Financial statements and tax returns
Most lenders assessing an equipment loan application will ask for recent business financial statements and business tax returns to verify revenue, expenses and overall financial health. Newer businesses with limited history may also be asked for personal financial information or personal tax returns from the owner.
Having these documents organized and current before applying generally speeds up underwriting, since a lender requesting additional clarification or updated figures partway through can slow the process down.
Equipment quotes or invoices
A formal quote or invoice from the equipment seller, detailing the make, model, condition and price, is typically required so the lender can confirm exactly what is being financed and assess its value as potential collateral. This is usually necessary whether the equipment is new or used.
If the equipment is used, additional detail such as an appraisal or maintenance history can support the application, since the lender needs a clear basis for assessing the equipment's condition and resale value.
Business registration and structure
Lenders generally ask for confirmation of the business's legal structure and registration, such as incorporation documents or a business registration number, along with details of who owns and controls the business. This helps the lender confirm who is legally responsible for the obligation being financed.
Businesses operating under a trade name may also need to show the registration connecting that name to the legal entity applying for financing.
Personal guarantees
For many small businesses, lenders ask the owner or owners to sign a personal guarantee, meaning they agree to be personally responsible for the debt if the business cannot repay it. This is more common for newer or smaller businesses and less common, though not unheard of, for larger, more established borrowers.
Before signing a personal guarantee, understand exactly what it covers, including whether it applies to the full balance or only a portion, and under what conditions it could be invoked.
Time in business and credit history
Lenders typically look at how long the business has been operating, since a longer track record generally provides more evidence of financial stability. Both business and personal credit history are commonly reviewed, particularly for smaller businesses where the owner's credit history is closely tied to the business's own risk profile.
A newer business with a shorter operating history is not automatically excluded from equipment financing, but may face additional requirements, such as a larger deposit or a personal guarantee, to offset the limited track record.
The Canada Small Business Financing Program
The Canada Small Business Financing Program is a federal program that helps small businesses access financing, including for equipment, by sharing risk with participating financial institutions. The program itself does not issue loans directly; eligible loans are delivered through participating banks and other financial institutions, and the decision to approve or decline an application rests with the lender.
Businesses interested in this program should speak with a participating financial institution directly to confirm current eligibility criteria and what documentation that lender requires, since specifics can be updated and vary by lender.