How To Get Approved For Equipment Leasing

Getting approved for equipment leasing is usually easier than getting approved for a loan, and this guide shows you how. Leasing lets you use equipment you need without buying it, so you save cash, protect cash flow, and still get the job done. But because a lease is a form of credit, it needs approval, and a little preparation goes a long way.

Equipment finance is a mainstream route in Canada: as Statistics Canada reports, “The commercial and industrial machinery and equipment rental and leasing industry generated $17.5 billion in operating revenue in 2023, up 8.5% from 2022.” (Statistics Canada). Knowing how to finance the gear, and how leasing approval works, puts you ahead.

What is Equipment Leasing?

Equipment leasing is close to financing equipment, with one key difference: the lender purchases the equipment, and you own it outright once the lease term ends. Because you do not purchase the equipment up front, an equipment lease is generally easier to get approved for than typical financing, and the rates stay competitive, especially for a well-qualified business. That makes leasing attractive when you only need the gear for a limited time, and it is why many businesses finance this way rather than take a conventional loan.

How to Get Approved for Equipment Leasing

Because a lease is credit, expect credit and background checks. The lender needs to know you can cover the cost if the gear is lost, stolen, or damaged. Not every business gets approved, but a few moves stack the odds in your favour, and they apply whether you finance a single machine, a truck or trailer, or a whole fleet, spreading the cost into monthly payments.

Keep Your Credit in Good Standing

First, your business needs a solid credit score, not perfect, but good and in good standing. If it is not, pay down outstanding debts, set up and stick to a payment arrangement, and consolidate where it helps so the amortization is easier to carry. Keep your credit utilization at or below 30 percent. Handle a loan well and the score climbs, which improves both your financing options and your interest rate.

Have an Accountant Prepare Your Documents

When you apply, you will submit financial statements showing you can pay for the equipment. Having an accountant prepare them makes them accurate and lends credibility. Audited financials help even more, since a third-party audit, ideally by an established firm, reassures the lender. Hold onto past tax returns too, they are an asset when you apply to finance or lease.

Provide Accurate Business Information

Give accurate, up-to-date business information on the application. It is used to verify your assets and finances, and it is the detail people most often overlook when they apply to finance equipment.

New Business? Bring a Plan and Projections

A new company can still get approved to finance equipment. A detailed business plan with future projections goes a long way, and explaining how the new equipment will generate revenue strengthens the case. A corporate or personal guarantee in writing helps too, giving the lender recourse if you default on the agreement. And showcasing your experience, a list of regular clients, say, adds the confidence a lender wants before approval. Each payment you make on time after that builds the relationship.

Where to Lease Equipment in Canada

Many companies finance and lease equipment in Canada, and most want the documents above. Equipment Finance Canada is one of the most trusted, specializing in getting businesses approved for new equipment when other lenders say no. Need gear for a project or to launch the business? Get in touch, and the EFC team walks you through every step with competitive rates, so you can finance the equipment and get to work.