How equipment financing works
You choose the equipment and get a quote from the dealer or seller. The lender pays the seller, and you repay the lender in fixed payments over a term that usually matches how long the equipment will stay useful. The lender registers its interest in the equipment, and when the last payment is made, the equipment is yours free and clear.
Because the equipment secures the deal, lenders put real weight on the asset itself: what it is, how old it is and what it would sell for. That's why equipment financing is often easier to get than an unsecured loan of the same size, and why it usually costs less than short-term working capital products.
Equipment loan or lease?
Both spread the cost over time. The difference is ownership and tax treatment. With a loan, you own the equipment from day one and generally claim capital cost allowance and the interest. With a lease, the leasing company owns it and you pay to use it, with options at the end to buy, renew or return it. Our equipment financing vs. leasing guide walks through which fits when.
What lenders look at
- The equipment. Type, age, hours or mileage, and how easily it could be resold. Common, in-demand equipment is the easiest to finance.
- Your business. Most equipment lenders outside the big banks start from your last few months of deposits. Here's how they read your bank statements.
- The deal. A detailed quote or bill of sale, any down payment, and whether delivery, installation or training are included. Our document checklist covers what to have ready.
- Credit and taxes. Personal and business credit still matter, and CRA arrears can stop a deal. If you owe, fix it before you apply.
New, used and private-sale equipment
Many lenders finance used equipment, and some specialize in it. Private sales take more checking: the lender will want to confirm the seller owns the equipment outright, that no one else has a lien on it, and that it's worth the price. Ask before you commit to a seller, because not every lender does private sales.
Refinancing equipment you already own
If you own trucks or machines that are paid off or close to it, that equity can fund growth or replace expensive short-term debt. Equipment refinancing and sale-leasebacks explains how it works and when it makes sense.
Don't fund long-life equipment with short-term money
Paying for a machine you'll run for ten years with a cash advance repaid over six months squeezes your cash flow for no reason. Match the financing to the life of the asset. If you're already carrying advances, here's how to work out what they really cost.
Government-backed equipment loans
The Canada Small Business Financing Program covers equipment and leasehold improvements up to $500,000 through participating banks and credit unions. It can mean a better rate if your timeline allows for a bank process.
How Straightline helps
Equipment lenders specialize. Some prefer trucks, others medical equipment or production machinery, and each has its own appetite for used and private-sale deals. One application gets you an advisor who knows which lenders fit your equipment and your industry, and who can put a loan and a lease side by side. Your file goes to that one advisor and is never resold. Check your options in about 3 minutes.