to competitive, sustainable terms by tightening a few things before you apply.
Here are practical moves that help Mehmi sell your file to lenders:
Remember: Statistics Canada finds that riskier borrowers pay higher rates and have higher delinquency rates, but those averages mask a wide spectrum of structures. (ISED Canada) Your job — with Mehmi’s help — is to land on the healthiest structure in your bracket, not the first offer that says yes.
Key point: A bit of prep can turn a “we’ll see” file into a “yes, at fair terms” file — even if your credit has dings.
Here’s a simple roadmap:
Because Mehmi works with multiple lenders across equipment financing and business loans, your file can be packaged once and then matched to the right credit box — instead of you burning time applying piecemeal.
When you’re ready, you can start that process via Contact Us and work through your numbers with a Canadian credit specialist.
Profile (details changed for privacy)
The problem
Over three years, the company:
By 2024, monthly payments were eating cash, and the bank wouldn’t extend more credit because of elevated utilization and a few late payments. The owner assumed they were “C credit” and stuck.
What Mehmi did
The outcome
The big lesson: the credit score didn’t magically jump. Instead, Mehmi used the quality of the equipment and a smarter structure to get competitive pricing for where the business really was — not where the banks wanted it to be.
Often yes. A score in that range puts you somewhere in the “fair” band for many lenders, not an automatic decline. (Scotiabank) With Mehmi, strong equipment and solid cash flow can still support competitive equipment financing, even if rates are higher than true A-clients. The key is to structure the deal around assets and affordability, not just the score.
You’ll pay more than an A-client — that’s how risk pricing works — but you don’t have to live in “hard money” territory. Studies of small-business lending in Canada show that riskier borrowers do face higher interest rates, but terms vary widely depending on collateral and lender type. (ISED Canada) Using leases, asset based lending, and sale–leaseback can keep your effective rate competitive for your risk profile.
It depends what’s at stake. If a new machine or vehicle will clearly increase revenue or cut costs right away, waiting years to polish your score could cost more in lost opportunities than you save in interest. Many Mehmi clients move ahead with B credit now, then refinance later once performance and scores improve. The key is not to over-borrow or use the wrong products in the meantime.
Programs like the Canada Small Business Financing Program (CSBFP) can help bankable borrowers access term loans for equipment and improvements by sharing risk between lenders and the federal government. (ISED Canada) But CSBFP is still underwritten by banks, which means they favour stronger credits. If your file is clearly B or C, it’s often more realistic to look at specialized or asset-based partners through Mehmi while you work your way back toward bank-level eligibility.
Not necessarily. One of Mehmi’s strengths is finding ways to keep equipment secured against itself wherever possible. That might mean structuring equipment leases, sale–leaseback, or asset-based facilities that rely on the value of your machines, trucks, or production lines rather than your personal real estate. In some cases, additional security (like a secured loan) makes sense — but it shouldn’t be automatic.
It varies, but most lenders want to see 12–24 months of clean behaviour: on-time payments, fewer delinquencies, and lower utilization. (BMO) The right equipment financing can actually help that process if:
Working with a partner like Mehmi means your capital structure is built with that trajectory in mind, so today’s “B/C” deal is a stepping stone — not a dead end.
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