Quick answer: For most Canadian SMEs, the typical down payment on an equipment loan lands around 10%–20% of the purchase price. With prime credit and strong cash flow , some deals approve at 0%–10% .
Startups or credit-challenged files may see 20%–35%+ . Used, older, or specialty assets often require more. If minimizing upfront cash is critical, consider a lease (first/last plus fees instead of a classic down), or a sale-leaseback on gear you already own.
Run your own scenarios with the calculator and compare loans vs leases.
| Profile / Scenario | Typical Upfront (Loan) | Notes |
|---|---|---|
| Prime credit (680+), 2+ yrs in business | 0%–10% | Sometimes $0 down with strong statements and newer assets |
| Standard SME | 10%–20% | Most common band for new/late-model equipment |
| Startup / bruised credit | 20%–35%+ | Can be offset with guarantor, collateral, or stronger structure |
| Older/High-hour or niche assets | 15%–30%+ | Higher risk/remarketing drives equity ask |
| Private sale invoices | +5%–10% vs dealer (varies) | Extra diligence may increase equity |
| Lease alternative | Often 0%–5% equivalent | Usually first/last + fees; residual lowers monthly |
What drives the down payment
- Credit & time in business: Lower risk = lower equity requirement.
- Asset type/age: Newer, liquid equipment needs less equity than older/specialty gear.
- Deal structure: Lease residuals reduce upfront; loans rely more on down payment.
- Invoice & documentation: Dealer quotes are simpler; private sales can add equity.
- Cash flow strength: Solid bank statements and DSCR support lower down.
- Soft costs & taxes: Many programs finance delivery/installation/taxes—model this in the calculator.
Ways to reduce upfront cash
- Use a lease with a residual to shift cost to end-of-term.
- Leverage a sale-leaseback on owned gear to inject cash and support lower down on the new unit.
- Provide a guarantor or extra collateral (e.g., pair with asset-based lending).
- Choose the right term (48–72 mo) and ticket (age/hours) to fit lender appetite.
- Ask about in-house financing for flexible structures.
Case study
A BC landscaping startup needed a used skid steer (~$58k). Bank wanted 30% down. We modeled a lease with 10% residual plus a small sale-leaseback on a trailer they owned. Upfront cash fell to ~6% equivalent, monthly fit the budget, and they secured a municipal contract.
FAQs
How much down is “normal”?
Most loans close at 10%–20%, with 0%–10% for prime files and 20%–35%+ for startups/credit challenges.
Can I do $0 down?
Sometimes—typically with strong credit/cash flow and newer assets. Otherwise, consider a lease to minimize upfront.
Do leases require a down payment?
Leases usually take first/last payment + fees (often ~0%–5% equivalent) instead of a classic down payment, plus a buyout at term.
Does used equipment need more down?
Often yes—age/hours and resale risk can push equity higher.
Can taxes and delivery be financed?
In many programs, yes. Include them in the calculator and we’ll structure accordingly.
How do I get a lower down payment approved?
Stronger documentation, residual leases, added collateral/guarantor, or a sale-leaseback.
Are you looking for a truck? Look at our used inventory.
Ready to structure your deal? Feel free to contact our credit analysts via Contact Us, or compare scenarios for loans, leases, and equipment LOC. Check asset fit on Eligible Equipment.
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.
Eligibility, pricing, tax treatment, and program terms can change. Verify current official guidance and final financing documents.
Source perspective
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.