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Short answer: Leasing tends to beat buying when cash flow is tight, technology changes fast, you need flexibility, or you want to protect your bank borrowing power. Buying can still win for long-life, stable assets—but in today’s Canadian market, many SMEs are better off leasing more than they think.
Key point: Buying focuses on ownership and long-term cost, while leasing focuses on cash flow, flexibility, and risk management. Over the full life of an asset, total dollars can be similar; the real difference is timing and control.
Canadian guidance from BDC is pretty blunt: buying is usually cheaper over the very long term, but leasing requires far less cash upfront and helps keep you current with technology.(bdc.ca)
From a tax perspective:
So in many cases, leasing and buying both give you strong deductions; the question is how much and when, and how that lines up with your actual cash and growth plans.
Mehmi’s view (and mine): you shouldn’t start from “own vs lease” as a matter of pride. Start from “What does my cash, risk, and growth plan actually need?”
Key point: If you care more about monthly cash flow than the absolute cheapest option over 10–15 years, leasing almost always beats buying.
Recent federal SME data shows that about 36% of Canadian small businesses requested external financing in 2024, and a big share of that was for working capital and equipment.(ISED Canada) At the same time, Statistics Canada notes that business investment in machinery and equipment has been under pressure, with outlays falling 9.4% in early 2025.(Statistics Canada)
That’s a fancy way of saying: owners are cautious and cash-conscious.
Leasing helps because you can:
Compare that to buying with a bank term loan:
This is why many Mehmi clients use:
You’re not “renting forever”; you’re matching the cash outflow to the revenue the asset generates, instead of blowing a crater in your cash on day one.
Key point: If the equipment you’re buying will be old news in 3–5 years, you probably shouldn’t finance it as if you’ll own it for 15. That’s where leasing really beats buying.
BDC and others note that leasing is especially useful for technology and equipment that becomes outdated quickly, such as IT hardware, software-heavy machinery, POS systems, and some medical and lab gear.(bdc.ca)
Real examples:
Leasing helps you:
Mehmi sees this a lot with hospitality businesses using Rent Try Buy hospitality programs—operators essentially “test drive” new equipment with a built-in path to buy or upgrade.
If your industry’s gear is moving faster than your accountant’s depreciation schedule, leasing wins on risk management alone, even if the pure dollar cost is similar.
Key point: Leasing can be structured with seasonal, step-up, or skip payments; bank loans usually can’t. If your revenue isn’t perfectly flat, flexible leases beat rigid loans.
Canadian equipment finance specialists are seeing rising demand for flexible structures—seasonal and usage-based payments, lease-to-own, and revolving equipment facilities—especially since 2024.(Equipment Finance Canada)
Typical situations:
With Mehmi, you’ll see structures like:
You can try to simulate this with a term loan by using interest-only periods or renegotiating, but banks are not set up to change amortizations every season. Leasing is.
Key point: If your bank line is already doing a lot of heavy lifting, using non-bank equipment leasing can keep your core bank facilities clean and available.
Federal SME credit surveys show roughly a quarter of Canadian small businesses request debt financing each year, and bank term loans remain dominant.(ISED Canada) At the same time, many banks have become more conservative on leverage and security packages.
What happens if you pile every new piece of equipment into your bank facilities?
Leasing with an independent partner like Mehmi:
In practice you might:
That’s a healthier capital stack than “everything through the bank.”
Key point: From a CRA standpoint, lease payments are usually fully deductible in the year you incur them, while CCA spreads deductions over many years. If your profits are high now—or you just hate waiting—leasing can beat buying on tax timing.
CRA’s guidance on leasing costs is short and sweet: deduct the lease payments incurred in the year for property used in your business.(Canada)
By contrast, when you buy equipment you:
Tax advisors in Canada consistently point out that leasing can:
Is leasing always better for tax? No. Over the long term, total deductions often land in the same ballpark. But if you’re in a high-tax year now and expect flatter or lower profits later, front-loaded lease deductions can be more valuable than slow-burn CCA.
Mehmi will usually model both options for you using their calculator—lease vs buy, after tax, using your expected profit profile.
Key point: For complex projects with multiple vendors, stages, and soft costs, a well-structured lease can turn chaos into a single, predictable monthly payment.
Typical scenarios:
If you try to “just buy” in these situations, you end up with:
Leasing lets you:
This is exactly where Mehmi’s equipment financing overview and eligible equipment list come in—most operationally useful gear can be bundled into one facility: everything from racking and compressors to kitchen lines and diagnostic machines.
You still see itemized vendor invoices, but from your perspective it’s one monthly obligation, not ten.
Key point: Leasing can still work for B or C credit, previous hiccups, or newer businesses, because the lender can lean more on the equipment itself and cash flow than on spotless ratios.
Canada’s Small Business Financing Program (CSBFP) and similar tools help some borrowers access term loans, but approvals still depend heavily on personal credit and collateral.(ISED Canada) And while alternative lenders have grown, they can be expensive if used for everything.
The equipment finance market, by contrast, is built around the idea that:
Industry snapshots suggest that a large majority of Canadian SMEs use some form of equipment financing, and many deals are approved within a few days.(cfla-acfl.ca)
Mehmi leans into that reality with:
If your bank is saying “not yet” on a term loan for equipment, leasing doesn’t just beat buying. It can be the difference between moving ahead and treading water.
Key point: Leasing often gives you a known cost per month or per hour of use, which makes pricing and budgeting easier—especially when you bundle service, warranties, and add-ons.
Many Canadian leasing providers highlight:
For a business owner, that means you can:
For many Mehmi clients, the decision isn’t emotional at all. They just want a clear, predictable cost to keep the doors open and trucks moving. Leasing gives them that.
Key point: Instead of debating in the abstract, run each equipment decision through a simple three-question filter.
Ask yourself:
Once you’ve answered those, someone at Mehmi can plug your numbers into their calculator and compare:
In a lot of cases—especially for growing Canadian SMEs in construction, transportation, hospitality, healthcare, and light manufacturing—the honest answer is: “We should be leasing more and buying less.”
Background
A mid-sized civil construction firm based in Ontario needed to:
Total equipment cost from multiple dealers: about $1.4 million plus HST.
The company had:
The owner’s first instinct was to buy everything with the bank, then use CCA and interest deductions to soften the tax hit.
Option A – Bank loans and buying
Working with the bank, the proposal looked like this:
The company’s accountant modelled CCA and loan interest and agreed it would be tax-efficient over the long run, but flagged serious concerns about short-term cash strain and reduced flexibility.
Option B – Mehmi leasing plus a lighter bank footprint
Through Mehmi, the firm re-framed the whole project:
Instead of a giant HST outlay, HST was charged on lease payments over time and recovered via input tax credits. Lease payments were fully deductible as leasing costs each year.(Canada)
Results
Within 12 months:
The accountant’s verdict wasn’t “leasing is cheaper than buying forever.” It was more nuanced:
“On pure tax and lifetime dollars, these options are comparable. But given your growth and cash profile, leasing clearly beats buying for this round of equipment.”
That’s the kind of decision—grounded in numbers, not ego—that Mehmi tries to drive toward.
1. Is leasing equipment actually cheaper than buying in Canada?
Over the full life of a long-lived asset, buying can often be cheaper than leasing if you ignore cash flow, risk, and flexibility.(bdc.ca) But when you factor in:
Leasing can absolutely win on practical, risk-adjusted cost, especially for equipment you’ll likely replace within 3–7 years.
2. When does CRA tax treatment make leasing more attractive?
CRA lets you deduct lease payments in the year you incur them, while purchases are deducted gradually through CCA.(Canada) If your business is profitable now and wants larger deductions in the next few years (instead of stretched over a decade), leasing can provide more immediate tax relief.
3. How do interest rates and the economic environment affect the lease vs buy decision?
With higher or volatile rates, tying up your bank line in long-term equipment loans can limit your ability to react to slower sales or new opportunities. Recent Bank of Canada surveys show businesses remain cautious about machinery and equipment investment amid economic uncertainty.(Bank of Canada) Leasing lets you:
4. Can I switch from owning to leasing later if I regret buying equipment?
Yes. A sale-leaseback lets you sell owned equipment to a finance company and lease it back, freeing up cash while keeping the equipment in use. This can trigger tax consequences (recapture or losses) tied to your CCA history, but it also creates a new stream of deductible lease payments.(MNP.ca) Mehmi offers this through refinancing or sales leaseback structures.
5. Which industries in Canada see the biggest benefit from leasing instead of buying?
Leasing tends to beat buying in:
All of these sectors face fast-changing equipment and uneven cash flow, so leasing structures from Mehmi’s equipment financing platform often fit better than straight purchases.
6. How can I quickly tell if my next purchase should be leased instead?
Run a quick test:
If the answer to any of those is “no,” get a leasing quote and an after-tax comparison—ideally via a tool like Mehmi’s calculator. For many Canadian SMEs right now, that second quote is where they discover that leasing quietly beats buying for more of their equipment than they ever expected.
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