In 2025, Canadian small and medium-sized enterprises (SMEs) are navigating an increasingly complex equipment financing environment. From economic uncertainty to inflation-driven costs and evolving tax policies, businesses across sectors—from construction to manufacturing, transportation to agriculture—are asking more informed, strategic questions before securing loans or leases for their equipment needs.
This shift marks a significant change from the pre-pandemic years. Today’s SME owners are more financially cautious, eager to optimize tax outcomes, and looking for financing solutions that offer long-term value—not just quick approvals.
At the heart of this transformation is a new mindset: making smart capital investments that support both growth and stability. This blog addresses the most pressing equipment financing questions we’re hearing from businesses in regions like Abbotsford, Surrey, Edmonton, and beyond—delivering clarity in a time when certainty is hard to come by.
What’s the Best Way to Finance Equipment in 2025: Lease or Loan?
This remains the most frequently asked question—and for good reason. The choice between leasing and taking a loan depends on:
- Cash flow needs
- Tax planning
- Equipment usage patterns
- The projected lifespan of the asset
Leasing offers benefits such as lower monthly payments, flexibility to upgrade, and tax-deductible lease payments. It’s ideal for fast-depreciating assets or when preserving capital is key.
Loans, on the other hand, provide ownership from day one and may offer long-term depreciation benefits through Capital Cost Allowance (CCA). They’re better suited for equipment with a long service life and high resale value.
The decision is less about one-size-fits-all and more about aligning financing with your strategic goals. Many Alberta and BC businesses are adopting blended models—leasing some assets while purchasing others outright through structured loans.
How Do Interest Rates Affect Equipment Financing in 2025?
Interest rates remain a critical factor in 2025. While the Bank of Canada has signaled potential stability, borrowing costs are still relatively high compared to pre-2020 levels. Here’s what SMEs need to understand:
- Fixed-rate loans provide predictability and help shield your business from future increases.
- Leasing rates may be lower upfront but could carry different cost implications over time.
- Equipment type and credit history also heavily influence the final rate.
In many cases, small businesses are opting for shorter-term leases or variable-rate loans with early repayment flexibility, especially when anticipating interest rate declines in the next 12–24 months.
Is It Worth Financing Used Equipment Instead of New in 2025?
With new equipment prices up significantly—partly due to tariffs, shipping delays, and supply chain disruptions—many Canadian SMEs are asking whether used equipment is a smarter buy.
The short answer: often, yes.
Used equipment can reduce capital outlay by 20–40% compared to new alternatives, and in most cases, it can be:
- Financed through a term loan
- Leased with service agreements
- Acquired faster due to domestic availability
The key consideration is the remaining useful life and maintenance history of the asset. In cities like Edmonton and Abbotsford, where demand for heavy-duty trucks and earthmoving equipment is high, we’re seeing increased interest in certified pre-owned leasing packages that come with extended warranties and financing support.
What Credit Score Do I Need to Qualify for Equipment Financing?
Most Canadian lenders assess both business and personal credit when reviewing applications. While there’s no universal benchmark, here’s a general guide:
- Above 700: Excellent – access to top-tier rates and minimal down payment
- 620–699: Acceptable – likely approval with moderate terms
- Below 620: Challenging – may require a higher down payment, additional collateral, or a co-signer
Even if your credit is in the lower tier, specialized lenders and brokers—including firms like Sandhu & Sran Leasing & Financing—can help structure a deal based on your cash flow, contracts, or business history, not just your credit file.
Can I Deduct Equipment Financing Costs from My Taxes?
Yes, and this is a major driver of financing decisions. Here’s how it works:
- Lease payments are typically fully deductible as operating expenses.
- Loan-financed equipment qualifies for depreciation (Capital Cost Allowance), and the interest portion of payments may be deductible.
Many SMEs structure their financing in a way that maximizes current-year deductions, especially in provinces like BC and Alberta where tax planning is closely tied to seasonal revenue.
Working with a financing partner who understands tax optimization can significantly enhance the overall value of your financing agreement.
What Documentation Do I Need to Apply for Equipment Financing?
The application process has become more efficient in 2025, but lenders still need key information to assess risk and structure the deal:
- Business financials (balance sheet, P&L, cash flow)
- Equipment quotes or vendor invoices
- Business license or incorporation documents
- Recent bank statements
- Credit authorization form
Lenders may also ask for details on equipment usage, expected revenue impact, and existing liabilities.
In many cases, a streamlined process with a broker can reduce document handling and accelerate approvals within 24–72 hours, depending on deal complexity.
What Types of Equipment Can Be Financed in 2025?
Almost any equipment that supports business operations can be financed today. The most commonly financed categories include:
- Heavy construction and earthmoving equipment
- Commercial trucks and trailers
- Agricultural machinery
- Manufacturing tools and CNC machines
- Material handling equipment like forklifts and conveyors
- Food production and packaging systems
- Specialized equipment for oil & gas or medical sectors
Because many SMEs operate across multiple verticals, financing partners that support multi-asset or bundled financing offers a major advantage in streamlining payments and documentation.
How Do I Know If I’m Getting a Good Deal?
This is an increasingly important question, especially for businesses comparing rates across banks, direct lenders, and brokers. Consider these factors:
- Effective interest rate (APR), including fees
- Term length and prepayment flexibility
- Ownership structure at the end of lease (FMV vs. $1 buyout)
- Tax deductibility and CCA class impact
- Service, maintenance, or insurance bundling options
A trustworthy financing provider will help you model the total cost of financing, not just promote a monthly payment number. Look for transparent terms, helpful advisors, and positive testimonials.
How Long Should My Equipment Financing Term Be?
Choosing the right term length—typically between 24 and 84 months—depends on three main factors:
- The useful life of the equipment: Avoid paying beyond the equipment’s prime operating period.
- Your cash flow: A longer term reduces monthly payments but increases total interest paid.
- Flexibility needs: Some SMEs prefer shorter terms to retain flexibility for upgrades or early payoff.
In 2025, businesses in transportation, manufacturing, and construction are leaning toward mid-range terms (48–60 months) to balance affordability and financial flexibility, especially as interest rates remain higher than pre-2020 averages.
Can I Finance Equipment Purchased from a Private Seller or Auction?
Yes, and it’s becoming more common. With more businesses liquidating surplus assets, auctions and private sales present opportunities to acquire quality equipment at reduced prices. Most lenders will support this type of purchase if:
- The equipment has a verifiable history
- The buyer provides clear documentation
- A site inspection or appraisal confirms value
Financing options may be more limited compared to vendor-direct purchases, but specialized lenders or brokers can often build custom packages to support these acquisitions.
What Are My Options If I Have Limited Credit History or a New Business?
Startups and newer businesses often worry about getting declined. While it’s true that traditional banks may hesitate, many financing partners offer:
- Low-doc programs for businesses with under two years of history
- Revenue-based underwriting instead of credit score focus
- Co-signer or guarantor options
- Collateral-backed lending using equipment value itself as security
In places like Abbotsford and Edmonton, we’re seeing growing demand for startup-friendly leasing packages in the trades, food production, and mobile service industries.
Working with experienced partners like Sandhu & Sran Leasing & Financing can give new businesses access to the capital they need—without overextending too early.
Can I Bundle Multiple Equipment Items Into One Financing Plan?
Yes. This is often called a “master lease agreement” or bundled financing. It allows you to finance several pieces of equipment through one contract, with benefits like:
- Simplified paperwork and billing
- Uniform payment terms
- Better negotiation power with vendors
- Ability to add-on equipment during the lease term
This structure is popular among SMEs scaling operations, especially in manufacturing, food processing, and logistics where multiple equipment categories are required at once.
How Fast Can I Get Approved for Equipment Financing in 2025?
With modern underwriting tools, many businesses now receive pre-approvals within 24–48 hours. Full funding can happen in 3–7 business days, depending on:
- Deal size
- Lender policies
- Type and location of equipment
- Document readiness
Working with a dedicated financing advisor helps accelerate the process—especially when bundling multiple items or arranging private sale or vendor-direct financing.
FAQs: Equipment Financing for Canadian SMEs in 2025
Q: Can I deduct lease payments or loan interest on my business taxes?
Yes. Lease payments are typically 100% deductible as operating expenses, while loan interest and depreciation (via CCA) can be claimed for purchased equipment.
Q: Is it better to lease or buy if I plan to keep the equipment long-term?
If ownership is your goal and the equipment will remain relevant for 7+ years, a loan might offer better long-term value. Leasing is ideal for shorter-use cycles or preserving capital.
Q: What are common mistakes SMEs make in equipment financing?
Not comparing total cost (not just monthly payments), ignoring tax impacts, or underestimating future cash flow needs are common pitfalls.
Q: Can I still get financing with average or poor credit?
Yes. Many providers consider your overall business profile, including cash flow and time in business. Collateral-based options or co-signed leases are available.
Q: Can I upgrade or swap equipment during a lease?
Often yes, especially in operating lease structures. Mid-term upgrades are common in fast-evolving industries like logistics and construction.
Final Thoughts: Empowering Canadian SMEs Through Smarter Financing
In today’s fast-changing business environment, equipment financing is no longer just about affordability—it’s a strategic tool for growth, stability, and smart tax planning. SMEs across Canada are becoming more sophisticated in how they evaluate financing options, asking better questions and expecting more tailored solutions.
By partnering with advisors who understand regional challenges—like those faced in Alberta’s energy sector or BC’s transportation and construction markets—businesses can avoid missteps and seize opportunities.
At Sandhu & Sran Leasing & Financing, we work closely with SMEs to match them with right-sized financing solutions, whether it’s a flexible lease, a bundled equipment package, or a refinance deal that frees up capital.
If you’re planning an equipment investment in 2025, asking the right questions is the first step. Getting the right answers starts with choosing the right partner.