How Does Equipment Financing Work in Canada?
📝 Mammoth Machinery Team, 31+ Yrs in Canadian Equipment • ⏰ 6 Min Read • ✔ Expert Verified
Standard on every Mammoth machine.
Equipment financing is a loan or lease that pays for a machine, with the machine itself acting as the security. Instead of pulling $30,000 to $140,000 out of your operating account, you spread the cost over a term that can run up to 12 years. Your cash stays on payroll, materials, and fuel.
For many Canadian contractors, that is the difference between adding a machine this season and waiting three more years. Here is how the process works, what lenders look for, and how to walk in prepared.
What Is Equipment Financing?
An equipment loan is a term loan used to buy a specific machine, and the machine is the collateral. If the payments stop, the lender can take the equipment back. Because the loan is secured by an asset the lender can value and resell, equipment loans are generally easier to get than unsecured credit of the same size.
The alternative is paying the full price in cash. It feels cheaper because there is no interest. But it concentrates risk in the worst place: your operating account.
“Financing a piece of equipment out of your everyday cash can put your business at risk.”
That warning comes from BDC’s own guide to equipment financing, and it matches what contractors see on the ground. One slow season plus one big repair on a machine you drained your account for, and suddenly payroll is the problem. Financing exists to keep that risk off your books.
Loan or Lease: What Is the Difference?
With a loan, you own the machine from day one and build equity with every payment. With a lease, the financing company owns it and you pay for the use, usually with a buyout option at the end. Both get the machine on your site; they differ in ownership, upfront cost, and tax treatment.
Tax treatment is where the two paths really part. Lease payments may be deductible as a business expense, while ownership follows depreciation rules instead. The right answer is different for a landscaper replacing dumpers every four years than for an excavation company running one wheel loader for a decade. Have your accountant run both before you sign.
What Do Lenders Actually Look At?
Approval is not a mystery. Lenders evaluate a short, predictable list, and you can prepare every item on it before you apply.
The Paperwork They Want
Financial statements for the last two years, plus monthly cash-flow forecasts covering the rest of this year and the next 12 months. They will also look at your debt-to-equity ratio and working capital. For its own equipment loan, BDC asks for at least 12 months of generating revenue.
Tip: previously purchased equipment can often be financed too, which frees up cash you already spent.
The Story They Want
A specific explanation of how the machine increases sales or cuts costs. Company history, operations, and management experience round out the picture. The stronger the numbers behind the story, the easier the approval.
Tip: name the jobs the machine unlocks and the margin on each. Specifics beat adjectives.
As BDC account manager Concetta Farina puts it in the same guide: “Bankers need numbers.” The strongest application is not a perfect credit history. It is a cash-flow forecast that shows exactly how the machine pays for itself.
What Can Financing Actually Cover?
More than the sticker price. BDC, Canada’s bank for entrepreneurs, can finance up to 125% of the upfront cost of equipment. That lets transportation, shipping, installation, and operator training ride along in the same loan instead of hitting your cash. A down payment “may be required in some cases, depending on the overall financing structure and business’s risk profile,” according to BDC.
Terms and structure are flexible in ways that matter for seasonal work. Equipment loan terms run up to 12 years, and principal postponement is available for up to the first two years on some loans. Repayment can also be structured seasonally, with smaller payments through the winter and larger ones in your busy months.
- Up to 125% financed: delivery, installation, and training can be included, not just the machine.
- Terms up to 12 years: longer terms lower the payment; match the term to the machine's earning life.
- Seasonal structures: postpone principal up to 2 years on some loans, or shape payments around your season.
For Canadian landscapers and excavation contractors whose revenue arrives between April and November, the seasonal structure is often the single most valuable feature.
How to Apply: Step by Step
1. Get a written quote for the machine, with delivery and attachments itemized.
2. Pull your financial statements for the last two years.
3. Build a monthly cash-flow forecast covering the rest of this year plus the next 12 months.
4. Write the revenue case in two or three sentences: which jobs the machine unlocks and what they pay.
5. Apply and compare at least two offers on rate, term, and flexibility, not rate alone.
6. Close and take delivery, then register your warranty the same week.
Financing a Mammoth Machine
Every Mammoth machine can be financed. Here are the current price ranges to plan around, all in CAD and all covered by the same warranty.
Prices are current listed prices on each machine page. Our financing page covers the available options, including leasing and seasonal payment structures built around Canadian work seasons. Every machine also carries the 5-Year / 3,000-Hour Warranty as standard, which matters to lenders too: a machine that holds value is better collateral.
Frequently Asked Questions
Can I finance used or already-purchased equipment?
Often, yes. BDC’s equipment loan covers “up to 125% of the purchase price of new or used equipment,” and its equipment financing guide notes that loans “can also cover previously purchased equipment.” That lets you refinance a recent cash purchase and put working capital back in the business. Policies vary by lender, so ask before assuming.
How long are equipment loan terms in Canada?
Equipment loans commonly run up to 12 years, with the machine as collateral. Longer terms mean lower payments but more total interest. Match the term to how long the machine will actually earn for you.
Is leasing or buying better for taxes?
It depends on your situation. The Canada Revenue Agency lets you deduct lease payments for property used in your business. If you buy, you claim capital cost allowance instead. Class 8 covers machinery at 20%, and power-operated equipment for moving earth, rock or concrete generally falls in Class 38 at 30%. Which class fits a specific machine is for your accountant to confirm, so have them run both options before you sign.
Can a newer business get equipment financing?
It is harder without two years of statements, but not impossible, because the machine secures the loan. Expect a larger down payment, and be ready with a detailed cash-flow forecast that shows exactly how the equipment pays for itself.
See Mammoth's Financing Options
Flexible financing and leasing on the full Mammoth lineup, with seasonal payment structures built for Canadian work. Start with the options, pick the machine, and keep your cash where it belongs: in the business.