2025 Economic Outlook: What It Means for Equipment Financing

In 2025, Canadian business owners face a financing landscape shaped by more than just credit scores and asset prices.

Interest rates, inflation trends, economic growth forecasts, and industry-specific investment plans all influence when and how you should finance new equipment.

At Mehmi Financial Group, we track these shifts closely—because smart financing depends on timing as much as terms.

In this guide, we’ll explain:

• Where interest rates may be headed in 2025
• Growth trends in key Canadian industries
• What to watch for with government stimulus or capital incentives
• How all this affects your decision to lease, buy, or refinance equipment
• Strategic tips for borrowing with confidence in the year ahead

Interest Rate Forecast: Stabilization Ahead?

After two years of aggressive hikes aimed at curbing inflation, the Bank of Canada held its overnight rate steady at 5% through late 2024.

Now, heading into 2025, most analysts predict:

• Mild rate cuts or continued holding pattern
• A cautious return to 4.25–4.5% range by year-end
• Stable borrowing costs for most equipment loans, leases, and credit lines

What This Means for You:

• If you’ve been waiting for lower rates, they may not come much further
• Now may be a good time to lock in fixed-term financing
• Variable-rate borrowers should assess refinancing if rates dip mid-year

Economic Growth Outlook by Sector (2025–2026)

Canada’s national GDP is projected to grow modestly at 1.6%–2.1%, with some regional and industry-specific tailwinds.

Industry Trends:

Will Government Stimulus Play a Role?

While Canada is unlikely to launch massive stimulus programs in 2025, several trends are influencing capital spending:

• Ongoing federal infrastructure commitments (transport, broadband, housing)
• Support for clean energy and fleet electrification (via tax credits and targeted funds)
• Provincial capital initiatives in Ontario, Alberta, and Quebec targeting industrial growth

These create rising demand for specific equipment (e.g. construction, EVs, automation)—which may mean tighter lender conditions or faster equipment price increases.

✅ Tip: If you’re in one of these target industries, secure financing before demand spikes.

Financing Strategy: What Businesses Should Consider in 2025

✅ Lock in Fixed Terms if You’re Ready to Buy

With rates stabilizing, fixed-term equipment loans or leases help protect against uncertainty and support budgeting.

✅ Don’t Wait for Major Drops—They May Not Come

If your equipment is aging or business is scaling, the cost of waiting may outweigh a small rate improvement.

✅ Preserve Cash with Flexible Down Payment Options

Ask about 0-down leases, seasonal structures, or sale-leaseback if cash flow is tight.

Explore: Working Capital & Credit Line Solutions

✅ Time Upgrades with Tax Cycles

Equipment depreciation (Capital Cost Allowance) and interest are tax-deductible—aligning purchases with fiscal planning can boost returns.

Final Word: Plan Ahead, Finance Strategically

The 2025 economy isn’t expected to bring major shocks—but that doesn’t mean you should wait passively.

Smart businesses will:

• Take advantage of rate stability to lock in favourable terms
• Upgrade before supply chains tighten again
• Time financing to their cash flow, industry cycles, and tax windows
• Work with partners (like Mehmi) who monitor the bigger picture

Wondering if now is the right time to finance new equipment?
Speak to a credit analyst or use our calculator to see how today’s economic conditions affect your borrowing power.

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