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Business Loans and Leases: Structured Financing for Growth and Expansion

Quick Overview — TD Business Central Financing Solutions

TD Business Central provides Canadian businesses with term loans from $25,000 to $25 million and equipment leases covering virtually any revenue-generating asset. Whether you are purchasing manufacturing equipment, acquiring commercial real estate, expanding warehouse capacity or financing a business acquisition, TD Business Central structures the financing to match the asset's useful life and your repayment capacity. Fixed and variable rate options, flexible amortization schedules and early repayment provisions give you control over the total cost of capital.

Growth requires capital. A new production line, a second warehouse, a fleet of delivery vehicles — these are not expenses you fund from operating cash flow without compromising day-to-day liquidity. They are investments that generate returns over years, and they should be financed accordingly.

TD Business Central term loans and equipment leases provide the structured capital that turns expansion plans into operational reality. The loan pays for the asset today. The asset generates revenue that services the loan over time. When the math works, the decision is straightforward. Our commercial banking advisors help you run the numbers before you commit.

Term Loans for Business Expansion and Acquisition

A term loan provides a lump-sum disbursement repaid over a fixed schedule. The predictability of fixed monthly payments makes budgeting straightforward and allows businesses to plan cash flow with confidence.

Fixed-Rate Term Loans

Lock in your interest rate for the full loan term. Your monthly payment never changes, regardless of what happens to the Bank of Canada overnight rate or broader economic conditions. For businesses that prioritize budget certainty, fixed-rate financing eliminates the risk of rising interest costs eroding project returns.

Fixed rates are available on terms from 1 to 10 years. Longer terms carry marginally higher rates to compensate for the extended rate lock. A 5-year fixed rate on a $500,000 term loan might save you $12,000 in interest compared to a variable rate that rises 150 basis points over the same period. Conversely, if rates decline, you pay the locked rate. That trade-off is the price of certainty.

The OSFI interest rate risk management framework requires financial institutions to stress-test loan portfolios against rate movements — TD Business Central applies this same discipline to help borrowers evaluate fixed-versus-variable decisions.

Variable-Rate Term Loans

Variable-rate loans float at a margin above TD Prime Rate. When rates fall, your monthly payment decreases. When rates rise, your payment increases. This structure generally offers a lower starting rate than fixed alternatives, making it attractive in stable or declining rate environments.

Variable-rate borrowers benefit from unlimited prepayment flexibility. Unlike fixed-rate loans that may carry interest rate differential (IRD) penalties for early repayment, variable-rate facilities can be paid down or paid off at any time without charge. For businesses expecting a liquidity event — a property sale, a large receivable, an equity injection — this flexibility can be worth more than the rate savings alone.

TD Business Central provides rate-cap options on variable loans for businesses that want downside protection without committing to a full fixed rate. A rate cap guarantees your rate will not exceed a specified ceiling, combining the benefits of both structures at a modest premium.

Loan and Lease Products Comparison

TD Business Central offers multiple financing structures to match different capital needs. The table below compares key parameters across our core lending products.

Feature Standard Term Loan Equipment Lease Commercial Mortgage CSBFP Loan
Amount Range $25K – $5M $10K – $3M $250K – $25M Up to $1M
Term 1 – 10 years 2 – 7 years 5 – 25 years Up to 10 years
Fixed Rate (Indicative) 5.49% – 8.99% 5.99% – 9.49% 4.99% – 7.49% Prime + 3.0%
Variable Rate Prime + 0.5% – 3.0% N/A Prime + 0.75% – 2.5% Prime + 3.0%
Collateral General security agreement Leased asset First mortgage on property Government-backed (85%)
Down Payment 10% – 25% $0 (100% financing) 25% – 35% 10% minimum
Early Repayment Variable: no penalty; Fixed: IRD applies Buyout at residual value Variable: no penalty; Fixed: IRD applies No penalty
Best For General business expansion Equipment with rapid depreciation Commercial property purchase New businesses (< 3 yrs)

CSBFP refers to the Canada Small Business Financing Program, a federal government-backed lending program that shares credit risk with approved lenders.

Equipment Leasing: Preserve Capital While Acquiring Assets

Leasing lets you deploy equipment immediately without the upfront capital outlay of a purchase. Monthly lease payments are typically 100% tax-deductible as an operating expense, and the leased asset stays off your balance sheet.

Capital Lease vs. Operating Lease

A capital lease transfers most ownership risks and rewards to the lessee. At the end of the term, you own the asset for a nominal buyout (typically $1). This structure works for equipment with long useful lives that you intend to keep — CNC machines, commercial ovens, medical imaging systems. The asset appears on your balance sheet, and you claim Capital Cost Allowance (CCA) deductions.

An operating lease is closer to a rental agreement. You use the equipment for the lease term, then return it, renew, or buy it at fair market value. This structure suits technology assets that depreciate rapidly — servers, vehicles, office equipment. Payments are fully deductible as operating expenses, and the asset never touches your balance sheet.

Lease-vs-Buy Decision Framework

The right choice depends on your tax position, cash reserves, the asset's useful life and its expected residual value. TD Business Central advisors model both scenarios using your actual numbers.

Generally, buying makes sense when the asset has a long useful life (10+ years), retains significant residual value, and your business has the cash or borrowing capacity to fund the purchase. Leasing makes sense when the asset depreciates quickly, technology obsolescence is a concern, or preserving cash for operations and growth takes priority over building asset equity.

A $200,000 piece of manufacturing equipment with a 15-year useful life and strong resale value? Buy it. A $50,000 server cluster that will be obsolete in four years? Lease it. The math usually points clearly in one direction when you run the total-cost-of-ownership calculation including tax implications, maintenance costs and opportunity cost of capital.

Commercial Real Estate Financing

Owning your business premises builds long-term equity and eliminates exposure to rising lease rates. TD Business Central commercial mortgages finance owner-occupied and investment properties across Canada.

Owner-Occupied Commercial Mortgages

If your business occupies the property, TD Business Central offers preferred terms including lower down payment requirements (as low as 25%) and competitive interest rates. Owner-occupied financing is available for office buildings, retail locations, warehouses, manufacturing facilities and mixed-use properties where the business occupies at least 50% of the space.

Amortization periods up to 25 years keep monthly payments manageable, even on larger properties. Combine a commercial mortgage with a revolving credit line to ensure working capital remains available after the down payment and closing costs.

Investment Property Financing

Businesses acquiring commercial properties for rental income or portfolio diversification can access investment property financing with down payments starting at 35%. Rental income from existing tenants is factored into the debt service coverage calculation, which can support higher borrowing amounts than the business's standalone cash flow would permit.

TD Business Central provides construction financing for businesses building new facilities. Draw schedules align with construction milestones, and the facility converts to a permanent mortgage upon project completion. Your account summary dashboard tracks draw amounts, remaining budget and construction timeline in real time.

Related Credit & Financing Services

Term financing works alongside revolving credit, corporate cards and savings products to create a comprehensive capital structure for your business.

Credit Lines

Supplement term financing with a revolving credit line for working capital flexibility. Draw funds for short-term needs while your term loan handles long-term capital expenditures.

Business Credit Cards

Manage day-to-day operational expenses with TD Business Central corporate cards. Earn rewards on routine purchases while term loans and leases handle major capital items.

Savings & GICs

Build reserves for future capital expenditures in TD Business Central savings accounts and GICs. Structured saving reduces your borrowing needs for the next expansion.

Frequently Asked Questions About Business Loans and Leases

A complete loan application requires two years of financial statements (income statement, balance sheet, cash flow statement), the most recent corporate tax return, a current personal net worth statement for all guarantors, a business plan or use-of-proceeds summary, and details of existing debt obligations. For real estate financing, you will also need a property appraisal, environmental assessment, and lease agreements if the property generates rental income.

TD Business Central accepts commercial real estate, equipment, inventory, accounts receivable, investment portfolios, and personal real estate as collateral. The type and value of collateral directly affect your interest rate and borrowing capacity. Equipment is typically valued at 75-80% of appraised fair market value. Commercial real estate is margined at 65-75% of appraised value. Your commercial banking advisor will explain the specific margining requirements for your collateral type.

Variable-rate term loans can be repaid early at any time without penalty. Fixed-rate loans may carry an interest rate differential (IRD) prepayment charge if repaid before maturity, calculated as the difference between your contract rate and the current rate for the remaining term multiplied by the outstanding principal. Some loan products offer a 10-20% annual prepayment privilege that allows partial early repayment without charges. Review your specific loan agreement for prepayment terms.

The lease-versus-buy decision depends on several factors: equipment lifespan, your cash flow position, tax implications, and whether the equipment will retain residual value. Leasing preserves capital, keeps the asset off your balance sheet, and provides predictable monthly costs. Buying builds equity in the asset and may offer CCA tax deductions. TD Business Central advisors can model both scenarios using your specific numbers to determine which option produces the lower total cost of ownership over the expected useful life.

Standard term loan applications are typically reviewed within 5-10 business days of receiving a complete application package. Equipment leases may be approved faster, often within 3-5 business days for amounts under $250,000. Commercial real estate financing requires 15-30 business days due to appraisal, environmental assessment and legal review timelines. You can expedite the process by ensuring all requested documentation is submitted upfront. Your commercial banking advisor will provide a specific timeline once your application is received.

Ready to Finance Your Next Business Investment?

TD Business Central financing solutions are available to businesses with an active TD commercial banking relationship. Speak with a commercial banking advisor to structure a loan or lease that matches your capital needs, repayment capacity and growth timeline.

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