Side by side

Choose Equipment Financing when

• The purchase is a specific machine with resale value
• You want the payment matched to the asset's useful life
• The equipment secures the loan, so pricing improves
• Credit is weak and the asset is what makes the file work

Choose Business Line of Credit when

• The need is working capital, not a capital asset
• Costs rise and fall and you want to pay only on what is drawn
• The purchase is small enough that a separate facility is not worth arranging
• You are covering a timing gap rather than buying something

When both make sense

This is the most common structural mistake we see corrected: a business buys a machine on its operating line, then cannot fund the payroll and materials for the contract the machine was bought to service. Financing the asset against itself keeps the line free for exactly that.

Where both are already in place, refinancing an equipment purchase off the operating line back onto an equipment loan restores the limit and usually lowers the cost at the same time.

Frequently asked questions

Is it cheaper to just draw on my line of credit?

On the posted rate, sometimes. On the real cost, usually not — an unsecured line is priced above a secured equipment loan, the term is shorter, and the drawn limit is no longer available for anything else. The opportunity cost of a consumed operating line is the part most often left out of the comparison.

What if I have already bought the equipment on my line?

It can often be refinanced onto an equipment loan afterwards, freeing the line back up. Lenders will want the invoice, the serial number and proof of payment. The sooner after purchase, the simpler it is.

Which is easier to get approved with weak credit?

Equipment financing, by a wide margin, because the machine can be repossessed and resold. An unsecured line depends entirely on the credit strength of the business and its guarantors, which is the test a damaged file fails.

Related

• Chartered bank term loan vs Business Line of Credit — A chartered bank term loan is cheaper and should be your first call if the business is bankable — two or more years of history, clean financials and strong credit.
• Invoice Factoring vs Merchant Cash Advance (MCA) — If the business invoices other businesses, factoring is almost always the cheaper answer — it advances money the business has already earned, priced from 1.5% per 30 days, and creates no debt.
• Term Loan vs Merchant Cash Advance (MCA) — A term loan is the cheaper instrument and the right one whenever the file can carry it — fixed payments, a defined end date, and pricing quoted as an annual rate.
• Equipment Financing vs Term Loan — If the money is going into a specific piece of equipment, finance the equipment.
• Purchase Order Financing vs Invoice Factoring — These are not alternatives — they are consecutive.
• Inventory Financing vs Business Line of Credit — A line of credit is underwritten on the business as a whole and can be spent on anything; inventory financing is underwritten on the stock and is used to buy stock.
• RBC Royal Bank business operating line vs Business Line of Credit — If RBC will approve the operating line inside your timeline, take it — the rate on a bank line is lower than anything a non-bank lender can price.
• TD Canada Trust business line of credit vs Business Line of Credit — For a business with filed statements and clean guarantor credit, a TD business line of credit is cheaper than any non-bank alternative and should be the first application.
• Scotiabank receivables-secured operating facility vs Invoice Factoring — A Scotiabank receivables facility is the cheaper way to finance invoices and the right call if your receivables fit a bank margin formula: many customers, none dominant, all under ninety days, all easy to credit-check.
• BMO Bank of Montreal equipment term loan vs Equipment Financing — If BMO will write the equipment term loan and the delivery date allows, take the bank rate — nothing else prices lower on a long-lived asset.
• CIBC business term loan vs Term Loan — A CIBC business term loan is the cheapest way to fund a defined, one-time capital need, and a bankable file should apply there first.
• National Bank of Canada receivables-secured operating facility vs Invoice Factoring — For a Quebec business with a diversified receivables book, a National Bank operating facility is cheaper than factoring and easier to run in French from end to end.
• Desjardins equipment financing through a caisse vs Equipment Financing — If you are an established Desjardins member and the caisse will finance the machine, that is the cheapest capital available and the relationship is worth protecting.
• Vancity business line of credit vs Business Line of Credit — For a British Columbia business whose work fits Vancity's mandate, a credit union line of credit is cheaper than a non-bank facility and worth the application.
• ATB Financial equipment term loan vs Equipment Financing — For an Alberta business buying new equipment, ATB is a genuinely well-matched lender and should get the first quote — provincial focus means the underwriting understands your cycle.

Start an application · Talk to an advisor