Financing IT equipment, servers & software

Écrit par

Alec Whitten

Publié le

November 25, 2025

How Canadian Businesses Can Finance Technology Equipment Like Servers, IT Hardware, and Software

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Canadian businesses usually finance servers, IT hardware, and software through equipment leases, technology equipment loans, equipment lines of credit, and working capital facilities. The smartest setups treat hardware and software differently, and they spread the cost of upgrades over time instead of burning cash up front.

If you’re looking at a server refresh, new laptops, better networking, or a major software rollout, the big decision is how to structure the financing so you can keep up with technology without choking cash flow.

Let’s walk through how Canadian lenders (and Mehmi specifically) approach this, and what structures actually work in the real world.

Why IT equipment financing is its own category

IT gear is different because it changes fast, is mission-critical, and blends hardware, software, and services in one project. That’s why the financing mix looks a bit different than for, say, forklifts.

A few Canadian realities:

In 2021, 45% of Canadian businesses were using cloud computing, and those that used it spent an average of $43,000, with small firms still dropping $8,800 on cloud alone.(Statistics Canada)
Software is now the largest ICT investment category globally, and Canada still invests a slightly smaller share of its capital spending in software than top peers—meaning there’s catch-up underway.(The Conference Board of Canada)
Roughly 49% of Canadian SMEs requested external financing in 2023, much of it to fund equipment, technology, and growth.(ISED Canada)
Asset-based finance (leasing and related tools) is estimated to finance over 40% of all equipment and commercial vehicle spending in Canada.(Canadian Finance & Leasing Association)

Put simply:

Canadian businesses are pouring money into digital infrastructure, and a big slice of that is financed—often using the same asset-based tools Mehmi uses for other equipment under Equipment Financing.

Core option: leasing servers, laptops, and on-prem IT hardware

For physical IT hardware—servers, storage, networking gear, laptops, workstations—leasing is usually the most efficient option.

Instead of owning equipment that becomes obsolete in 3–5 years, you:

Spread the cost over the gear’s useful life
Keep your bank line open for working capital
Maintain a consistent refresh rhythm

Mehmi approaches that through tailored Equipment Leases, applied to tech assets that fall within its Eligible Equipment list.

What can be leased in IT?

Typically:

On-prem servers and storage
Networking/switching, firewalls, Wi-Fi infrastructure
Laptops, desktops, thin clients
POS terminals and retail IT
Industrial PCs and edge devices on the plant floor

If it has a serial number and a reasonable resale value, it’s usually fair game for asset-based leasing through Equipment Financing.

Common IT lease structures

The main structures you’ll see for IT hardware are:

FMV (fair market value) / operating-style lease
- Lowest monthly payment; you can return or upgrade at term end.
- Great for laptops and endpoints you refresh every 3–4 years.
Fixed-percentage buyout lease (e.g., 10% buyout)
- Mid-range payment with a known buyout amount.
- Good when you expect to squeeze a bit more life out of servers or networking after the main term.
$1 buyout lease
- Highest monthly payment; you effectively own the hardware at the end.
- Best for items with longer, predictable life (racks, PDUs, certain backbone networking).

Mehmi can model each scenario in its online Calculator so you can see how term, residual, and buyout choices change your monthly and total cost.

My opinion: for most Canadian SMEs, FMV or low-residual leases on IT gear beat “owning it forever”, because tech depreciation is brutal.

Technology equipment loans: when a loan makes more sense than a lease

Loans come into play when you’re financing broader technology projects, not just boxes with serial numbers.

Crown lenders like BDC offer dedicated technology equipment loans that can be used for hardware and software, and they can finance up to 125% of the purchase price to cover transport, installation, and training.(BDC.ca)

Mehmi takes a similar “project view” using:

…sitting alongside core Equipment Financing.

When a tech loan is useful

Loans can make sense when:

You’re bundling hardware + software + implementation in one ticket
A big portion of spend is intangible (e.g., licenses, consulting)
You want to own certain elements outright for tax or accounting reasons

For example, a technology loan might cover:

ERP or CRM licenses and implementation
Cybersecurity software plus related appliances
A new contact centre platform (headsets, servers, licenses)

In that case, you might:

Lease the appliances and on-premise hardware via Equipment Leases, and
Use a Working Capital Loan or Secured Loan for the software and services.

Financing software, cloud, and subscriptions

Software is trickier because you can’t repossess a licence the way you can repossess a server. That doesn’t mean you can’t finance it—it just means the tools look more like working capital than classic equipment leases.

Conference Board data show software is now the largest category of ICT investment in advanced economies, with Canada spending slightly less (as a share of total investment) than top peers.(The Conference Board of Canada) In practice, that’s a lot of ERP, CRM, SaaS, cybersecurity, and analytics spend.

Industry guides describe “IT equipment finance” broadly as funding both hardware and software, emphasizing that paying cash for fast-depreciating tech usually makes poor business sense.(Swoop UK)

Typical ways to finance software and cloud

Project-based working capital loan
- Term loan covering licenses, implementation, customization, and training.
- Paid back over 2–5 years as the software delivers productivity gains.
Line of credit for recurring SaaS and cloud
- Use a Line of Credit as a buffer for subscription and usage spikes, especially during ramp-up.
Software included in a broader lease
- In some cases, software that’s tightly tied to hardware (e.g., firmware, on-box licences) can be rolled into a lease through Equipment Financing.
Short-term bridge via merchant cash advance (use cautiously)
- A Merchant Cash Advance can plug urgent gaps but is more expensive, so it’s best reserved for truly time-sensitive opportunities.

Rule of thumb:

Lease the boxes; use loans and LOCs for licenses and services. Don’t try to jam everything into a single “equipment loan” if half your spend is consulting and configuration.

Using equipment lines of credit and ABL for ongoing IT refresh cycles

If you’re refreshing IT every year across multiple sites, one-off leases and loans get cumbersome. That’s when you step up to facility-style structures.

Canada’s asset-based finance sector (which includes leases, secured loans, and equipment lines) financed about 42–43% of all equipment and commercial vehicle spending in 2020–2021, and new business asset financing continues to grow.(Canadian Finance & Leasing Association) IT equipment is part of that story.

Equipment line of credit for tech

An Equipment Line of Credit gives you:

A pre-approved limit just for equipment (including IT)
The ability to draw as needed for server refreshes, laptop cycles, or network upgrades
Each draw converting into its own lease or loan schedule

This is ideal when:

You have a 3–5-year IT roadmap with known projects
Multiple branches or locations need similar upgrades
You want to move fast when supply or pricing is favourable

Asset-based lending (ABL) when the asset base is big

For larger firms with significant equipment across plants, depots, and data rooms, Asset Based Lending can:

Tie together IT hardware with other eligible equipment
Offer higher overall limits than isolated transactions
Allow you to tap value in existing hardware when funding new tech projects

It’s heavier on reporting, but if you’re already at that scale, ABL can turn your entire equipment base into a funding engine for modernization.

Working capital tools that wrap around IT upgrades

Even a perfect equipment lease doesn’t pay for everything in an IT project. You still have:

Implementation and integration
Data migration
Parallel run periods
Training
Short-term productivity dips while teams adjust

That’s where Mehmi’s Business Loans suite comes in:

Working Capital Loan – covers one-time project costs and ramp-up.
Line of Credit – handles ongoing fluctuations in SaaS, cloud, and staffing.

Banks like BDC highlight that with equipment loans they can finance up to 125% of the equipment cost to cover transport, installation, and training.(BDC.ca) Mehmi mirrors that flexibility by pairing equipment structures with working capital facilities instead of shoving everything into one blunt instrument.

Vendor financing vs independent IT financing

Vendor financing (from your OEM, VAR, or integrator) can be convenient—but it’s not always the best structure.

BDC notes that vendors often offer more limited loan terms and that independent financing can deliver more flexible structures and sometimes better total cost, even if the headline rate looks similar.(BDC.ca)

Pros of vendor financing:

One-stop shop at the point of sale
Promotions like “0% for 12 months” on part of the stack
Familiarity with the specific product

Cons (where Mehmi and other independent funders shine):

Less flexibility on term and residual
Harder to bundle multiple vendors and projects together
Tougher to integrate with broader Equipment Financing and Business Loans strategy

Contrarian take:

A slick 0% offer on servers can actually cost more if it locks you into rigid terms and prevents you from structuring the whole project efficiently.

Mehmi’s Vendor Program sits in the middle: it lets IT vendors offer financing that’s pre-aligned with better structures and underwriting, so you get convenience and flexibility.

Comparing your main financing options for IT hardware and software

Here’s a simple comparison of the key structures you’ll likely use.

You can plug rough numbers into Mehmi’s Calculator to see how these structures look with your actual budget.

What lenders look at when financing IT equipment and projects

The tech itself matters—but lenders care just as much about your business and your plan.

The classic “five Cs of credit” still apply, but in a digital context:

Character – your track record and transparency
Capacity – your ability to carry the payments from existing and new revenue
Capital – how much skin you have in the game
Collateral – the value and quality of the hardware (servers, endpoints, etc.)
Conditions – sector outlook and how digitized your business is

Research on Canadian SMEs shows that more digitally mature businesses were more resilient during the pandemic, taking smaller hits to revenue and employment than less digital peers.(The Dais) That’s exactly the story a good IT financing case can tell: this isn’t a gadget spend; it’s a resilience and growth spend.

A strong package usually includes:

A short business case (what you’re buying and why)
Quotes from vendors or integrators
Financial statements and bank statements
A realistic implementation plan and timeline

That’s what Mehmi’s credit team expects to see when they evaluate an IT-heavy Equipment Financing or Business Loans request.

Tax note: equipment financing costs are generally deductible in Canada, but the details differ between loans and leases; legal overviews stress that you should discuss specifics with your tax advisor.(Lexpert)

Step-by-step: how to plan financing for your next IT upgrade

Here’s a practical playbook you can follow before you sign any quotes.

1. Define the business problem, not just the tech wish list
Are you fixing downtime, security risk, sluggish systems, or scalability? Write down the problem in one paragraph.

2. Separate hardware from software and services

Hardware → likely Equipment Leases
Software, migration, training → Working Capital Loan or Line of Credit

3. Decide your refresh rhythm

Laptops: 3–4 years
Servers: 4–5 years (sometimes shorter if performance-critical)
Network core: maybe 5–7 years

Match your lease/loan terms to these cycles.

4. Gather vendor quotes and a simple project plan
Include:

Hardware BOM and pricing
Software licence model (per user, per core, SaaS)
Implementation timeline
Any dependencies (e.g., electrical, rack upgrades)

5. Run scenarios using Mehmi’s calculator
Test:

Different terms (36 vs 60 months)
With and without residuals on hardware
How much, if any, down payment you’re comfortable making

Use the Calculator to see payment impacts, then sanity-check those numbers against your cash flow.

6. Decide whether you need a one-off deal or a facility

One-time refresh? A single lease + loan may be fine.
Rolling upgrades over years? Talk about an Equipment Line of Credit or longer-term Asset Based Lending.

7. Talk to a specialist, not just your general bank contact
You can get a feel for Mehmi’s style via the Homepage, explore related topics on the Blog and FAQ, then bring your plan to an advisor through Contact Us.

Case study: Financing a hybrid IT refresh for a growing professional services firm

Background

A 45-person engineering and design firm in Calgary was running:

Five aging on-prem servers
A mix of old laptops and workstations
A patchwork of file servers, cloud storage, and VPN

Performance was lagging, and security worries were keeping the partners up at night. They wanted to:

Move core workloads to a hybrid setup (new on-prem hosts + expanded cloud)
Replace 30 laptops/workstations
Standardize on modern collaboration and security tools

Project scope

Two new server hosts, SAN storage, firewalls, and switching
30 high-spec laptops/workstations
Microsoft 365, security suite licences, and backup software
Migration, configuration, and training services via an IT partner

Total project cost: ~$420,000 over 12 months.

Challenge

Cash reserves weren’t strong enough to pay upfront.
The existing bank line was nearly maxed from prior growth.
The partners wanted to avoid vendor-locked financing that only covered part of the stack.

Financing with Mehmi

Working with a Mehmi advisor, they structured the project into a blended solution:

Hardware lease for servers and endpoints
- All physical IT (servers, storage, firewalls, laptops, switches) went into a 48-month Equipment Lease.
- Residual structured to align with a planned 4–5 year refresh cycle.
Working capital loan for software and migration
- Licences, migration, and training were funded via a 4-year Working Capital Loan.
- This avoided overcomplicating the lease while still spreading project costs.
Line of credit buffer for cloud ramp-up
- A modest Line of Credit ensured they could absorb a few months of “double spend” while old systems overlapped with the new hybrid setup.
Future-proofing with an equipment line of credit
- Mehmi also approved a small Equipment Line of Credit dedicated to IT, so the firm could add storage or replace individual laptops without a fresh underwriting process each time.

Outcomes (18 months later)

Server performance issues disappeared; design teams reported noticeably smoother work.
Security posture improved, satisfying requirements for several enterprise clients.
Monthly payments fit comfortably within existing project margins.
The firm had a clear timeline and structure for their next refresh instead of waiting for the next “crisis upgrade.”

Crucially, the partners didn’t burn cash reserves or overload their bank line. They used asset-based IT leasing and smart working capital tools to modernize without betting the firm.

FAQ: Financing IT equipment, servers, and software in Canada

1. Can I lease software in Canada, or only physical IT hardware?

You can almost always lease physical hardware (servers, storage, laptops, networking) through programs like Mehmi’s Equipment Financing. Pure software is harder to lease because it isn’t tangible collateral, but you can usually finance it via a Working Capital Loan or bundle certain licences with related hardware in a single structure.

2. Is it better to buy servers outright or finance them?

For most SMEs, financing is more sensible. Servers and storage depreciate quickly and often need replacing in 4–5 years. Leasing or using a tech loan lets you spread the cost over the hardware’s useful life, preserve cash, and line up future refreshes. Paying cash is sometimes appropriate if you’re genuinely over-capitalized, but for many firms it just ties up money that could be used for sales, hiring, or inventory instead.

3. How long can I finance IT equipment like servers and laptops?

Typical terms in Canada are:

36–60 months for laptops, workstations, and standard servers
Sometimes up to 72 months for more robust infrastructure, depending on vendor and usage

Mehmi structures terms to match realistic refresh cycles under Equipment Leases. Pushing terms beyond the gear’s useful life is rarely a good idea—you end up paying for obsolete kit.

4. Can I finance used or refurbished servers and IT hardware?

Often, yes. Many Canadian lenders will finance late-model, refurbished IT hardware as long as it’s from a reputable source and in good condition. Terms may be shorter or residuals lower than for brand-new gear. This can be an efficient way to add capacity if you’re cost-sensitive. Mehmi can look at refurbished assets as part of broader Equipment Financing or Asset Based Lending solutions.

5. Are payments on IT leases or loans tax-deductible?

In Canada, equipment financing costs are generally deductible, but the details depend on structure. Lease payments are typically treated as expenses, while loan structures usually involve capital cost allowance (CCA) on the hardware plus interest deductibility. Legal and tax guidance stresses checking the specifics with your accountant.(Lexpert) A Mehmi advisor can walk you through the practical differences, then you can confirm with your tax professional.

6. How do I start exploring IT equipment financing with Mehmi?

Start by sketching your IT roadmap and rough budget, then:

Read through Mehmi’s Equipment Financing and Business Loans pages.
Use the Calculator to ballpark payments.
Check the Blog and FAQ for similar scenarios.
Reach out through Contact Us with a short summary of what you want to buy and why.

From there, a Mehmi advisor can help you design a structure that fits your cash flow and your technology plans—not just the spec sheet.

Internal links used

External citations used

Statistics Canada – Digital technology and Internet use, 2021: cloud computing adoption and average spend by firm size. (Statistics Canada)
Conference Board of Canada – ICT Investment: software as the largest ICT investment category and Canada’s relative share. (The Conference Board of Canada)
ISED / Statistics Canada – Summary of the Survey on Financing and Growth of SMEs, 2023: 49% of SMEs requested external financing and breakdown of financing types. (ISED Canada)
CFLA – Canadian Market Overview Highlights 2021 and Annual Report 2024: asset-based finance financing ~42–43% of equipment and commercial vehicle spending; 6.5% growth in machinery and equipment spending and 2.8% growth in financing of new equipment and commercial vehicle assets in 2023. (Canadian Finance & Leasing Association)
BDC – Equipment Loan and Equipment financing 101: ability to finance up to 125% of equipment cost including transport, installation, and training; comparison to vendor financing. (BDC.ca)
BDC – Technology Equipment Loan and Fundica summary: financing for hardware, software, digital marketing, and advisory services. (BDC.ca)
Swoop – Technology equipment financing guide: definition of IT equipment finance covering both hardware and software; rationale for financing rather than paying cash. (Swoop UK)
Toronto Metropolitan University / The Dais – Digital Maturity in Canadian SMEs: digitally intensive businesses were more resilient during the pandemic. (The Dais)
Lexpert – Equipment finance in Canada: legal concepts to know: tax treatment and deductibility considerations for equipment financing. (Lexpert)

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