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Equipment Leasing Companies in Canada: 3 Critical Factors Every Business Must Know 

Table of Contents  

The Three Things You Need to Know About Equipment Leasing

Critical Factor #1: You Influence Your Lease Rate

Critical Factor #2: Most Assets Can Be Financed

Critical Factor #3: Who You Deal With Matters

Key Takeaways

Conclusion

Most Canadian business owners understand the advantages of leasing business equipment in today’s marketplace. Leasing preserves cash flow, supports growth, and provides flexibility. However, many firms fail to optimize rates, terms, and structures.

This guide explains the three most important factors that determine whether you secure competitive equipment lease financing in Canada.

The Equipment Financing Gap That's Holding Your Business Back  

Your business needs new equipment to grow, but banks want perfect credit and three years of financials you don't have. Meanwhile, your competitors are moving forward while you're stuck waiting.

Let the 7 Park Avenue Financial team show you how Equipment leasing companies specialize in saying yes when banks say no, offering flexible terms that preserve your cash flow and get you the machinery you need to compete and win.

3 UNCOMMON TAKES ON EQUIPMENT LEASING COMPANIES  

Most business owners don't realize that equipment leasing companies actually want you to succeed more than banks do—their entire business model depends on your ability to make payments over time, so they're incentivized to structure deals that work for your cash flow rather than just checking boxes on a credit application.

The "approval rate" myth: While banks approve roughly 25% of small business equipment financing applications, specialized equipment leasing companies approve 60-80% because they're evaluating the equipment's value and your business fundamentals, not just your credit score.

Equipment leasing companies often provide faster access to capital than purchasing with cash—the irony is that even if you have the money, leasing can get equipment into your operation within days while procurement processes can take weeks, meaning the opportunity cost of waiting often exceeds the cost of financing.

The Three Things You Need to Know About Equipment Leasing  

To achieve optimal lease rates and structures, Canadian businesses must understand these fundamentals:

Clients influence their lease rate

Most assets can be financed

The leasing partner you choose determines outcomes

Each factor plays a direct role in approval speed, pricing, and flexibility.

Critical Factor #1: You Influence Your Lease Rate  

Clients often ask whether it is really possible to influence their lease rate. While lenders set pricing models, your financial profile ultimately determines the rate offered.

Lease pricing is driven by credit quality, not guesswork. Companies with growing revenue, consistent profitability, and strong cash flow qualify for the most competitive lease terms in Canada.

Key drivers leasing companies evaluate include:

Historical and projected cash flow

Balance sheet strength

Revenue stability and growth trends

Leasing terminology can be confusing, even for experienced professionals. Common terms include:

Rate factors

Residual values

Full payout vs. non-full payout

Bargain purchase options

Effective interest rates

For large or complex equipment acquisitions, working with an experienced lease financing advisor is strongly recommended. A qualified advisor negotiates structure and pricing on your behalf.

Critical Factor #2: Most Assets Can Be Financed  

Many Canadian businesses are unaware of how flexible equipment leasing can be. Both new and used equipment are commonly financed across industries.

Used equipment financing represents a significant share of the Canadian leasing market. Age, condition, and resale value matter more than whether the asset is new.

In addition to hard assets, many soft costs can be included in a lease, such as:

Software and technology licenses

Installation and delivery

Maintenance and service contracts

Extended warranties

Bundling soft costs into a lease helps preserve working capital and improves cash flow management.

Critical Factor #3: Who You Deal With Matters  

Equipment leasing in Canada is highly fragmented. Lessors may specialize by geography, industry, or asset class.

Some leasing firms focus exclusively on:

Technology and IT equipment

Manufacturing and industrial machinery

Transportation and construction assets

Others operate in Canada but are foreign-owned or funded. Understanding a lessor’s specialization and funding source ensures alignment with your financing needs.

Selecting the right leasing partner directly affects approval timelines, flexibility, and long-term value.

CASE STUDY

From the 7 Park Avenue Financial Client Files  

Company: ABC Manufacturing Inc. (Precision Metal Fabrication)

Challenge: ABC Manufacturing, a 3-year-old precision metal fabrication shop in Ontario, needed to acquire a $150,000 CNC machining center to fulfill a major contract with an automotive parts manufacturer. The company had been declined by two banks despite having consistent revenue of $800,000 annually. The banks cited limited operating history and the owner's credit score of 620 from a previous business failure. Without this equipment, ABC would lose the contract and potentially close operations.

Solution: ABC Manufacturing partnered with a specialized equipment leasing company that evaluated the CNC machine's value and the revenue potential from the automotive contract. The leasing company structured a 60-month lease with payments of $3,100 monthly. They required a modest 10% down payment ($15,000) and approved the application within 48 hours. The equipment was delivered within 10 days of approval, allowing ABC to begin production immediately.

Results: ABC Manufacturing fulfilled the automotive contract, generating $340,000 in first-year revenue from that client alone. The manageable monthly lease payments preserved working capital for raw materials and staffing. Within 18 months, the company expanded to a second shift and increased annual revenue to $1.4 million. The owner's business credit score improved to 720 by consistently making lease payments. At month 36, ABC exercised an upgrade option to add a second CNC machine, further expanding capacity and revenue to $2.1 million annually.

Key Takeaways

Lease rates are influenced by your financial performance and cash flow

New, used, and soft-cost assets can often be financed

The leasing company or advisor you choose determines success

Conclusion  

Need Equipment Financing Today?

Informed lessees consistently achieve better terms and structures

Being educated in these three areas significantly improves equipment leasing outcomes for Canadian businesses.

7 Park Avenue Financial specializes in connecting Canadian businesses with commercial equipment leasing solutions when traditional financing isn't available.

Contact us: Learn how we've helped businesses across Canada to lease equipment and solve their equipment financing needs and challenges

Trusted advisor to Canadian businesses since 2004. Licensed and experienced in alternative commercial lending.

FAQ / Frequently Asked Questions About Equipment Leasing Companies  

What types of businesses use equipment leasing companies most often?

Equipment leasing companies serve businesses across nearly every Canadian industry. Common users include manufacturing, construction, healthcare, transportation, restaurants, and professional services. Leasing is most popular when preserving working capital or when bank financing is limited.

How do equipment leasing companies differ from bank equipment loans?

Equipment leasing companies focus on the value of the equipment and cash flow, not just credit scores. Banks typically require large down payments and lengthy approvals. Leasing companies often offer faster decisions, flexible terms, and up to 100% financing.

When should a business choose leasing instead of buying equipment outright?

Leasing is ideal when cash flow preservation is critical or equipment becomes obsolete quickly. It also works well for seasonal or fast-growing businesses. Lease payments are usually fully deductible as operating expenses.

Where do equipment leasing companies get their funding?

Leasing companies obtain capital from institutional investors, private equity, credit unions, and financial facilities. This flexibility allows them to approve deals banks often decline and offer customized lease structures.

Why do equipment leasing companies approve applications banks reject?

Leasing companies use asset-based underwriting. They focus on the equipment’s resale value and revenue potential rather than the borrower’s full financial history. This makes them more flexible for startups or credit-challenged businesses.

How fast can a business get equipment through a leasing company?

Most leasing companies issue credit decisions within 24–48 hours. Smaller deals may close in 3–5 business days. Bank equipment loans often take several weeks.

What credit score is required for equipment leasing?

Credit requirements vary, but many leasing companies work with scores as low as 550–600. Strong cash flow, time in business, and equipment value often matter more than credit score alone.

Who owns the equipment during and after the lease?

Ownership depends on the lease type. In operating leases, the lessor owns the equipment. In capital or $1 buyout leases, ownership transfers to the business at the end of the term.

Can seasonal businesses use equipment leasing?

Yes. Equipment leasing companies commonly offer seasonal payment structures. Payments can increase during peak months and decrease during slow periods, aligning financing with revenue cycles.

What happens if a business struggles to make lease payments?

Most leasing companies prefer restructuring over repossession. Options may include payment deferrals or term extensions. Early communication improves outcomes, but persistent non-payment can lead to repossession.

What documents do equipment leasing companies require?

Typical requirements include a credit application, recent bank statements, equipment quotes, and basic business information. Documentation is usually lighter than bank loan requirements.

How long are typical equipment lease terms?

Lease terms generally range from 12 to 84 months. Term length depends on the equipment’s useful life, resale value, and the business’s cash flow needs.

Are personal guarantees always required?

Personal guarantees are common for startups and small businesses. Established companies with strong financials may qualify for corporate-only leases or limited guarantees.

Is used equipment eligible for leasing?

Yes. Many leasing companies finance both new and used equipment, often up to 7–15 years old, depending on asset type and condition as long as purchases are from commercial equipment vendors. Rates may be slightly higher than for new equipment.

What exactly is an equipment leasing company?

An equipment leasing company is a specialized lender that purchases business equipment and leases it to the borrower for monthly payments. Unlike banks, they focus exclusively on equipment financing.

What factors do equipment leasing companies evaluate?

Key factors include equipment value, resale potential, business cash flow, time in operation, industry experience, and credit history. The equipment itself is usually the primary collateral.

STATISTICS -  EQUIPMENT LEASING COMPANIES  

Approximately 80% of North American businesses use some form of equipment leasing or financing

The equipment leasing industry finances roughly $1 trillion in business equipment annually across North America

Small and medium-sized businesses account for approximately 60% of equipment leasing volume

Equipment leasing companies report approval rates of 60-80% compared to traditional bank approval rates of 20-30% for similar applications

Over 85% of businesses cite cash flow preservation as their primary reason for choosing leasing over purchasing

The average equipment lease term is 36-48 months depending on equipment type

Technology equipment represents approximately 30% of all leased business equipment

CITATIONS  

Equipment Finance Association. "2024 Survey of Equipment Finance Activity." Arlington, VA: Equipment Finance Association, 2024. https://www.equipmentfinance.org

Canada Revenue Agency. "Capital Cost Allowance: Leasing Property." Government of Canada, modified January 2024. https://www.canada.ca/en/revenue-agency.html

7 Park Avenue Financial."Capital Equipment Leasing: Essential Financing Strategies" .https://www.7parkavenuefinancial.com/equipment-leasing-and-finance-asset-finance.html

Industry Canada. "Financing and Growth in Canadian Small and Medium Enterprises." Innovation, Science and Economic Development Canada, 2024. https://www.ic.gc.ca

Canadian Federation of Independent Business. "Equipment Financing Options for Small Business." Toronto: CFIB Research, 2023. https://www.cfib-fcei.ca

Medium/7 Park Avenue Financial/Stan Prokop."Equipment Leasing Canada- Solutions & Advantages" https://medium.com/@stanprokop/equipment-leasing-canada-solutions-advantages-5f9639fd5a52

Leasing Foundation of Canada. "The State of Equipment Leasing in Canada: Annual Report 2024." Toronto: Leasing Foundation of Canada, 2024. https://www.leasingfoundation.ca

7 Park Avenue Financial . "Equipment Finance In Canada" . https://www.7parkavenuefinancial.com/equipment-finance.html