Deciding Whether to Finance Equipment with Rising Interest Rates

Taking on a loan or financing is never a decision someone should make lightly. There are many factors to consider – the terms of the loan, interest rates and fees, whether there’s flexibility and more.

With interest rates increasing and inflation remaining untamed, it can impact the decision to finance equipment for your business. No one knows what’s coming around the corner, so it makes sense to be cautious. But it’s also essential to look at how not having the equipment you need to make your business more efficient and productive can set you back.

Finding the right balance between what your business needs to grow and what risk you can comfortably afford to take on is no easy task, which is why our finance professionals are here to help. At WiseCap, we want to see the businesses we work with grow and flourish, so our experts will help you find the right solution for your business.

Rising Interest Rates

When deciding whether to finance equipment for your business, interest rates are an obvious factor to consider. Another interest rate hike from the Bank of Canada was announced in early September, this time raising its policy rate by three-quarters of a percentage point. This is the fifth increase in 2022, bringing the benchmark overnight rate to 3.25 per cent.

Fluctuating interest rates affect your business – how it operates and how much revenue it brings in. But a common mistake when considering financing is focusing only on interest rates and forgetting about other important factors.


The recent interest rate hikes are meant to help curb inflation, which was at a 39-year high of 8.1 per cent earlier in the summer. It has eased slightly since then, but the decline was mainly due to gas prices. With inflation remaining untamed, economists believe more interest rate hikes will come before the end of the year. The Bank of Canada has said they are intent on squashing inflation to their two per cent target range.

Deciding Whether to Finance Equipment

Amidst all the economic uncertainty, it can make business owners reluctant to borrow. The decision to finance equipment while interest rates are increasing is tough. Ultimately, what the decision comes down to is the return on investment.

If you are still making the necessary return on investment when financing an equipment purchase and it will grow your business, then the higher interest should be less of a concern than servicing your clients while still making a profit.

The right equipment can give your business a competitive advantage, streamline your operations, and enhance productivity and safety. If equipment is crucial for operating your business – and that includes both stabilizing and growing your business – then taking on a loan or financing with higher rates can be justified and well worth it.

Consider your financing needs, your current situation and your goals for your business. If you work with a reputable lender, you can find an equipment financing solution that will support your business operations, not hold them down.

Whether you’re looking to purchase equipment that is integral to your business’ growth or need access to funds to help with managing equipment maintenance, we can help. Many of our financing experts are business owners themselves and come from a variety of industries and backgrounds, which means we can relate to your business financing needs.

When choosing a financing company, look for a company that wants to help you grow your business. At WiseCap, we don’t offer cookie-cutter solutions. We offer a holistic approach to financing to find the solution that fits your specific situation and the needs of your business. We’ll walk you through the process and share our knowledge, so you understand all the choices available to you. Contact us today to discuss your options.