AFO · Glossary
Equipment Finance
Term debt or lease structured against a specific piece of equipment, with the equipment itself as primary collateral.
What this term means in practice
Equipment financing structures the debt against a specific piece of equipment rather than against the borrower's overall cash flow. The equipment itself secures the facility, which lets the lender stretch on the borrower's credit profile in exchange for clear recovery rights if the deal goes sideways.
Term loans typically advance 75–90% LTV on the equipment with a tenor matching the useful life (3–7 years on most production equipment, longer on real-estate-like assets, shorter on vehicles and consumables). Rates run Prime + 2–5% depending on the equipment class and the borrower's credit profile. Manufacturer captive lenders (offering financing on their own equipment) often beat independent equipment lenders on rate but trade on flexibility.
Leasing — capital or operating — is a sibling structure. Capital leases function economically like a loan; operating leases keep the equipment off the balance sheet at the cost of higher cumulative payments. The choice depends on tax treatment, balance-sheet impact, and whether the business wants to own the equipment at end of term.
Where this matters in the catalog
Programs that turn on Equipment Finance.
Equipment Finance / Leasing
Equipment-specific term loan or lease at 75–90% LTV on the equipment.
CSBFP — Canada Small Business Financing Program
Government-backed term loan for equipment, leasehold, and real property. Up to $1.15M.
Where the definition meets your situation.
The CPA can walk through how this concept applies to your business in twenty minutes — what providers will ask, where the negotiation matters, what the trade-offs actually look like in your numbers.