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Equipment financing lets a business acquire the machinery, vehicles, or technology it needs without paying the full cost upfront — and because the equipment itself typically secures the loan, it's often one of the more accessible financing types even for businesses with limited credit history.
How Equipment Financing Works
You borrow against a specific piece of equipment — new or used — and repay over a term that's often matched to the equipment's useful life, commonly 12 to 84 months. The equipment itself acts as collateral, which is why lenders can offer more flexible credit requirements than unsecured products: if you default, the lender can repossess the specific asset rather than relying solely on your creditworthiness.
What Equipment Qualifies
Nearly any income-producing business equipment can typically be financed:
- Commercial vehicles — trucks, vans, trailers
- Construction equipment — excavators, skid steers, scaffolding
- Medical and dental equipment — imaging machines, dental chairs, surgical tools
- Restaurant equipment — commercial kitchens, refrigeration, POS systems
- Manufacturing machinery — CNC machines, production lines
- Technology and office equipment for larger purchases
New vs. Used Equipment
Both new and used equipment can typically be financed, though terms can differ — used equipment financing sometimes carries a shorter term or slightly different down payment requirement, reflecting the asset's remaining useful life and resale value.
The CCA Tax Deduction
In Canada, business equipment is generally eligible for Capital Cost Allowance (CCA) — a tax deduction that lets you write off a portion of the equipment's cost against income each year, similar in concept to Section 179 in the US. The specific CCA rate depends on the equipment class under CRA rules, and financed equipment is typically still eligible for the deduction even though you're paying it off over time rather than in cash. A tax professional can confirm the specific class and rate that applies to your purchase.
Equipment Financing vs. Leasing
Financing builds equity in the equipment and you own it outright at the end of the term. Leasing typically means lower monthly payments and the option to upgrade at the end of the term, but no ownership. Which fits better depends on whether the equipment will still be useful to your business years from now, or whether you'll want to upgrade regularly.
