In today’s uncertain economic environment, Canadian businesses are prioritizing flexibility, liquidity, and smarter capital deployment. Equipment leasing—once seen as a stopgap—is now a strategic move for small and mid-sized enterprises (SMEs) across construction, logistics, farming, and manufacturing.
Whether you’re launching a startup or scaling your operations, understanding how equipment leasing works in Canada is critical in 2025. With rising borrowing costs, ongoing supply chain delays, and new import tariffs affecting machinery pricing, business owners are rethinking how they acquire and manage assets.
At Sandhu & Sran Leasing & Financing, we’ve supported hundreds of businesses through tailored leasing programs that match their cash flow cycles, tax planning needs, and asset usage goals. This guide will walk you through how leasing works, its advantages, and how to avoid common pitfalls.
What Is Equipment Leasing?
Equipment leasing is a financial arrangement that allows you to use machinery, vehicles, or tools for a set period while making monthly payments—without purchasing the asset upfront. At the end of the lease term, you may have the option to buy the equipment, return it, or upgrade.
It differs from traditional equipment financing in that ownership remains with the leasing company unless a buyout is executed at term-end.
If you’re just starting out, check out our equipment leasing basics and concepts for foundational understanding.
How Equipment Leasing Works (Step-by-Step)
- Assessment of Equipment Needs
Businesses identify the type of equipment needed (e.g., trucks, excavators, medical devices). Leasing is particularly beneficial for technology that depreciates quickly or needs frequent upgrades. - Selection of Leasing Provider
Choose a licensed leasing firm that offers flexible terms, seasonal payment options, and industry-specific knowledge. Many SMEs prefer working with local specialists like Sandhu & Sran, known for fast approvals and custom structuring. - Lease Agreement Structure
A lease term typically ranges from 12 to 60 months. Payment amounts depend on the asset value, lease duration, and your business’s credit standing. - Usage + Maintenance
You use the equipment as your own, but the lessor retains ownership. Some leases include maintenance; others may leave this responsibility with the lessee. - End-of-Term Options
Depending on the lease type, you can:- Return the equipment
- Renew the lease
- Purchase the asset at a pre-agreed value
To go deeper, explore our guide on how equipment leasing works in Abbotsford.
Types of Equipment Leases Available in 2025
The Canadian market offers several lease types tailored to different operational and financial goals. The most common include:
- Operating Leases: Off-balance-sheet, ideal for short-term use
- Capital Leases: Treated like an asset purchase, with ownership transfer at the end
- Sale-Leasebacks: Sell owned equipment and lease it back to unlock capital
- TRAC Leases (for vehicles): Popular in the transportation industry
Learn more about the types of leases available to businesses and how they apply to your industry.
Key Benefits of Equipment Leasing
Here’s why leasing is becoming a strategic advantage for Canadian SMEs:
1. Preserves Working Capital
Rather than tying up large sums in upfront purchases, leasing allows businesses to invest in marketing, staffing, or operations. Explore how to acquire heavy equipment without paying upfront.
2. Tax Advantages
Lease payments may be fully tax deductible as operating expenses, depending on the lease structure and your accountant’s guidance.
3. Flexible Terms
Many providers—including us—offer flexible leasing options for heavy machinery tailored to seasonal cash flow or revenue fluctuations.
4. Technology Access
Stay current with equipment upgrades instead of owning outdated or inefficient machinery.
Real-World Use Cases in 2025
- A logistics firm in Surrey leased a fleet of refrigerated trucks with seasonal payments that aligned with summer demand surges.
- A construction company in Abbotsford used a sale-leaseback to free up $100,000 in capital for hiring and safety training.
- A farm operator near Mission leased advanced irrigation systems with government rebate coordination to save on both tax and water usage.
These businesses didn’t just lease—they grew.
Common Pitfalls to Avoid
Before entering a lease agreement, be sure to:
- Understand buyout clauses and end-of-term fees
- Clarify maintenance responsibilities
- Avoid underestimating equipment usage needs
- Read the fine print for early termination penalties
Read our breakdown of what to look for in an equipment lease and how to avoid top leasing mistakes.
Equipment Leasing vs. Buying: What’s Better in 2025?
A key decision for many business owners is whether to lease or purchase equipment outright. In 2025, the rising cost of capital and fluctuating interest rates make leasing an increasingly attractive option—especially for SMEs operating with tight budgets or limited credit access.
When you lease equipment, you preserve cash, gain flexibility, and avoid depreciation losses. On the other hand, purchasing may be beneficial if long-term use and asset ownership are key priorities.
For a deeper comparison, visit our blog on buying vs leasing: what’s better for small business owners, and if you’re weighing truck lease decisions specifically, check out should I buy or lease a truck in Abbotsford?.
What to Look for in an Equipment Leasing Company
Choosing the right leasing partner matters as much as selecting the equipment itself. Consider:
- Industry experience and approval track record
- Flexibility in lease structure and payment terms
- Knowledge of sector-specific needs like construction or agriculture
- Speed and transparency in communication
If you’re unsure how to start, here’s a guide on how to pick the right equipment leasing company in Abbotsford.
How Leasing Aligns with Cash Flow Planning
For seasonal businesses like farming, freight, and construction, equipment usage doesn’t align with uniform monthly income. Leasing companies today understand this, and offer seasonal or step-payment leases—where payments increase during busy months and decrease during off-seasons.
We’ve helped several businesses manage growth through seasonal fluctuations in the trucking industry, using tailored leasing solutions.
Frequently Asked Questions: Equipment Leasing in Canada (2025)
Q1: What’s the typical lease term for equipment in Canada?
Lease terms range from 12 to 60 months, depending on the asset’s lifespan, usage intensity, and business needs. Some leases include early buyout options or renewal clauses.
Q2: Can startups or low-credit businesses lease equipment?
Yes. Many leasing companies—including ours—offer options for new or credit-challenged businesses. Learn more about how to get approved for equipment leasing in Canada and how to improve your credit score before applying.
Q3: What types of equipment can be leased?
Everything from trucks, trailers, and construction machines to medical devices and restaurant equipment. Read our overview on equipment leasing options for small businesses.
Q4: How do I decide which type of lease is right for me?
It depends on whether you want to own the asset eventually (capital lease) or use it short-term (operating lease). Our article on equipment leasing types explains the differences.
Q5: Is equipment leasing tax deductible?
In many cases, yes. Lease payments can often be written off as business expenses. Speak to a tax advisor to confirm how this applies to your structure.
Final Thoughts: Is Leasing the Smart Move for 2025?
With interest rate uncertainty, import tariffs, and increased operational expenses, equipment leasing offers a smart way to scale without overspending. It supports long-term growth, simplifies budgeting, and keeps you agile in fast-moving industries.
At Sandhu & Sran Leasing & Financing, we don’t just offer leases—we tailor solutions that make sense for your business stage, sector, and seasonality.
Whether you’re considering heavy machinery, commercial trucks, or specialty tools, now is the time to explore leasing as a core financial strategy—not just an alternative to buying.