Typical down payments in Canada range from 0%–20%—but the “right” number depends on credit, cash flow, asset type, and structure. Here’s how to lower it.
Most Canadian businesses don’t need a massive down payment to finance equipment—but you do need the right upfront cash for your specific file. In practice, down payment requirements usually fall into three buckets:
The key: down payment isn’t a rule—it's a risk lever. If you understand what the underwriter is protecting against, you can often reduce upfront cash without killing approval odds.
Down payment is the cash you put in at the start to reduce the lender’s risk and/or cover initial costs. But in equipment finance, “down” can be packaged a few different ways:
Underwriters care about how much cash leaves your account on day one, not what the vendor calls it.
Here’s a practical range guide you can use before you even apply:
A useful reality check: BDC’s own equipment financing explainer shows an example where a cash down payment is 10% (in their scenario) while other parts of the purchase are financed through different methods. (BDC.ca)
Down payment is how lenders protect three risk variables:
In plain English: the more uncertain the story, the more the lender wants you to share the risk upfront.
This shows up directly in credit packaging requirements: even on smaller files, the “structure” explicitly includes term, down payment, and residual/buyout—because structure is the risk toolset.
Key point: credit helps, but lenders approve behavior and consistency more than a single number.
A strong credit profile can reduce the need for cash down. But if the application details don’t match reality, or recent trade performance looks shaky, down payment often rises.
If you want a fast benchmark on what Canadian lenders tend to look for, read our guide on credit score expectations for equipment financing in Canada:
credit score ranges and approval logic (Canada).
Key point: “can you afford it?” is often answered by bank activity, not your optimism.
If the lender can’t clearly see stable deposits and manageable outflows, they’ll often ask for more upfront cash—or require more documentation. For weaker credit or older equipment, it’s common to request the last 3 months of bank statements, and even the format matters (PDF vs scattered photos).
Key point: lenders put more money down on equipment that’s harder to resell.
Standard, liquid assets (common construction units, forklifts, basic shop equipment) generally finance with less cash down than niche units that have thin resale markets.
For a Canadian-heavy example set, see:
how heavy equipment deals get structured.
Key point: used equipment isn’t a problem; unknown condition is.
Used assets can still be financed at low upfront cash, but condition and service history matter. If the engine has been rebuilt, lenders may require repair invoices; higher-km/hours deals can trigger extra verification.
Key point: private sales usually require more “proof,” which can translate to more upfront cash.
Even when the approval is fine, funding can require proof of initial payment and confirmation that deposits came from the lessee’s account (and match the banking details).
Key point: if you can’t lower the risk, change the structure.
Structure controls affordability and exposure. That’s why “term + down payment + residual” is treated as one combined lever set.
If you’re not sure which structure fits, start here:
leasing vs financing in Canada (what actually changes).
Key point: in Canada, up to 100% financing exists—but “0% down” rarely means “no cash out of pocket.”
Major providers publicly market high-advance equipment financing/leasing. For example, RBC states it offers up to 100% financing for business equipment leasing. (RBC Royal Bank) Scotiabank similarly promotes up to 100% financing for leasing/equipment financing solutions. (Scotiabank)
But here’s what you should assume in real life:
If your real goal is “protect cash,” leasing is often the cleanest route—BDC notes that leasing generally requires less cash upfront than buying (even though buying may be cheaper over the full asset life). (BDC.ca)
For the practical buy-vs-lease decision in Canadian terms:
lease vs buy framework (cash flow + total cost).
Key point: underwriters discount what they can’t verify.
If your file is borderline, don’t start by arguing the down payment—start by removing uncertainty:
Key point: down payment is often a substitute for a mismatched structure.
Two examples:
Use:
$1 buyout vs FMV lease (Canada).
Key point: a big down payment can reduce lender risk—but can increase your risk.
If a down payment leaves you with no cushion for payroll, fuel, repairs, or tax timing, you may trade approval for fragility. If you’re tempted to pay cash, read:
how leasing/financing affects your business finances.
Key point: if you already own equipment, you may be able to “create” the down payment by refinancing or sale-leaseback.
That’s a common way to fund a deposit (or preserve cash) while keeping operations running:
Key point: “required down” is often lender-specific, not deal-specific.
One lender may demand 20% simply because the asset or industry is outside their comfort zone. Another lender may approve at 0%–10% with the right structure. If you’re comparing options, use:
best equipment financing companies in Canada.
Key point: planning a realistic range prevents “deal shock” at approval.
Give yourself 1 point for each “yes”:
Score guide
To avoid self-inflicted problems that drive up down payments, see:
top equipment financing mistakes to avoid.
Business: HVAC contractor in Ontario (4 years operating)
Asset: Used service van + shelving package (bundled purchase)
Initial quote elsewhere: 20% down requested due to “used vehicle + incomplete banking package”
Goal: Keep cash for payroll and a slow season
Conditional approval moved forward at 10% upfront (instead of 20%), because the lender could measure risk quickly and the structure fit. The contractor kept more working capital while still sharing enough risk to get the deal done.
Key point: the “true” cost of a down payment is what it does to cash flow after tax timing.
Leasing can reduce upfront strain (often spreading costs into payments), and taxes/filing timing can make “big upfront cash” feel worse than expected. If you want the practical tax view:
tax benefits of equipment financing in Canada and
capital lease tax treatment (CCA vs lease deductions).
If you want the lowest realistic down payment, don’t start with “what’s the minimum?” Start with: what structure keeps you safe and approvable even in a weak month? Then package the file so the lender can say yes quickly.
Mehmi can help you compare structures across lenders (especially when one lender’s down payment ask is really just an “appetite mismatch”).
Yes, in some cases—several major providers promote up to 100% financing for equipment leasing/financing. (RBC Royal Bank) But you should still expect at least a first payment and fees.
Often it’s not just credit—it’s asset risk, used condition uncertainty, industry volatility, or weak documentation. For weaker-credit/older-asset scenarios, lenders commonly request more documentation (like bank statements) and may require more upfront risk-sharing.
Often, yes. Leasing is commonly positioned as requiring less upfront cash than buying/borrowing. (BDC.ca)
Not always, but they usually need more verification, and funding commonly requires proof of initial payment/deposit source.
Sometimes—especially in leasing—soft costs may be financed depending on lender policy and deal strength. (Confirm per lender/program.)
Make the file easy to underwrite: clear equipment specs, clean vendor invoice, and strong proof of banking/cash flow (properly formatted).
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