How Canadian Farms Can Finance New Machinery and Implements

‍

Canadian farms usually finance new machinery and implements through equipment leases, asset-based facilities, refinancing (sales-leaseback), and farm-focused loans, sometimes supported by government guarantee programs. The smartest setups use leases first, and then layer in loans and working capital to match your crop or livestock cycle.

If you’re staring at a quote for a tractor, air drill, baler, sprayer, or dairy parlour upgrade, the key question isn’t just “What’s the rate?” It’s “How do I structure this so the machine pays for itself without breaking my cash flow in a bad year?”

Let’s walk through how Canadian lenders – and a specialist like Mehmi – actually handle farm machinery and implement financing.

Why financing machinery matters so much for Canadian farms

Most Canadian farms can’t grow or even keep up without outside capital. Machinery and equipment aren’t “nice-to-haves”; they’re a huge chunk of farm wealth and a major driver of productivity.

Statistics Canada’s farm capital program defines farm capital as farmland, buildings, farm machinery and equipment, and livestock. Machinery and equipment are a core part of total farm capital reported on Census Day.(Statistics Canada)

At the same time, margins have been under pressure: a 2023 Farm Financial Health Report notes that Canadian farm net income fell about 5.9% in 2022, while operating expenses jumped nearly 20%, the biggest increase since the late 1970s.(Canadian Federation of Agriculture)

FCC’s own analysis points out that:

• After land, equipment is usually the most expensive part of farming, and
• The buy vs lease decision has big implications for cash flow, technical support, and repair risk.(FCC)

FCC and independent analysts also expect new equipment sales to stay softer into 2024–2025, as higher interest rates and elevated iron prices make farmers more cautious.(Farms.com)

Put that together and you get a simple reality:

You probably need better machinery, but you can’t afford to get the financing structure wrong.

That’s where dedicated equipment financing programs – like Mehmi’s Equipment Financing suite – become less of a luxury and more of a survival tool.

Core option: equipment leasing for tractors, combines and implements

Most modern Canadian machinery deals are structured as leases first, and loans second. The equipment itself becomes the main collateral, which is exactly how asset-based lenders like Mehmi think.

The Canadian Finance & Leasing Association says its members finance hundreds of billions of dollars in vehicles and equipment across Canada, including agricultural machinery, via asset-based leases and loans.(House of Commons)

Mehmi fits squarely in that ecosystem. For ag, they’ll typically look at:

• Tractors and combines
• Air drills, planters, seeders
• Sprayers and spreaders
• Tillage equipment and cultivators
• Balers, rakes, forage harvesters
• Telehandlers, loaders, skid steers
• Grain handling and on-farm storage gear

Most of this will qualify under their Eligible Equipment list and can be tackled through an Equipment Lease or broader Heavy Equipment Financing structure.

How a typical ag equipment lease works

In practice, a farm machinery lease looks like this:

1. You pick the iron
   • New or used tractor, combine, sprayer, drill, or a package (tractor + loader + implements).
2. Mehmi pays the dealer or seller
   • This could be a branded OEM dealer, an independent lot, or a private sale. The flexibility is useful when you find a good used unit.
3. You lease the equipment over 3–7 years
   • Terms are sized to the equipment’s expected working life and your projected cash flow.
4. At the end, you decide what’s next
   • Buy it out, roll into another lease, or sometimes upgrade into newer machinery.

Because the machine is the security, approval decisions lean heavily on:

• The equipment’s age, condition and value
• Your farm’s cash flow and debt levels
• Your track record and management

That’s the asset-based model behind Mehmi’s Equipment Financing and Asset Based Lending.

Lease structures that actually fit farm cash flow

Farm cash flow is seasonal. Underwriters know that, but not every structure respects it. With a good partner, you can tailor:

• Monthly or seasonal payments – heavier in harvest months, lighter in the off-season.
• Skip-payment options – to bridge tough periods if planned up front.
• Residuals / buyouts – lower monthly payments with a balloon at the end, or higher payments with a token buyout.

Typical ag lease styles:

• Fair Market Value (FMV)
  • Lower monthly payment.
  • At end of term, you can buy at fair market value, return, or upgrade.
  • Works well for tech-heavy gear (precision ag consoles, high-spec tractors) you might upgrade more often.
• Fixed-percentage buyout (e.g., 10% or 15%)
  • Middle-ground payment.
  • You know exactly what the buyout will be.
  • Good when you plan to keep the machine, but still want flexibility.
• $1 buyout
  • Highest payment.
  • You effectively own the machine at the end.
  • Fits long-life assets like tillage, grain bins, or simpler implements.

You can play with variations in Mehmi’s Calculator to see how term length and buyout choice change the payment.

Opinion: for anything with fast-moving technology (big tractors, combines, precision sprayers), most farms are better off with FMV or modest buyout leases, not “own it forever” $1 structures.

Refinancing and sales-leaseback: unlocking cash from iron you already own

Many operations have paid-off or low-debt machinery that still has real value. In a tight margin environment, that equity can be turned into working capital or used to upgrade the fleet.

That’s where refinancing or sales-leaseback comes in, structured through Mehmi’s Refinancing or Sales Leaseback offering.

How it works:

1. Mehmi agrees on the value of your existing tractor, combine, or key implements.
2. They purchase the equipment from you at that value.
3. You immediately lease it back over a new term.
4. You receive cash upfront, while keeping the machine on the farm.

You can then use that cash to:

• Put a down payment on newer equipment
• Pay down high-interest short-term debt or credit cards
• Catch up on input bills or tax arrears
• Invest in on-farm storage or yard upgrades

The key is discipline. You don’t want to re-lever a machine that’s nearly worn out. A good advisor will flag when a sales-leaseback is smart, and when it’s just kicking the can.

Where loans and government programs fit (alongside leasing)

Leasing should usually cover the iron and major implements. But Canadian farms also lean on loans and guarantee programs for the broader capital picture.

BDC’s equipment loan, for example, can cover up to 125% of the purchase price of new or used equipment, including related costs like transport and installation.(BDC.ca) Farm Credit Canada (FCC) offers dedicated equipment loans and leases for producers as well.(FCC)

On top of that, the Canadian Agricultural Loans Act (CALA) program provides a federal guarantee (typically up to 95% of net loss) on eligible loans for farm assets, including equipment.(Greenbox Capital)

Mehmi’s role isn’t to replace these tools, but to complement them with more flexible, non-bank structures:

• Working Capital Loan – for inputs, repairs, custom work, and soft costs around a machinery upgrade.
• Secured Loan – when you want a loan against broader collateral (not just one machine).
• Line of Credit – to smooth cash flow between input purchases and crop or livestock sales.
• Invoice or Freight Factoring – if you’re hauling grain, livestock, or doing custom work and waiting on receivables.

Think of it this way:

The best financing stack on a farm usually looks like leases for iron, loans for buildings and big projects, and lines/factoring for working capital.

Mehmi’s Business Loans line up with that logic.

How underwriters look at farm machinery deals

Underwriters don’t just look at the tractor; they look at the farm behind it. But farms are different from generic SMEs, so the lens shifts a bit.

BDC’s equipment financing guide says lenders evaluate the classic five Cs of credit – character, capacity, capital, collateral, conditions – and usually expect to take the equipment itself as collateral.(BDC.ca) For farms, that framework becomes:

• Character – your track record, experience, and how you handled tough years.
• Capacity – your ability to cash-flow payments through good and bad commodity cycles.
• Capital – how much equity is in your land and assets, and whether you’re putting some cash into the deal.
• Collateral – the iron itself (and sometimes land or other gear), with realistic resale values.
• Conditions – commodity prices, drought/flood history, regional land prices, and your specific production mix.

Recent data on farm financial health show that rising interest rates and input costs are squeezing margins, making structure and term even more important.(Canadian Federation of Agriculture)

Mehmi’s credit team will look closely at:

• Your last couple of years of financials or tax returns
• Current debt load (land, buildings, equipment, operating)
• Bank statements and evidence of seasonal cash patterns
• The age and condition of your existing fleet

The goal isn’t to punish you for volatility – it’s to make sure the new payment fits your average year, not just your best one.

Matching structures to different types of farm operations

A grain farm with 10,000 acres and a couple of big 4WDs has very different needs than a 120-cow dairy or a mixed hay and beef operation. The financing tools are similar, but how you use them changes.

Grain and oilseed operations

Priorities: seeding capacity, harvest throughput, sprayer uptime.

Typical structures:

• Lease large horsepower tractors, combines, and air drills via Heavy Equipment Financing and Equipment Leases.
• Use Refinancing or Sales Leaseback on older but valuable machines to fund bin projects or an additional grain truck.
• Keep a Line of Credit for inputs and marketing windows.

If you haul your own grain, farm trucks and trailers might be financed through Truck and Trailer Financing and Mehmi’s Transportation Expertise.

Dairy and livestock operations

Priorities: daily uptime, feed handling, barn equipment, manure management.

Typical structures:

• Lease parlour upgrades, TMR mixers, skid steers, and telehandlers.
• Finance barn improvements and manure systems with a mix of equipment leases and Secured Loans.
• Use Working Capital Loans to bridge feed costs or health events.

Because the work is year-round, payments might be more evenly spread (vs heavily seasonal on grain farms).

Horticulture, specialty crops, and direct-to-consumer

Priorities: smaller machinery fleets, specialized implements, cold storage, and direct-market infrastructure.

Typical structures:

• Lease tractors, sprayers, harvest aids, and packing line equipment.
• Finance cold rooms and wash/pack areas with combined equipment and working capital solutions.
• Consider Invoice or Freight Factoring if you’re delivering to grocery chains or distributors with longer payment terms.

Custom operators and ag service providers

Priorities: high-spec machines, good road gear, strong balance sheet to handle swings in work.

Typical structures:

• Lease high-horsepower tractors, sprayers, spreaders, and support trucks through Equipment Financing and Truck Repair Financing.
• Use an Equipment Line of Credit to add units when demand spikes.
• Backstop everything with a Line of Credit for fuel, labour, and parts.

For all of these, Mehmi’s Industries experience means they’re not seeing your operation for the first time.

Practical steps: planning machinery financing before you sign a quote

Here’s a simple, farm-friendly roadmap to follow before you commit to that new tractor or combine.

1. Start with your bottlenecks, not the brochure

Ask:

• Are you short on seeding days?
• Is harvest capacity your choke point?
• Are repairs and downtime killing you?

This lines up with BDC’s advice to do a cost-benefit analysis on equipment: what problem does it solve, and how much productivity or cost reduction will you gain?(BDC.ca)

2. Separate “must-have” from “nice-to-have”

List machines and implements into:

• Must-have this year – critical capacity or reliability issues.
• Next 2–3 years – efficiency and comfort upgrades.

You don’t have to finance the entire wish list at once.

3. Decide what to lease, what to loan

Use a simple rule:

• Anything with a serial number and clear resale value → Equipment Leases or related equipment facilities.
• Buildings, yard work, and soft costs → Working Capital Loan or Secured Loan.

4. Check what you already own free and clear

Prepare a basic equipment list:

• Unit, year, hours, condition
• Amount owing (if any)

Identify candidates for Refinancing or Sales Leaseback to unlock cash safely.

5. Gather the paperwork once, reuse it often

Underwriters will want:

• Last 2–3 years of financials or tax returns
• 3–6 months of bank statements
• A recent Acreage/production summary or herd description
• Quotes from equipment dealers (including used equipment details)

Do this once and keep it updated; it makes every future deal faster.

6. Stress-test payments using real numbers

Use the Calculator or a similar tool to model:

• 5 vs 7-year terms
• With and without residuals
• Seasonal vs level payments

Be honest: Could you still make payments in a drought year or at $X/bu wheat or $Y/cwt cattle?

7. Talk to a specialist before you sign the dealer’s finance form

Dealer or OEM financing can be fine, but it’s often narrow. Before you sign, compare it with:

• A leasing-led structure via Mehmi’s Equipment Financing
• A blended stack that includes Business Loans and maybe Asset Based Lending

You can get a feel for Mehmi’s approach on their Homepage, then reach out through Contact Us. The FAQ and Blog are good pre-reading.

Case study: Upgrading a Prairie grain farm’s machinery without breaking cash flow

Background

A third-generation grain farm in Saskatchewan cropped about 5,500 acres of wheat, canola, and pulses.

• 2 mid-2000s 4WD tractors
• 1 aging combine
• Older air drill needing frequent repairs

They wanted to:

• Upgrade to a newer combine with better capacity and grain loss control
• Add a larger air drill to hit seeding windows
• Keep one older tractor as backup, but avoid more repair bills

Challenges

• Operating loan was near its limit after a year of high input costs.
• Net income had dipped with lower commodity prices and higher interest costs – very much in line with national trends.(Canadian Federation of Agriculture)
• The farm didn’t want to over-leverage land to solve a machinery problem.

Structure with Mehmi

Working with a Mehmi advisor, they broke the plan into pieces:

1. Lease the new combine and air drill
   • Both financed via 7-year Equipment Leases under the Equipment Financing umbrella.
   • Seasonal payment schedule: heavier in November–January, lighter in spring and midsummer.
2. Sales-leaseback on one existing tractor
   • A late-model tractor with lower hours was refinanced through a Refinancing or Sales Leaseback, injecting cash to:
     • Pay down high-interest supplier credit
     • Cover part of the combine’s initial tax and insurance costs
3. Working capital buffer
   • Mehmi added a small Working Capital Loan with a 3-year term to smooth input purchases during the first two seasons.
4. Future-proof with an equipment line of credit
   • A modest Equipment Line of Credit was put in place for potential grain cart or truck upgrades, so they wouldn’t need a full new credit workup later.

Results (two seasons later)

• Seeding was consistently finished before rain windows, reducing replant risk.
• Harvest losses dropped thanks to the newer combine, boosting marketed bushels.
• Repair bills on the old air drill and combine fell sharply.
• Despite softer prices one year, lease payments stayed manageable because they’d been sized for “average” years from the start.

No land was mortgaged to solve the equipment issue. Instead, the iron funded itself through a structure that reflected how a Prairie grain farm actually makes money.

FAQ: Financing farm machinery and implements in Canada

1. Is it better for Canadian farmers to lease or buy equipment?

There’s no one-size answer, but many operations lean toward leasing larger, tech-heavy machines (tractors, combines, sprayers) and buying simpler implements over time. Leasing through an asset-based provider like Mehmi’s Equipment Financing helps match payments to the machine’s working life and keeps your bank line available for land, inputs, and buildings. Buying outright sometimes makes sense for long-life, low-tech assets if you’re genuinely cash-strong.

2. Can I finance used tractors and implements, or only new equipment?

Yes, used equipment is very financeable. Lenders like FCC openly finance new and used machinery,(FCC) and private asset-based funders do too. Mehmi regularly structures leases and Heavy Equipment Financing for late-model used tractors, combines, and implements, especially when supply of new units is tight or prices are high. Terms and residuals may be a bit more conservative than on brand-new iron.

3. Are there seasonal payment options for farm equipment financing?

Yes. Because farm income is seasonal, many lenders – including Mehmi – offer seasonal or annual payment structures on farm machinery leases and loans. You might pay more around harvest and year-end and less (or nothing) in low-cash months. FCC and dealer programs advertise similar structures, and independent providers can often be even more flexible.(FCC)

4. What government programs can help me finance farm equipment?

A few key ones:

• CALA (Canadian Agricultural Loans Act) – a federal guarantee program where Ottawa guarantees up to 95% of net loss on eligible farm loans, including machinery purchases.(Greenbox Capital)
• FCC programs – Farm Credit Canada has specialized loans and leases for equipment, young farmers, and environmental projects.(FCC)

These usually run through banks or FCC, while private partners like Mehmi focus on flexible Equipment Financing and Business Loans that sit alongside them.

5. Can I finance implements like drills, balers, and sprayers, or only “big” units like tractors and combines?

Implements are absolutely financeable as long as they have clear value and serial numbers. Air drills, planters, tillage tools, balers, rakes, sprayers, and spreaders can all be rolled into Equipment Leases or Equipment Line of Credit facilities. Sometimes bundling a tractor with a key implement in one schedule makes sense; other times, separate terms work better.

6. How do I get started with Mehmi on financing new farm machinery?

A simple starting point:

1. Make a short list of the machines and implements you need in the next 12–24 months.
2. Pull together your last couple of years of financials or tax returns and a rough equipment list.
3. Visit Mehmi’s Equipment Financing and Business Loans pages, and test some numbers in the Calculator.
4. Reach out through Contact Us with a short description of your farm and what you’re trying to do.

You can also skim the Blog and FAQ for similar scenarios before you talk to an advisor.

Internal links used

1. https://www.mehmigroup.com/services/equipment-financing
2. https://www.mehmigroup.com/services/equipment-financing/equipment-leases
3. https://www.mehmigroup.com/eligible-equipment
4. https://www.mehmigroup.com/services/equipment-financing/heavy-equipment-financing
5. https://www.mehmigroup.com/services/equipment-financing/refinancing-sales-leaseback
6. https://www.mehmigroup.com/services/equipment-financing/equipment-line-of-credit
7. https://www.mehmigroup.com/services/equipment-financing/asset-based-lending
8. https://www.mehmigroup.com/services/business-loans
9. https://www.mehmigroup.com/services/business-loans/working-capital-loan
10. https://www.mehmigroup.com/services/business-loans/secured-loan
11. https://www.mehmigroup.com/services/business-loans/line-of-credit
12. https://www.mehmigroup.com/services/business-loans/invoice-freight-factoring
13. https://www.mehmigroup.com/services/equipment-financing/truck-trailer-financing
14. https://www.mehmigroup.com/transportation-expertise
15. https://www.mehmigroup.com/services/equipment-financing/truck-repair-financing
16. https://www.mehmigroup.com/industries
17. https://www.mehmigroup.com/calculator
18. https://www.mehmigroup.com
19. https://www.mehmigroup.com/blog
20. https://www.mehmigroup.com/faq
21. https://www.mehmigroup.com/contact-us

External citations used

1. Statistics Canada – Value of Farm Capital (farm capital includes machinery and equipment as a major component). (Statistics Canada)
2. Canadian Federation of Agriculture – Farm Financial Health Report 2023 (net income down 5.9% in 2022; operating expenses up ~19.9%). (Canadian Federation of Agriculture)
3. FCC – Buy or lease farm equipment – how to choose and Equipment Financing pages (equipment is the most expensive part of farming after land; overview of loan vs lease decisions). (FCC)
4. Farms.com & Grainews – analyses of Canadian farm equipment sales (softer new equipment sales into 2024–2025 due to high prices and interest rates). (Farms.com)
5. Canadian Finance & Leasing Association – submissions and equipment finance data (CFLA members finance over $350B of vehicles and equipment; strong role in ag and asset-based finance). (House of Commons)
6. BDC – Equipment Loan and Equipment financing 101 (equipment loans can cover up to 125% of purchase price including transport and installation; lenders take equipment as collateral; five Cs of credit). (BDC.ca)
7. Greenbox Capital – overview of Canadian Agricultural Loans Act (CALA) (federal guarantee up to about 95% of net loss on eligible farm loans, including equipment). (Greenbox Capital)

‍