Current Equipment Financing Rates in Canada
Equipment Loan Rates
- In 2025, Canadian small and medium-sized businesses typically face equipment loan rates between 7% and 14% APR, depending on credit quality and lender risk appetite (Mehmi Financial Group).
- U.S.-based business data reflects equipment financing rates ranging from 7.5% to 24%, highlighting how creditworthiness significantly impacts rates (Lendio).
Equipment Lease Rates
- A “good” lease rate in Canada generally falls within 7% to 9%, especially for businesses with solid credit, for leases under $100,000 (Soluco).
Rates for less competitive credit profiles or lenders can range from 9% to 13%, and in some cases, up to 16% depending on the asset and risk profile (Soluco).
What Drives Equipment Financing Rates?
- Credit Profile & Business History: Strong financials can mean rates near the lower end (e.g., 7%); new or riskier businesses may face higher double-digit rates.
- Asset Type and Age: Newer, high-resale-value equipment typically attracts lower rates.
- Financing Structure: Terms like down payments, residuals, and amortization length directly influence rate offers.
- Lender Type: Banks and government-backed programs tend to offer lower rates; alternative lenders offer flexibility at higher costs.
- Macro Factors: Changes to the Bank of Canada’s overnight rate—currently around 2.75%—help shape borrowing costs (sandhusranleasing.com, BDC.ca, Mehmi Financial Group, SPAR Leasing).
How to Get a Better Rate
- Strengthen Your Credit – A strong statement of financial health can reduce rate offers significantly.
- Increase Down Payment – More upfront reduces risk and may unlock better terms (Bizfund).
- Time Your Application – Submit when your business is showing strong revenue or seasonally strong performance (Bizfund).
- Shop Around – Compare rates from banks, alternative lenders, and government programs like Canada Small Business Financing Program (CSBFP).
- Use Hybrid Options – Structures like leasing with residuals, sale-leaseback, or equipment lines of credit can optimize your monthly payments while preserving liquidity (Mehmi Financial Group).
FAQ: Equipment Financing Interest Rates in Canada
1. What factors determine my exact rate?
It depends on business credit, equipment type, lease vs loan structure, lender risk appetite, and macroeconomic conditions.
2. Are lease rates always lower than loans?
Not always—lease rates can be lower per month, but loans build equity and may have comparable total costs depending on structure.
3. Can startups access good rates?
Yes—but expect higher rates unless backed by collateral, co-signers, or strong revenue.
4. Do government programs offer better rates?
They can—programs like CSBFP may offer competitive rates, but terms depend on the participating lender.
5. Do rates fluctuate quickly?
They follow broader trends. Even though the Bank of Canada has cut its key rate, long-term financing costs like bonds haven't dropped as much (Mehmi Financial Group, BDC.ca).
6. How do I model financing scenarios?
Use Mehmi’s Equipment Financing Calculator to compare rates, lease vs loan, down payments, and term lengths.
Final Thoughts
In Canada throughout 2025, equipment loan rates generally range between 7% and 14%, while lease rates often fall between 7% and 13% (and higher depending on credit risk). The final rate depends on your credit profile, equipment type, loan structure, and economic conditions.
To improve your financing outcome:
- Strengthen your financial presentation
- Structure your deal strategically
- Shop across lenders and programs
- Use tools like the calculator
Reach out to Mehmi’s experts via Contact Us
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