Equipment, leasing, inventory and purchase orders
50 answers. Written by the celerfunding.com editorial team from official sources. Each answer shows where it applies and when its sources were read.
Should I use a loan or a lease to get equipment?
There is no single right answer. Match the instrument to what you need, who should own the asset, and how long you will use it.
BDC lists equipment loans, leasing, and inventory and purchase-order finance as distinct types. It stresses matching the instrument to use, ownership and repayment horizon, and not assuming every lender offers every category.
With a loan you generally borrow to buy the equipment. With a lease you pay to use it under contract terms. Exact ownership, end-of-term, insurance and early-exit rules differ by provider, so ask in writing who owns the equipment at the end.
Government-backed options can also fund equipment. SBA 7(a) allows equipment as a use of funds, and SBA microloans can pay for equipment.
Compare total cost, not just the monthly payment. Nothing here predicts approval.
Next: Compare funding options
Sources (read 2026-10-31): BDC financing; financing types; SBA lending; microloans
Can a loan pay for inventory or purchase orders?
Sometimes, depending on the product. Inventory is allowed under some programs and excluded from others.
SBA microloans can fund inventory and supplies. SBA 504 loans cannot: they are for major fixed assets, not working capital or inventory. SBA 7(a) loans can cover working capital among other uses.
BDC treats inventory and purchase-order finance as separate categories of financing and cautions that lenders do not all offer every category.
A purchase-order arrangement is tied to specific customer orders, so a lender will look closely at the order and the customer. Terms and costs vary a lot.
Before applying, list what you are buying, when you are paid by your customers, and how the loan would be repaid in between. Ask each provider whether inventory is an eligible use.
This is general information, not a prediction of approval.
Next: Business funding
Sources (read 2026-10-31): microloans; SBA 504; SBA lending; BDC financing
Can the Canada Small Business Financing Program finance used equipment?
Yes. The program page says term loans can cover new or used equipment, as of 2026-11-01. The loan goes through a bank, credit union or caisse populaire, which makes the credit decision.
Other listed term-loan uses include commercial real property purchase or improvement, leasehold improvements, intangible assets and working capital. Overall financing can be up to $1.15 million, with term loans up to $1 million.
A 2% registration fee applies and can be financed. Lender fees cannot be financed.
If you plan to buy a used machine, ask the lender how it values used equipment and whether it needs an appraisal or invoice. Approval is never assured. This is general information, not an eligibility decision.
Next: Canada funding resources
Related: Can a government-backed loan in Canada pay for leasehold improvements or software?; How large can a Canada Small Business Financing Program term loan be?
Sources (read 2026-11-01): CSBFP
Can a government-backed loan in Canada pay for leasehold improvements or software?
It can. The Canada Small Business Financing Program lists leasehold improvements and intangible assets as eligible term-loan uses, as of 2026-11-01.
That means a renovation of space you rent, or certain non-physical assets, may be financeable alongside equipment. The page does not define 'intangible assets' in detail, so confirm with your lender what counts.
Lines of credit under the program are narrower: working capital and the registration fee only.
The lender decides whether to approve and may apply its own tests. Ask for a written list of eligible costs before you buy or sign a contract, and keep invoices. This is general information, not an eligibility decision.
Next: Canada funding resources
Related: Can the Canada Small Business Financing Program finance used equipment?
Sources (read 2026-11-01): CSBFP
How large can a Canada Small Business Financing Program term loan be?
The program page says the overall maximum is $1.15 million, with term loans up to $1 million and lines of credit up to $150,000, as of 2026-11-01. The amount is negotiated between you and the lender.
The page does not give separate maximums for equipment, leasehold improvements or working capital. Businesses with gross revenues of $10 million or less are eligible.
Because the loan is delivered by a participating lender, the lender sets other conditions, including security and personal guarantees. Ask about these early.
Bring a quote or invoice for the equipment, your recent financial statements and a short explanation of how the equipment will pay for itself. This is general information, not a prediction of any amount.
Next: Canada funding resources
Related: Can the Canada Small Business Financing Program finance used equipment?
Sources (read 2026-11-01): CSBFP
How long should an equipment loan term be?
Match the term to how long the equipment will be useful. BDC's guidance says the repayment period should fit the equipment's lifespan, suggesting two to four years for computer equipment and longer for manufacturing equipment.
The reason is that equipment loses value over time. If the term is too long, the loan can outlast the asset's usefulness, and you may be paying for something you have replaced.
Shorter terms raise each payment but reduce total interest. Longer terms ease cash flow but cost more overall.
Ask each lender for a payment schedule at two or three terms, and compare total cost, not only the monthly figure. Ask whether early repayment carries a fee. This is general information.
Next: Compare funding options
Related: Is the equipment itself the collateral for an equipment loan?
Sources (read 2026-11-01): financing types
Is the equipment itself the collateral for an equipment loan?
Usually, yes. BDC's guidance describes an equipment loan as a term loan where the equipment you buy serves as collateral, and the lender typically advances a percentage of its assessed value.
That means you may need to fund the rest yourself, such as with a down payment. The percentage varies by lender and by the type and age of the equipment.
Because the lender holds a claim on the asset until you repay, selling or moving it can need permission. Read the security terms before signing.
Ask what percentage of value the lender would advance, how it will value the equipment, and whether any other business or personal security is required. This is general information, not a quote or approval.
Next: Compare funding options
Related: How long should an equipment loan term be?
Sources (read 2026-11-01): financing types
Who owns the equipment under a lease?
Under the arrangement BDC describes, the supplier keeps ownership. You pay a monthly fee to use the equipment, and at the end of the lease you can generally return it or buy it.
With a loan, by contrast, you own the equipment from the start and it is pledged as collateral until you repay.
Exact end-of-term options differ by contract. Some leases set a buyout price, some allow renewal, and some require return in specified condition.
Ask in writing who owns the equipment at the end, what the buyout price is, who pays for repairs and insurance, and what happens if you end the lease early. Do not rely on a verbal promise. This is general information, not legal advice.
Next: Compare funding options
Related: When does leasing equipment make more sense than buying it?; What is the main financial difference between buying with a loan and leasing?
Sources (read 2026-11-01): financing types
When does leasing equipment make more sense than buying it?
Leasing may suit equipment that becomes obsolete quickly. BDC's article says you can upgrade under the original contract, which avoids being stuck with outdated gear.
Buying can suit equipment you will use for a long time, because you build equity as you pay down the loan and own the asset at the end.
The right choice depends on how fast the equipment loses value, how long you need it, your cash flow, and tax treatment, which an accountant should confirm.
Compare the total cost of each path over the same period, including fees, insurance and any end-of-term payment. Ask each provider for a written breakdown. This is general information, not advice.
Next: Compare funding options
Related: Who owns the equipment under a lease?; What is the main financial difference between buying with a loan and leasing?
Sources (read 2026-11-01): financing types
What is the main financial difference between buying with a loan and leasing?
With a loan you build equity in an asset you own, and with a lease you pay to use an asset someone else owns. That is the basic distinction in BDC's guidance.
A loan puts the equipment on your side as an owned asset that is pledged as collateral until repaid. A lease usually means lower upfront cost and the option to return or buy at the end.
What each does to your cash flow and taxes depends on the contract and your situation, so ask your accountant to model both.
Also check how each option affects borrowing room. Avoid using a revolving line of credit for long-term equipment, since BDC suggests keeping the line for operating costs. This is general information, not advice.
Next: Compare funding options
Related: Who owns the equipment under a lease?; When does leasing equipment make more sense than buying it?
Sources (read 2026-11-01): financing types
What scams involve equipment leasing offers?
The FTC's small business scam guide warns that some sellers promise better leasing deals, then use fine print and false statements to get a signature. Some agents have business owners sign blank documents or change terms later.
The FTC's advice is to ask for copies of all documents before you sign, never sign blank forms, and be wary of salespeople who delay giving you documents.
Also search the company's name with the word 'scam' or 'complaint', and ask trusted people for recommendations.
If you think you were misled, keep all paperwork and report it at ReportFraud.ftc.gov and to your state attorney general. This is general information, not legal advice.
Next: Request a review
Related: What should I check before signing an equipment lease or loan contract?
Sources (read 2026-11-01): Scams and Your Small Business
What should I check before signing an equipment lease or loan contract?
Get a full copy first and read the cost, term, ownership, default and exit terms. The FTC advises you to ask for copies of all documents before you sign and never to sign blank forms.
Check the total you will pay, not only the monthly figure. Check who owns the equipment at the end, who must insure and maintain it, what happens if it breaks or becomes obsolete, and what early termination costs.
Look for personal guarantees, security over other assets, automatic renewal and any fee that is not in the quote.
If anything is unclear, ask for the answer in writing. For a large contract, have a lawyer or accountant review it. Do not be rushed by a one-day deal. This is general information.
Next: Request a review
Related: What scams involve equipment leasing offers?
Sources (read 2026-11-01): Scams and Your Small Business; financing types
Can SBA 504 financing pay for equipment?
Yes, for long-term machinery and equipment with a useful life of at least 10 years, as of 2026-11-01. The SBA page also lists AI-supported equipment used to manufacture products.
The 504 program targets major fixed assets that promote business growth and job creation. It does not fund working capital or inventory.
Other permitted uses include buying, building or renovating existing buildings or land, and certain debt refinancing that meets the program's 'qualified debt' rules.
A 504 loan is delivered through a Certified Development Company with a senior lender, and each has its own approval process. Ask your local CDC whether your equipment and project fit. Approval is never assured. This is general information, not an eligibility decision.
Next: US funding resources
Related: Can SBA 504 financing pay for equipment?; What is a Certified Development Company and why do SBA 504 loans go through one?; What repayment terms do SBA 504 loans have?
Sources (read 2026-11-01): SBA 504
What is a Certified Development Company and why do SBA 504 loans go through one?
A Certified Development Company, or CDC, is an organization the SBA authorizes to originate 504 loans together with a senior lender. The SBA page says 504 loans are available only through CDCs.
That means you do not apply to the SBA directly. You work with a CDC and a lender, and each reviews the project.
The SBA page does not state in the text I read how the loan is divided between the CDC, the lender and the borrower, so ask for the structure and your required contribution in writing.
Start by finding a CDC that serves your area and asking what documents it needs. Compare the cost with other equipment financing. Approval is never assured. This is general information.
Next: US funding resources
Related: What should I check before signing an equipment lease or loan contract?; What is a Certified Development Company and why do SBA 504 loans go through one?
Sources (read 2026-11-01): SBA 504
What repayment terms do SBA 504 loans have?
The SBA page lists repayment terms of 10, 20 or 25 years, at a rate pegged above the 10-year U.S. Treasury rate, as of 2026-11-01.
The page also gives two different maximums, describing financing of up to $5 million in a header and $5.5 million in the body, so confirm the current figure with a CDC.
Longer terms usually go with real estate, and shorter ones with equipment, but the actual term depends on the project and the lender, so ask. Do not assume a term from the program name.
Compare the 504 cost with other equipment options, including conventional loans and leases. This is general information and not a quote.
Next: US funding resources
Related: What should I check before signing an equipment lease or loan contract?; Can SBA 504 financing pay for equipment?
Sources (read 2026-11-01): SBA 504
Can short-lived equipment qualify for an SBA 504 loan?
Generally no. The SBA says 504 funds long-term machinery and equipment with a useful life of at least 10 years, as of 2026-11-01. Equipment that wears out sooner does not fit that test.
For shorter-lived items such as computers, other routes may fit better. SBA microloans can fund machinery, equipment, furniture and fixtures up to $50,000, and 7(a) loans can finance machinery and equipment.
The 504 program also excludes working capital and inventory.
If you are unsure whether an asset meets the useful-life rule, ask a CDC before you commit to a purchase. This is general information, not an eligibility decision.
Next: US funding resources
Related: What should I check before signing an equipment lease or loan contract?; Can a small SBA microloan buy equipment?
Sources (read 2026-11-01): SBA 504; microloans; SBA lending
Can an SBA 7(a) loan buy equipment, furniture and supplies?
Yes. The SBA lists purchasing and installing machinery and equipment, plus furniture, fixtures and supplies, as permitted 7(a) uses, as of 2026-11-01. It also mentions AI-related expenses.
The same loan can combine uses, such as equipment plus working capital or a change of ownership. The 7(a) maximum is $5 million.
SBA-backed loans are made by lenders, who decide on approval and set terms within program rules. Ask the lender about down payment, security, fees and personal guarantees.
Compare 7(a) with a 504 loan or a lease if the equipment is long-lived or quickly outdated. This is general information, not an approval or a quote.
Next: US funding resources
Related: What should I check before signing an equipment lease or loan contract?
Sources (read 2026-11-01): SBA lending
Can a small SBA microloan buy equipment?
Yes, for smaller purchases. SBA microloans can fund machinery, equipment, furniture, fixtures, supplies and inventory, with a maximum of $50,000 and an average around $13,000, as of 2026-11-01.
Terms can run up to seven years, and rates are generally 8% to 13%. The SBA says nonprofit intermediary lenders make all credit decisions and set terms.
Microloans cannot buy real estate or pay off existing debt.
If you need larger or more expensive equipment, other products may fit better. Ask local intermediaries about their requirements, training, security and speed, and compare cost. This is general information, not an eligibility decision.
Next: US funding resources
Related: Can a small SBA microloan buy equipment?
Sources (read 2026-11-01): microloans
Can equipment financing cover AI-related equipment?
Sometimes, depending on the program. The SBA's 7(a) page mentions AI-related expenses among machinery and equipment uses, and its 504 page includes AI-supported equipment used to manufacture products, as of 2026-11-01.
Those are program-specific statements, not general promises. The SBA does not define the term broadly on the pages I read, so a lender or CDC will decide what qualifies.
If your purchase is software or a subscription rather than equipment, ask whether it counts as a financeable asset at all.
Before buying, ask your lender or CDC in writing whether the specific item is an eligible use. This is general information, not an eligibility decision.
Next: US funding resources
Related: What should I check before signing an equipment lease or loan contract?; What repayment terms do SBA 504 loans have?
Sources (read 2026-11-01): SBA lending; SBA 504
What is the Section 179 deduction for business equipment?
Section 179 lets you elect to deduct all or part of the cost of qualifying property in the year you place it in service, up to a dollar limit. This is the IRS's description as of 2026-11-01. The page does not state the current dollar limit, so check it.
Generally you must own the property, use it in a business or income-producing activity, and it must have a determinable useful life of more than one year. The deduction cannot exceed your taxable income from the active conduct of a trade or business.
This is a tax deduction, not a grant or funding. It reduces tax; it does not provide cash.
Ask a tax professional whether your asset qualifies, what the current limit is, and how your state treats it. This is general information, not tax advice.
Next: US funding resources
Related: Can Section 179 give me a bigger deduction than my business earns?; Are vehicles and computers treated differently for US depreciation?
Sources (read 2026-11-01): IRS Topic 704 Depreciation
Is bonus depreciation 100% on equipment I buy now?
Per the IRS page read on 2026-11-01, property acquired and placed in service after January 19, 2025 qualifies for a 100% special depreciation allowance. For property placed in service from January 1 to January 19, 2025, the page lists 40%.
The allowance is taken after any Section 179 deduction and before other depreciation. Only property that meets the rules qualifies, and land never does.
Tax law changes, so confirm the current rate and your asset's placed-in-service date before you rely on it. It is a tax deduction, not funding.
A tax professional should confirm eligibility, state treatment and any later recapture rules. This is general information, not tax advice.
Next: US funding resources
Related: Is bonus depreciation 100% on equipment I buy now?; Are vehicles and computers treated differently for US depreciation?
Sources (read 2026-11-01): IRS Topic 704 Depreciation
Can Section 179 give me a bigger deduction than my business earns?
No, not on the IRS's description. The Section 179 deduction is limited to your taxable income from the active conduct of a trade or business for the year, as of 2026-11-01.
That means a business with little taxable income may not be able to use the full deduction in one year. The IRS page does not explain carryforward, so ask a professional.
Bonus depreciation is a separate allowance that is taken after Section 179. How the two interact depends on your facts.
If you are buying equipment mainly to get a deduction, check the cash cost first: a deduction reduces tax, it does not pay for the equipment. A tax professional can model your case. This is general information, not tax advice.
Next: US funding resources
Related: Is bonus depreciation 100% on equipment I buy now?; Can Section 179 give me a bigger deduction than my business earns?
Sources (read 2026-11-01): IRS Topic 704 Depreciation
Are vehicles and computers treated differently for US depreciation?
Yes. The IRS says listed property, including automobiles, has special limits, while computers and peripheral equipment are not listed property, as of 2026-11-01.
Mixed personal and business use also matters: the business-use percentage affects what you can deduct.
So a delivery van and a laptop can be treated very differently. The IRS refers readers to Publication 946 for detail.
Keep mileage logs, invoices and placed-in-service dates. A tax professional should confirm the limits and your state's treatment before you buy. This is a tax deduction question, not a funding source, and this is general information, not tax advice.
Next: US funding resources
Related: Is bonus depreciation 100% on equipment I buy now?
Sources (read 2026-11-01): IRS Topic 704 Depreciation
Can I depreciate the land when I finance a property purchase with equipment?
No. The IRS says land is never depreciable, as of 2026-11-01. Only property you own, use in a business or income-producing activity, and that has a determinable useful life of more than one year generally qualifies.
If a purchase bundles land, buildings and equipment, the cost usually has to be split, and the split affects tax treatment.
Some nonresidential building improvements, such as roofs, HVAC and security systems, can qualify when placed in service after the building was first used.
Ask an accountant to allocate the cost and advise on timing. A loan for a mixed purchase may also have different rules by component. This is general information, not tax advice.
Next: US funding resources
Related: Is bonus depreciation 100% on equipment I buy now?
Sources (read 2026-11-01): IRS Topic 704 Depreciation
What is capital cost allowance in Canada?
Capital cost allowance, or CCA, is the yearly deduction the CRA allows for depreciable property such as buildings, furniture or equipment used in a business. It is a tax deduction, not funding.
Because these assets wear out or become obsolete, their cost is deducted over several years rather than all at once. The CRA page refers to separate pages for the most common classes and rates and for the declining-balance method.
It also links to a separate page on the Accelerated Investment Incentive.
Which class and rate apply depends on the asset. Ask an accountant to confirm before you plan around the deduction. This is general information, not tax advice.
Next: Canada funding resources
Related: Can I deduct the full cost of equipment in the year I buy it in Canada?
Sources (read 2026-11-01): CRA capital cost allowance
Can I deduct the full cost of equipment in the year I buy it in Canada?
Generally you cannot, based on the CRA's capital cost allowance overview, which says you cannot deduct the full cost of depreciable property in the year you acquire it.
Costs are deducted over several years using classes and rates. The CRA page also links to the Accelerated Investment Incentive, which may change first-year amounts for eligible property. I did not read its terms in this run, so ask an accountant what applies now.
The incentive rules have changed over time, and eligibility depends on the asset and your business type.
Before buying, ask for a tax estimate based on your actual asset class and date of use. A tax deduction does not replace funding. This is general information, not tax advice.
Next: Canada funding resources
Related: What is capital cost allowance in Canada?
Sources (read 2026-11-01): CRA capital cost allowance
Can I still claim US federal credits for EV chargers or commercial clean vehicles?
Often not for new purchases. IRS guidance says the section 30C credit is unavailable for property placed in service after June 30, 2026, and the section 45W commercial clean vehicle credit is unavailable for vehicles acquired after September 30, 2025. This is as of 2026-11-01.
Earlier qualifying transactions can be treated differently, and the rules turn on dates and facts.
These are tax credits, not grants, and they reduce tax owed rather than paying for the equipment.
If you are planning an equipment purchase around a credit, ask a tax professional to confirm the current rule and your dates before you commit. Do not rely on old credit lists. This is general information, not tax advice.
Next: US funding resources
Related: Is bonus depreciation 100% on equipment I buy now?
Sources (read 2026-11-01): IRS termination guidance
What does BDC list as the main equipment financing choices?
BDC's guidance separates an equipment loan, leasing and a line of credit. An equipment loan is secured by the asset, leasing leaves ownership with the supplier, and a line of credit is for everyday operating costs.
BDC also notes that working capital loans are based on cash flow, while equipment loans and commercial mortgages are secured by the asset.
It advises comparing asset life against repayment term, ownership, collateral and cash-flow impact, and notes that rates and terms vary by institution.
A good first step is to write down what you will buy, how long you will use it, and what you can afford each month. Then ask two or more lenders for written quotes. This is general information, not a recommendation.
Next: Compare funding options
Related: Should I use a loan or a lease to get equipment?; Is the equipment itself the collateral for an equipment loan?
Sources (read 2026-11-01): financing types
Can a Canadian government-backed line of credit be used to buy equipment?
Not under the Canada Small Business Financing Program. Its lines of credit cover working capital and the registration fee only, as of 2026-11-01, while equipment falls under term loans.
Term loans can finance new or used equipment, leasehold improvements, intangible assets and working capital, up to $1 million, within an overall $1.15 million maximum.
BDC also advises against tying up a line of credit with long-term purchases, since you will need it for operating costs.
If you need equipment, ask your lender about the term-loan route or a lease instead, and confirm in writing what your credit line may be used for. Approval is never assured. This is general information, not an eligibility decision.
Next: Canada funding resources
Related: Can the Canada Small Business Financing Program finance used equipment?
Sources (read 2026-11-01): CSBFP; financing types
Can I use an SBA microloan to refinance equipment debt?
No. The SBA says microloans cannot be used to pay off existing debts or buy real estate, as of 2026-11-01.
They can fund new purchases of machinery, equipment, furniture, fixtures, supplies, inventory and working capital, up to $50,000.
If you want to refinance, look at other routes. The SBA lists refinancing current business debt as a permitted 7(a) use, and 504 loans can refinance only debt that meets the program's 'qualified debt' definition.
Ask the lender whether your existing loan qualifies, what prepayment costs apply, and whether the new loan is cheaper overall once fees are included. This is general information, not advice or an eligibility decision.
Next: US funding resources
Related: Can an SBA 7(a) loan buy equipment, furniture and supplies?
Sources (read 2026-11-01): microloans; SBA lending; SBA 504
What is the Accelerated Investment Incentive and immediate expensing in Canada, and are they current?
The Accelerated Investment Incentive is a CRA measure that raises the first-year capital cost allowance on eligible property, and it is being phased out. As of 2026-11-01, the CRA page says eligible property must be available for use before 2028.
For 2024 to 2027, property under the half-year rule gets about two times the normal first-year deduction. Other eligible property generally gets about 1.25 times.
Separate full expensing applies to manufacturing and processing equipment (Class 53) and clean energy equipment (Classes 43.1 and 43.2). The allowance is 75% for property available for use in 2024 and 2025, and 55% for 2026 and 2027. It is not available from 2028.
Total deductions over the life of the asset do not change. Only the timing does. Some property, such as items bought from non-arm's length sellers, may not qualify.
Check the class of your equipment and ask an accountant before you buy. This is general information, not tax advice.
Next: Canada funding resources
Related: Can the Canada Small Business Financing Program finance used equipment?
Sources (read 2026-11-01): CRA: Accelerated Investment Incentive and full expensing
What is the difference between a fair market value lease and a $1 purchase option lease?
A fair market value lease usually has lower monthly payments and flexibility at the end, while a $1 purchase option lease lets you buy the equipment for $1 but has higher payments. This is how the SBA blog describes them, as of 2026-11-01.
With a lease the lender owns the equipment and you pay to use it. With financing you own it. A capital lease suits equipment you plan to keep. An operating lease suits equipment you plan to replace, such as computers or copiers.
The blog says tax treatment differs by type, with operating lease payments treated as an operating expense and ownership allowing depreciation. Tax rules depend on your facts, so confirm with an accountant.
Ask each provider for the buyout price in writing and compare total cost.
Next: US funding resources
Related: What are common end-of-lease options for equipment?; Who owns the equipment under a lease?
Sources (read 2026-11-01): SBA: Business equipment financing and leasing, 7 key tips
Can I claim Section 179 on equipment I finance or lease?
Financed equipment can generally be depreciated if you own it, but leased equipment usually cannot unless you keep the incidents of ownership. IRS Publication 946 says you are treated as owning property even if it is subject to a debt, and gives a financed van as an example.
Leased property is listed as not qualifying for depreciation, unless you hold legal title, the duty to pay, maintenance and tax duties, and the risk of loss. Whether a lease counts as ownership depends on its terms.
The Section 179 limit is $2,500,000 for 2025 and $2,560,000 for 2026, reduced once qualifying purchases pass $4,000,000 and $4,090,000 respectively. The property must be used in your business. Vehicles and other listed property have extra rules.
As of 2026-11-01 these figures come from the Publication 946 page. Ask a tax professional how your lease or loan is structured before relying on this. It is general information, not tax advice.
Next: US funding resources
Sources (read 2026-11-01): IRS Publication 946, How To Depreciate Property
How does purchase order financing work?
Purchase order financing is a short-term loan that gives you cash to fill a large customer order. As of 2026-11-01, BDC's article says its version covers up to 90% of the purchase order's value.
The loan term is timed to invoicing the order or receiving customer payment. Interest is charged only during the term, and repayment is a single balloon payment at maturity, so you need the funds ready for that lump sum.
BDC says it is less expensive than factoring and that your suppliers and customers deal only with you. It gives no rates or fees, and it does not list formal eligibility rules. The core requirement is an actual purchase order.
Plan early, because large orders can take months to arrive. Ask a lender what it needs. Nothing here promises approval.
Next: Canada funding resources
Related: How does inventory financing work and what do lenders look at?; Can a loan pay for inventory or purchase orders?
Sources (read 2026-11-01): BDC: Purchase order financing
How does inventory financing work and what do lenders look at?
Inventory financing is a short-term loan used to buy goods, supplies and materials. BDC lists purchase order financing, working capital loans, lines of credit and factoring as ways to do it, as of 2026-11-01.
For larger amounts lenders may look at your inventory turnover ratio, which is cost of goods sold divided by average inventory value. They also usually ask for company details, about two years of financial statements for larger loans, and a monthly cash flow forecast for the rest of the year and the next 12 months. Tax returns may be enough for smaller loans.
Start early, since authorization and disbursement can take a few weeks. Borrow with a small buffer, but not so much that it strains cash flow. Approval is never assured.
Next: Canada funding resources
Related: How does purchase order financing work?; Can a loan pay for inventory or purchase orders?
Sources (read 2026-11-01): BDC: Inventory financing
What extra costs should I plan for when I buy equipment?
Plan for extra costs on top of the equipment price, which BDC puts at roughly 25% to 30% of the equipment's value. As of 2026-11-01, the article lists transportation, installation, maintenance, training, downtime and losses from malfunctions.
BDC's equipment loan can cover up to 125% of the purchase price of new or used equipment, with the extra meant for costs such as shipping, installation and training. Other lenders may cover less, so compare the percentage each one will finance.
A down payment may also be required, depending on the lender and your finances.
Before you sign, add up the full cost, not just the price tag, and ask each lender what it will and will not finance. This is general information, not a credit decision.
Next: Canada funding resources
Related: What does BDC list as the main equipment financing choices?; Will I need a down payment for equipment financing?
Sources (read 2026-11-01): BDC: Equipment financing 101; BDC: Equipment loan
What do I need to do before importing equipment into Canada?
Before you import equipment into Canada, confirm it can legally enter, register with the CBSA's CARM system, and file a formal declaration to clear it through customs. The CBSA guide describes these steps, as of 2026-11-01.
You also choose a shipping method and port of entry, pay the duties and taxes owed, and correct any errors after accounting for the goods. Watch for CBSA adjustment notices.
The guide says the duties and taxes depend on the goods' tariff classification and value for duty. It does not give GST/HST rates, so check with the CBSA or a customs broker for your item.
If you are financing the purchase, tell the lender about the import costs so the loan amount covers them. This is general information, not customs advice.
Next: Canada funding resources
Related: What extra costs should I plan for when I buy equipment?
Sources (read 2026-11-01): CBSA: Importing commercial goods guide
How much does holding extra inventory cost, and should I borrow to stock up?
Holding inventory is costly: BDC cites annual carrying costs of 20% to 30% of inventory value, as of 2026-11-01. Borrowing to stock up only makes sense if the goods will sell within the loan term.
BDC says inventory loans suit fast growth, seasonal cycles or a big new contract. It warns against borrowing for longer than necessary and advises timing purchases to your sales cycle. Unsold stock puts pressure on short-term credit.
Inventory tracking software can make sales forecasts more accurate, which helps you size a loan. Bulk and promotional discounts can help, but weigh them against carrying costs.
Write down expected sales by month before you borrow, and ask a lender how repayment would work if sales run slow. This is general information.
Next: Canada funding resources
Related: How does inventory financing work and what do lenders look at?
Sources (read 2026-11-01): BDC: Inventory financing
What is an equipment line of credit for staged purchases?
An equipment line lets a business buy equipment in stages within a pre-approved limit. As of 2026-11-01, BDC's page says purchases can be made over 12 to 24 months, depending on the sector, followed by a 6-year repayment period.
BDC says funds are released as needed and that rates and terms are guaranteed for the line. The page also mentions credit availability for up to 2 years to finance future purchases.
Eligibility minimums listed are being based in Canada, generating revenue for at least 12 months, and having a good track record and credit history. A down payment may be required. The page states conditions apply and is subject to loan approval.
This suits a business planning several purchases. Ask a lender whether it offers something similar and what it requires.
Next: Canada funding resources
Related: What does BDC list as the main equipment financing choices?
Sources (read 2026-11-01): BDC: Equipment loan
What kinds of equipment can equipment financing cover?
Equipment financing covers long-term tangible assets such as machinery, hardware and vehicles. BDC's article lists production line machinery, automated equipment, robotics, hardware, specialized lab equipment, commercial vehicles, and renewable energy or waste management equipment, as of 2026-11-01.
Loans can also cover equipment you have already bought. You can finance by loan or lease, and the article lists vendor financing, equipment loans, working capital loans and lines of credit as options.
It advises against using a line of credit for expensive equipment. Repayment is generally aligned with the equipment's lifespan.
What a particular lender accepts varies, so ask about your specific item, including whether it is new or used. Approval is never assured.
Next: Canada funding resources
Related: What does BDC list as the main equipment financing choices?; Should I use a loan or a lease to get equipment?
Sources (read 2026-11-01): BDC: Equipment financing 101
How should I prepare my credit before applying for equipment financing?
Review your personal and business credit reports and fix wrong or outdated information before you apply. The SBA's equipment financing tips say lenders may request your credit reports and financials, so be ready to explain negative items. This is as of 2026-11-01.
The SBA also advises against submitting many lease applications, because multiple rejections can raise questions. Instead choose a provider that works with your type of business, and compare rates, lease terms and fees rather than assuming your bank or the manufacturer's finance arm is best.
Explain how the equipment will benefit the business, including expected revenue gains and cost savings.
Nothing here predicts whether a lender will say yes. If your credit is weak, ask lenders what they would need to see.
Next: US funding resources
Related: What should I check before signing an equipment lease or loan contract?
Sources (read 2026-11-01): SBA: Business equipment financing and leasing, 7 key tips
What are common end-of-lease options for equipment?
Common end-of-lease options include buying the equipment, often at a reduced amount, or leasing upgraded equipment under a new agreement. BDC and the SBA describe these, as of 2026-11-01.
BDC says some leases let you buy at the end for a reduced amount, and some vendors offer upgraded equipment under a new lease. It advises comparing the end-of-lease purchase cost and any conditions on buying.
The SBA describes a fair market value lease, which gives flexibility at the end, and a $1 purchase option lease, which lets you buy for $1 but has higher payments.
The options in your lease are set by its contract. Read the buyout clause and ask for the price in writing before you sign.
Next: Canada funding resources
Related: What is the difference between a fair market value lease and a $1 purchase option lease?; Who owns the equipment under a lease?
Sources (read 2026-11-01): BDC: Should I buy or lease my business equipment?; BDC: Equipment financing 101; SBA: Business equipment financing and leasing, 7 key tips
Who handles maintenance and repairs on leased equipment?
It depends on the lease contract, but BDC says leasing may suit businesses with limited capacity for maintenance and repairs because the lessor often handles this. As of 2026-11-01, the article notes the opposite when you buy: you carry the capacity to maintain, repair and upgrade the equipment.
BDC also says lease conditions may restrict modifying or maintaining the equipment yourself.
It lists warranty terms and insurance among the factors to research when comparing buying with leasing.
Before you sign, ask in writing who pays for routine service, major repairs and downtime, who can do the work, and what happens if the equipment fails. Terms differ between lessors. This is general information, not legal advice.
Next: Canada funding resources
Related: When does leasing equipment make more sense than buying it?; What should I check before signing an equipment lease or loan contract?
Sources (read 2026-11-01): BDC: Should I buy or lease my business equipment?
What documents will an equipment lender ask for?
Lenders typically ask for company details, financial statements, financial projections and your use of funds. BDC's articles list these, as of 2026-11-01.
Company details cover history, operations, strategy and management experience. For larger loans expect about two years of financial statements plus interim statements compared with the same period last year. Projections are usually a monthly cash flow forecast for the rest of the current year and the next 12 months, sometimes two years.
You should also explain how the equipment will increase sales, profitability or efficiency. BDC's equipment loan page lists company details, financial statements and projections.
Ask your lender for its exact checklist, since requirements vary, and start early. Nothing here promises approval.
Next: Canada funding resources
Related: What should I check before signing an equipment lease or loan contract?; What extra costs should I plan for when I buy equipment?
Sources (read 2026-11-01): BDC: Equipment financing 101; BDC: Equipment loan
Will I need a down payment for equipment financing?
You may need a down payment, depending on the lender, the structure and your business risk. BDC's equipment loan page says a down payment may be required and is assessed during the application, as of 2026-11-01.
BDC's article says larger amounts may require a cash down payment and that the amount depends on the lender and the business's finances. Its blended-financing example includes a $35,000 cash down payment on a $350,000 purchase.
Leasing generally needs less cash upfront than buying, according to BDC.
When comparing offers, ask what percentage each lender will finance, the repayment schedule and the collateral required, not just the interest rate. Terms are not fixed by this page.
Next: Canada funding resources
Related: What extra costs should I plan for when I buy equipment?; What is the main financial difference between buying with a loan and leasing?
Sources (read 2026-11-01): BDC: Should I buy or lease my business equipment?; BDC: Equipment financing 101; BDC: Equipment loan
How do I check whether used equipment already has a lien on it?
Search the personal property registry before you buy used equipment, because a lender may already hold a registered security interest in it. Ontario's registry page says buyers of used goods should search first, and if a loan shows up, contact the lender to confirm whether it is still active. As of 2026-11-01.
In Ontario a search costs $8 online and covers personal property, not land. The lien registration can last up to 25 years or be perpetual for business loans.
In the United States, lenders usually file a UCC financing statement with the Secretary of State, which makes pledged property visible to other creditors.
Other provinces and states have their own registries and fees, so check yours. This is general information, not legal advice.
Next: Canada funding resources
Related: What is an equipment line of credit for staged purchases?; Is the equipment itself the collateral for an equipment loan?
Sources (read 2026-11-01): Ontario: Register a security interest or search for a lien (Access Now); Cornell LII: UCC financing statement
Does the debt-to-equity ratio matter when I finance equipment?
Yes, bankers watch it closely. BDC's article says a debt-to-equity ratio between 2 and 3 is generally considered good, though this varies by industry. As of 2026-11-01.
It adds that a very low ratio can suggest resources are not being used as well as they could be. The ratio compares what you owe with what the owners have put in.
Lenders also look at your ability to repay. BDC defines the debt service coverage ratio as EBITDA divided by interest plus principal due over a year, and says 2 or higher is generally considered healthy while around 1 is less healthy. There is no hard threshold, and levels vary by lender.
Ask your lender which ratios it uses, and speak to an accountant before taking on large debt.
Next: Canada funding resources
Related: What is debt service coverage and why do lenders ask for it?; How does a lender decide how much working capital I can borrow?
Sources (read 2026-11-01): BDC: Debt service coverage ratio; BDC: Equipment financing 101
Can an equipment loan cover installation, training and shipping?
Sometimes. BDC's equipment loan can cover up to 125% of the purchase price of new or used equipment, and the extra is meant for costs such as shipping, installation and training. As of 2026-11-01.
BDC's article gives an example of a $350,000 packaging line loan made up of $300,000 for equipment and $50,000 for training and setup. It also says some financing can cover equipment you already bought.
Other lenders set their own rules, and some finance only the equipment price. Ask what percentage will be financed and which costs count.
Bring quotes for the equipment and for each extra cost so the lender can see the total. This is general information and no lender is bound to approve.
Next: Canada funding resources
Related: What extra costs should I plan for when I buy equipment?; What does BDC list as the main equipment financing choices?
Sources (read 2026-11-01): BDC: Equipment financing 101; BDC: Equipment loan
What is vendor or manufacturer financing for equipment?
Vendor financing is financing offered by the equipment seller or its partners, and it is fast and convenient but shorter-term and less flexible than a term loan. BDC's article says so, as of 2026-11-01.
Manufacturers' financing arms may offer discounts, and upfront costs can be lower. BDC adds that vendor rates generally will not exceed traditional financing rates, and it shows a blended example using both.
The SBA warns not to assume your bank or the manufacturer's finance arm offers the best terms, and to compare rates, lease terms and fees.
Get at least one independent quote, and compare the percentage financed, schedule, collateral and total cost, not only the rate. Nothing here promises approval.
Next: Canada funding resources
Related: Should I use a loan or a lease to get equipment?; Should I compare more than the interest rate when choosing equipment financing?
Sources (read 2026-11-01): BDC: Equipment financing 101; SBA: Business equipment financing and leasing, 7 key tips
Should I compare more than the interest rate when choosing equipment financing?
Yes. BDC says to compare the percentage each lender will finance, the repayment schedule and the collateral required, not just the interest rate. As of 2026-11-01.
It also suggests asking about flexible repayment such as seasonal payments, and confirming that loan terms will not change without due cause. Principal postponements of up to two years are offered by some banks, including BDC.
The SBA adds that you should compare rates, lease terms and fees across providers and weigh the overall cost of buying versus leasing.
Put each offer in a simple table with total payments, down payment, fees, collateral and end-of-term cost. Ask a lender or accountant to check the numbers. This is general information.
Next: Canada funding resources
Related: What is vendor or manufacturer financing for equipment?; What should I check before signing an equipment lease or loan contract?
Sources (read 2026-11-01): BDC: Equipment financing 101; SBA: Business equipment financing and leasing, 7 key tips
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