Equipment Loans for Canadian Businesses

When a business needs a truck, excavator, CNC machine, oven, or imaging device, the fastest route to productive capacity is often an equipment loan. You finance the purchase, make fixed monthly payments over 24–84 months, and the lender takes a security interest in the asset until it’s paid off. For many Canadian SMEs, this structure balances ownership, predictable amortization, and tax clarity. Mehmi also sells equipment directly, so you can source the asset and financing from one team and keep delivery timelines tight.

Use our calculator to model monthly payments across terms and structures, then explore facility options: Equipment Loans, Equipment Leases, Equipment Line of Credit, and Refinancing & Sale-Leaseback.

What an equipment loan covers

An equipment loan typically funds new or used revenue-producing assets plus eligible soft costs (delivery, installation, sometimes taxes). Common categories include:

• Transportation & Trucking: class 8 tractors, day cabs, trailers. See Transportation & Trucking.
  
  
• Construction & Contractors: excavators, loaders, lifts, attachments. See Construction & Contractors and Construction Equipment expertise.
  
  
• Manufacturing & Wholesale: CNC, fabrication/processing, material handling. See Manufacturing & Wholesale.
  
  
• Hospitality & Food Service: ovens, refrigeration, kitchen lines, POS. See Hospitality & Food Service.
  
  
• Medical, Dental & Wellness: imaging, chairs/units, lab devices. See Medical, Dental & Wellness.
  
  
• Farming & Agriculture: tractors, harvesters, implements. See Farming & Agriculture.
  
  

Not sure if your asset qualifies? Review Eligible Equipment. Are you looking for a truck? Look at our used inventory.

How an equipment loan is structured

Term & amortization: Most loans run 24–84 months; longer terms are possible for long-life assets and strong files.
Rate: Fixed or variable pricing based on credit, time in business, asset type/age, and documentation strength.
Down payment: Commonly 10%–20%; prime files can see 0%–10%, while startups or older assets may require 20%–35%+.
Security & guarantees: Lien on the equipment; personal/corporate guarantees are common; additional collateral can help.
Tax treatment (high level): Interest is generally deductible; principal is recovered via capital cost allowance (CCA) over time. If you prefer expensing periodic payments, compare a lease.

Loan vs. lease vs. line of Credit vs. sale-leaseback

If working capital is tight during ramp-up, consider Working Capital Loan or Invoice/Freight Factoring alongside your equipment facility. For broader collateralization, look at Asset-Based Lending.

Eligibility and what lenders evaluate

• Credit & time in business: Many approvals land around 650+; 620–649 can work with structure (residual, equity, guarantor).
  
  
• Cash flow: Bank statements, DSCR, and backlog/contracts matter.
  
  
• Asset quality: Year, hours/km, maintenance, and resale strength.
  
  
• Equity & guarantees: Down payment, cross-collateral, or co-signer reduce risk.
  
  
• Use case & industry: Transportation, construction, manufacturing, medical, hospitality, and agriculture each price differently.
  
  

Start modeling with the calculator to set a target monthly before you apply.

Approval strategies for startups or credit-challenged files

• Choose liquid assets: Mainstream models with healthy resale are easier to approve. Check Eligible Equipment.
  
  
• Consider a residual lease: If the monthly on a loan is tight, a lease can keep payments lower while preserving an ownership path.
  
  
• Add equity or collateral: Even a modest bump in upfront—or pairing with Asset-Based Lending—can tip a decision.
  
  
• Leverage what you own: A sale-leaseback on existing gear injects cash and strengthens your file.
  
  
• Document cash flow clearly: Provide 3–6 months of bank statements and any signed POs/contracts.
  
  
• Explore flexible channels: In-House Financing or the Canada Small Business Financing Program may fit special scenarios.
  
  

Costs to plan for (and how to keep them in check)

• Payment vs. total cost: Shorter terms build equity faster but raise monthly; longer terms lower monthly but increase total interest.
  
  
• Fees & soft costs: Many programs finance delivery/installation; include them in the calculator.
  
  
• Taxes & accounting: On loans, interest is generally deductible; principal is recovered via CCA. Leases typically allow expensing of payments (business-use portion). Coordinate with your accountant for the most tax-efficient path.
  
  

Step-by-step: from quote to funding

1. Asset & quote: Pick the unit (price, year, hours/km, serials). If you want to source and finance in one place, browse our inventory.
   
   
2. Payment target: Test 36/48/60/72-month options in the calculator (and a lease alternative).
   
   
3. Application & docs: ID, void cheque, 3–6 months bank statements, invoice/bill of sale.
   
   
4. Underwriting: We align term, rate, and (if leasing) residual to your cash flow.
   
   
5. Docs & funding: Execute agreements; vendor gets paid; you take delivery.
   
   
6. Post-funding: Insurance documentation; future options to refinance, buy out a lease, or set up an equipment LOC for repeat purchases.
   
   

Case study: loan vs. lease for a growth-stage carrier

Profile: Ontario carrier adding a late-model day cab and 53’ reefer before peak season.
Constraint: Needed to preserve cash for driver onboarding and fuel.
Path: We modeled a 60-month loan and a 60-month lease with a 10% residual in the calculator. The lease reduced monthly outlay ~10–12% vs. the loan while keeping an ownership path at buyout.
Add-on: A small invoice factoring facility stabilized early receivables.
Outcome: Approval in 48 hours; equipment delivered ahead of the contract start.

Industry-specific tips

• Transportation: Prioritize late-model tractors and trailers with clean maintenance histories; consider a lease for predictable payments and an upgrade path. See Transportation & Trucking and Trailer Financing.
  
  
• Construction: Align term to expected hours; attachments can be financed with the base or separately. See Construction & Contractors and Construction Equipment expertise.
  
  
• Manufacturing: Combine a loan on core machinery with Asset-Based Lending for receivables/inventory. See Manufacturing & Wholesale.
  
  
• Hospitality & Medical: Faster tech refresh cycles often favour leases for lower monthly and simpler upgrades. See Hospitality & Food Service and Medical, Dental & Wellness.
  
  
• Agriculture: Use seasonal/skip schedules to align payments with harvest; see Farming & Agriculture.
  
  

What to do next

• Price your asset and model payments in the calculator.
  
  
• Compare loan vs. lease vs. equipment LOC.
  
  
• If you own gear, consider a sale-leaseback to reduce upfront cash on the new unit.
  
  
• Feel free to contact our credit analysts to tailor terms and documents via Contact Us.
  
  

Mehmi sells equipment directly—browse inventory for immediate availability.

FAQ

What credit score do I need for an equipment loan?
Many approvals occur around 650+, but 620–649 can work with the right structure (equity, residual lease, guarantor).

How much down payment is typical?
Loans often close at 10%–20% down; leases usually take first/last plus fees instead of a classic down payment.

Can I finance used or private-sale equipment?
Yes—documentation and asset condition matter. Start with Equipment Loans or a lease and confirm Eligible Equipment.

Are loan payments tax-deductible?
The interest portion is generally deductible; principal is recovered over time via CCA. If you prefer expensing periodic payments, compare a lease (business-use portion).

How fast can I get approved?
With clean documentation, specialized programs often clear files in 24–48 hours.

What if I need cash flow help during ramp-up?
Blend your equipment facility with Working Capital Loan or Invoice/Freight Factoring.

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