Equipment Loan and Lease Rates in Canada: What Sets Your Rate and How to Compare Offers

Equipment loan and lease rates are what a lender charges you to use their money (or their equipment, in the case of a lease) over a set term. In Canada, these rates move with the Bank of Canada’s policy rate, but the number on your deal also reflects your credit profile, the equipment, the term length and how the lender prices the risk. Understanding what goes into the rate helps you compare offers and avoid paying more than you need to.

Key takeaways

• The Bank of Canada’s policy rate (2.25% as of September 2026) sets the floor for commercial lending. Your equipment loan or lease rate adds a margin on top, sized to your risk profile and the deal structure.
• The average interest rate on term loans for Canadian small businesses was 9% in the 2023 ISED Survey on Financing and Growth of SMEs.
• Government-backed CSBFP equipment loans cap floating rates at the lender’s prime plus 3%, making them one of the lower-cost options for eligible businesses.
• Always compare the total cost of borrowing over the full term, not just the monthly payment or the quoted rate, because fees, buyout amounts and structures vary between lenders.

Item	Detail
Bank of Canada policy rate	2.25% as of September 2026
Canadian prime rate	4.45% as of October 2026
Average SME term loan rate	9% (ISED, 2023 survey)
CSBFP floating rate cap	Prime plus 3%
CCA Class 8 depreciation	20% per year for most equipment
Funding through CBL Financial	Up to $1,000,000, terms from 24 to 72 months

What determines your equipment financing rate

The Bank of Canada policy rate

Every commercial lending rate in Canada traces back to the Bank of Canada’s policy rate, currently 2.25% as of September 2026. When the Bank raises or lowers this rate, the prime rate that chartered banks charge their strongest borrowers moves with it. As of October 2026, the prime rate sits at 4.45%. Your equipment loan or lease rate is typically quoted as prime plus a margin, or as a fixed rate that reflects where the lender expects prime to go over the term.

Your credit profile

Lenders price credit risk into the rate. A business owner with strong personal and business credit, clean payment history and several years of operation will see lower rates than someone with a thinner file. This applies to both loans and leases, though equipment leasing can sometimes accommodate weaker credit profiles because the lender retains ownership of the asset during the term. For more on how lenders evaluate credit, see our guide to equipment financing with bad credit.

The equipment itself

New, name-brand equipment with strong resale value is less risky for the lender and usually carries a lower rate. A current-model truck with published auction values is a safer bet for the lender than a specialized machine with a narrow secondary market. Used equipment can still get competitive rates when it has reasonable remaining useful life and a verifiable serial number.

Term length

Longer terms spread the payments but expose the lender to more time risk, so the rate tends to be higher. A shorter term on a truck will often carry a different rate than a longer one on the same truck with the same borrower. The right term balances the monthly payment against the total interest paid over the life of the deal.

Down payment

A larger down payment reduces the amount financed and the lender’s exposure if the deal goes sideways. On a borderline file, a meaningful down payment can shift the pricing from one rate tier to the next, or move a decline to an approval.

Industry and revenue stability

Lenders look at how the equipment earns. A trucking company with freight contracts or a contractor with awarded tenders represents steadier repayment than a seasonal business with no backlog. Some lenders specialize in certain industries and price more competitively within them.

How loan rates compare to lease rates

The rate on an equipment loan and the implicit rate on an equipment lease are calculated differently, which makes a direct comparison tricky without doing the math.

Factor	Equipment loan	Equipment lease
Ownership	Yours from day one	Lender owns it during the term
Rate structure	Stated interest rate on the principal	Implicit rate built into the payment
Down payment	Often required	Sometimes lower or zero
End of term	Equipment is paid off	Buyout, return, or upgrade
Tax treatment	Interest may be deductible; CCA on the asset	Lease payments often deductible as a business expense
Collateral effect	Equipment secures the loan	Lender already owns the asset

With a loan, you see the interest rate on paper. With a lease, the rate is embedded in the monthly payment and the residual or buyout amount at the end of the term. To compare them, calculate the total cost of borrowing for each: add up every payment plus any buyout, then subtract the fair market value of what you own at the end.

Pro tip: Ask each lender for the total dollar cost of the financing, including all fees, over the full term. Lenders are required to disclose the cost of borrowing, but the format varies. Lining up the total dollars paid across competing offers, with the same equipment and same term, is the most reliable way to compare a loan to a lease or two quotes of either type.

Government-backed rate caps

The Canada Small Business Financing Program (CSBFP) offers one of the most clearly defined rate structures for equipment purchases. Businesses with gross annual revenue of $10,000,000 or less can borrow up to $500,000 for equipment through a participating lender, with rates capped as follows:

• Floating rate: the lender’s prime rate plus 3%
• Fixed rate: the lender’s residential mortgage rate for that term, plus 3%

Those caps include a 1.25% annual administration fee. There is also a 2% registration fee on the total loan amount, which can be financed into the loan itself. The program works because the federal government shares the default risk with the lender, which is why the caps sit lower than what many businesses would see on a conventional commercial deal.

Not every business qualifies (farming operations are excluded, and the revenue ceiling applies), but for those that do, the CSBFP is one of the lower-cost paths to equipment ownership in Canada.

Tax deductions that affect the real cost

The interest rate on the deal is not the whole picture. How the financing interacts with your taxes changes the effective cost.

With an equipment loan, you own the asset and can claim Capital Cost Allowance (CCA). Most general equipment falls into CCA Class 8 at 20% per year on a declining balance. Vehicles and trucks go into Class 10 at 30%. Manufacturing and processing equipment acquired before 2026 falls into Class 53 at 50%. The Accelerated Investment Incentive enhances the first-year CCA deduction for property available for use before 2028. Interest paid on the loan is also generally deductible as a business expense.

With a lease, you typically deduct the full lease payment as a business expense in the year it is paid, rather than depreciating the asset over several years. Which structure produces the lower after-tax cost depends on the business’s tax position, the asset class and the term. Your accountant can model both scenarios with your actual numbers.

Heads-up: A lower quoted rate does not always mean a lower total cost. A lease with a low monthly payment but a large end-of-term buyout can cost more overall than a loan at a slightly higher rate with no balloon. Run the total-cost comparison before deciding.

Steps to compare equipment financing offers

1. Get more than one quote. A bank, an alternative lender and a broker channel will each price the same deal differently. Multiple offers create a real basis for comparison and give you room to ask questions.

2. Standardize the comparison. Same equipment, same term, same down payment. If one offer runs four years and the other runs five, the monthly payments are not comparable without adjusting for the different endpoints.

3. Ask for the total cost of borrowing. Add every payment over the term, plus any buyout or residual, plus fees. Subtract what you own at the end. The net number is your real cost, and it is the only number that makes a loan and a lease truly comparable.

4. Read the prepayment terms. Some equipment loans charge a penalty for paying off early; others allow it freely. If there is a chance you will sell the equipment or pay down the balance before the term ends, this clause matters.

5. Factor in the tax treatment. A lease payment that is fully deductible produces a different after-tax cost than a loan payment where only the interest portion is deductible but you also claim CCA on the asset. Ask your accountant to compare the two structures at your marginal tax rate.

How CBL Financial can help

CBL Financial arranges equipment loans and leases from multiple lenders across Canada, with funding up to $1,000,000 and terms from 24 to 72 months. Because your file goes to lenders matched to your industry and equipment type, you can compare competing offers rather than taking the first rate you see. To see what rates look like for your deal, apply online or run the numbers on the equipment financing calculator.

Frequently asked questions

What is a typical equipment financing rate in Canada right now?

There is no single answer. The 2023 ISED Survey on Financing and Growth of SMEs found that the average interest rate on term loans for Canadian small businesses was 9%. Your rate will depend on the policy rate at the time you apply, your credit profile, the equipment type, the down payment and the term length. Government-backed CSBFP loans cap floating rates at prime plus 3%.

Is a fixed or floating rate better for equipment financing?

A fixed rate locks in a predictable payment for the full term, which makes cash flow planning simpler. A floating rate starts lower when the policy rate is low but moves if rates rise. If you plan to hold the equipment for the full term and want certainty, fixed is the straightforward choice. If rates are trending down or you plan to pay off early, floating can cost less overall.

Do equipment lease rates work the same as loan rates?

Not quite. A lease rate is embedded in the payment structure and the residual value rather than stated as an interest rate on a principal balance. To compare a lease to a loan, calculate the total dollars paid over the full term, including any end-of-term buyout, rather than comparing a quoted interest rate on one to a monthly payment on the other.

Can I negotiate my equipment financing rate?

Yes. Rates are not fixed by regulation (except for CSBFP caps). Lenders price each deal based on risk, and a stronger file (better credit, larger down payment, desirable equipment) gives you more room. Getting quotes from multiple lenders or working with a broker creates competition that can move the number.

Does the type of equipment affect the rate I get?

It does. Equipment with a strong secondary market (trucks, standard construction machinery, commercial kitchen systems) is lower risk for the lender and tends to carry a lower rate. Specialized or custom-built equipment with fewer potential buyers may be priced higher because the lender’s recovery is less certain if the deal defaults.

How do I know if a rate offer is fair?

Compare the total cost of borrowing across at least two offers for the same equipment and term. Use the CSBFP floating rate cap (prime plus 3%) as a reference point for conventional deals. If a lender’s offer sits well above that benchmark and your file is solid, ask them to explain the gap or get additional quotes.

General information, not financial advice.