Startup vs Established Equipment Financing in Canada

Whether you’re launching a new food truck or running a multi-location contracting firm, one thing’s true: you need equipment to generate revenue.

But not all businesses start from the same place—especially when it comes to financing.

In this guide, we break down how equipment loans work differently for:

• Startups with limited credit or no operating history
• Established businesses with financial records, assets, and revenue

You’ll learn how to position your business for approval, what lenders look for at each stage, and how to structure the right type of loan or lease based on your unique situation.

Key Differences at a Glance

Equipment Financing for Startups (0–12 Months)

Getting financing as a startup is absolutely possible—but it’s different.

Lenders can’t rely on your business track record, so they focus on:

• Personal credit score (ideally 650+)
• Your industry and experience
• The value and type of equipment
• Your contribution (down payment or trade-in)
• Whether you provide a personal guarantee

Startup-Friendly Equipment Financing Options

1. Lease-to-Own with PG
   A startup leases equipment over 24–60 months and buys it out for $1 or 10% at the end. Personal credit and income are reviewed.
2. Private Sale Financing
   Buy used equipment from another business or individual. Lenders fund the sale with proof of asset condition, serial number, and bill of sale.
3. Vendor Financing Programs
   If you're buying from a large dealer or manufacturer, they may offer financing or partner with startup-friendly lenders.
4. Sale-Leaseback (for early assets)
   If you’ve already purchased equipment with cash, you may be able to do a sale-leaseback to get that capital back.

Real Startup Scenario

Business: New mobile detailing business in Ontario
Need: Van and trailer-mounted cleaning system ($43,000)
Challenge: 3 months in business, no formal revenue history yet

What They Did:

• Applied with personal credit score of 671
• Provided a 15% down payment
• Used a private sale trailer and vendor invoice for van
• Structured a 36-month lease with $1 buyout

Outcome:
Approved in 48 hours. Launched operations and scaled to $10K/month in sales within the first quarter.

Equipment Financing for Established Businesses (12+ Months)

Once you’ve been in business for at least a year, lenders can start looking at your actual financial performance, not just projections.

What Lenders Look For:

• 12–24 months of bank statements
• Consistent revenue (ideally $10K+/month)
• A business credit score (if incorporated)
• Clean recent credit behavior (no NSFs, missed payments)
• Equipment condition and resale value (if used gear)

Financing Options Open Up:

• Term loans with fixed monthly payments
• Lease-to-own with lower rates
• Refinancing or consolidation of past equipment loans
• Sale-leaseback on owned assets
• Seasonal or skip-payment structures based on cash flow

Real Case Study: Established Business Upgrades with Financing

Business: Manufacturing firm in Calgary
Age: 4 years in operation
Need: Upgrade to a $185,000 automated packaging system
Financials: $1.4M annual revenue, $12K/month average net cash flow

What They Did:

• Used 6-month financials to apply
• Structured a 60-month equipment loan at 10.1%
• Bundled in installation, software license, and training
• Deferred first payment by 45 days

Outcome:
Streamlined packaging line, increased throughput by 35%, and reduced labor costs—without touching operating capital.

How to Know Which Strategy Fits You

Ask yourself:

✅ Are you under 12 months in business?
→ Focus on lease-to-own, private sale, and PG-backed options.

✅ Do you have $10K+ monthly revenue or 12+ months of statements?
→ You may qualify for lower rates, longer terms, and flexible structures.

✅ Own older equipment outright?
→ Use sale-leaseback to unlock capital now.

✅ Need equipment fast but don’t want to drain cash?
→ Lease-to-own lets you spread payments and preserve liquidity.

Tips for Startups Looking to Boost Approval Odds

1. Keep personal credit clean (aim for 650+)
2. Gather detailed vendor quotes or private sale info
3. Have a realistic plan for revenue and equipment usage
4. Put money down if possible (10–20%)
5. Work with lenders who understand startups—like Mehmi

FAQs: Startup vs. Established Business Financing

Can I get financing if I’m pre-revenue?
Yes—if your personal credit is strong, the equipment has value, and you’re in an industry with proven demand.

How much can a startup borrow?
Most startup-friendly lenders will approve $15K–$150K, depending on equipment value and credit strength.

Do established businesses always get better rates?
Generally yes—but only if their financials, revenue, and credit history support it.

Can I switch from a startup lease to a business-only loan later?
Yes. After 6–12 months of good repayment, many businesses refinance into better terms. See Refinancing Options.

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Not sure which financing path fits your business stage?
Use our calculator or connect with a credit analyst to build a plan that fits your timeline, budget, and growth goals.