Quick answer: Yes—businesses can use an equipment loan to purchase eligible new or used machinery, vehicles and other commercial assets. The lender assesses repayment capacity and the equipment; compare the required contribution, security, fees and full payment schedule before accepting an offer.
Yes—Canadian businesses commonly use an equipment loan to purchase new or used assets like trucks, excavators, CNC machines, ovens, or medical devices. You finance the price (often with delivery/installation and taxes), make fixed monthly payments over 24–84 months, and the lender takes a security interest in the equipment until it’s paid off. Start with the Equipment Loans page or compare structures on the Equipment Financing hub.
What an equipment loan can cover
- Purchase price of revenue-producing equipment (new or used)
- Eligible soft costs (delivery, installation) and often sales tax
- Assets across industries: Transportation, Construction, Manufacturing, Hospitality, Medical/Dental, Agriculture.
Not sure if your asset qualifies? Check Eligible Equipment. Mehmi also sells equipment directly—browse current inventory.
Are you looking for a truck? Look at our used inventory.
Loan vs. lease at a glance
| Feature | Equipment Loan | Equipment Lease |
|---|---|---|
| Ownership | Own from day one (lien until repaid) | Own at buyout ($10/10%/FMV) or return |
| Monthly payment | Fixed amortization | Often lower via residual |
| Upfront cash | Typically 10%–20% down | Usually first/last + fees (~0%–5% equivalent) |
| Tax treatment (high level) | Interest deductible; principal via CCA | Payments generally deductible (business use) |
| Best for | Assets you’ll keep long-term | Cash-flow relief and upgrade cycles |
| Learn more | Equipment Loans | Equipment Leases |
If you’ll make frequent purchases, consider an Equipment Line of Credit. Need cash tied up in gear you already own? A Refinancing & Sale-Leaseback can unlock capital while the asset stays in service.
BDC’s equipment-financing guide emphasizes the complete financing structure when comparing offers.
“Don’t focus only on interest rates”
For the equipment decision discussed here, compare the amount financed, payment schedule, collateral and remaining obligations alongside the quoted rate.
Typical terms, down payments, and rates
- Terms: 24–84 months (longer possible for long-life assets)
- Down payment: usually 10%–20%; prime files can see 0%–10%, while startups/older assets may require 20%–35%+
- Pricing: based on credit strength, time in business, cash flow, and asset age/resale
Model scenarios instantly with the calculator.
How to qualify (even with a thinner file)
- Choose liquid, mainstream equipment with strong resale.
- Provide 3–6 months bank statements, invoice/bill of sale (year/hours/km/serials), ID, and any contracts/POs.
- Add equity, collateral, or a guarantor if credit is mid-600s or lower.
- If upfront cash is tight, compare a lease or leverage Asset-Based Lending, Working Capital, or Invoice/Freight Factoring.
Quick steps to funding
- Pick the asset (or select from our inventory).
- Set a target payment/term in the calculator.
- Apply; upload bank statements and the vendor invoice.
- We align rate/term (or a lease alternative) to your cash flow.
- Docs e-signed; vendor paid; you take delivery—subject to lender review for clean files.
FAQ
Can I use a standard business loan instead of an equipment loan?
Yes, but dedicated Equipment Loans usually price and underwrite better for asset purchases.
Is it hard to get approved?
Not if your file is prepared. Many SMEs qualify quickly; thinner files often succeed with a lease, added equity, or collateral.
How much down do I need?
Plan for 10%–20% on loans; leases typically take first/last plus fees.
Are payments tax-deductible?
For loans, interest is generally deductible and principal is recovered via CCA. Lease payments are generally deductible (business-use portion).
Can I finance used or private-sale equipment?
Yes—documentation and condition matter. Confirm fit via Eligible Equipment.
What if I already own equipment and need cash?
Use Refinancing & Sale-Leaseback to unlock equity without taking the asset out of service.
If you want a tailored quote or structure, feel free to contact our credit analysts via Contact Us. You can also compare loans vs. leases and set your budget in minutes with the calculator.
Authoritative references
- Innovation, Science and Economic Development Canada — Canada Small Business Financing Program:
The Canada Small Business Financing Program makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders.
Program eligibility, lender criteria, tax treatment, and product terms can change. Verify current official guidance and the final financing documents before making a decision.