Financing “Soft Costs” With Equipment in Canada: Installation, Delivery, Training, and Taxes

Q: Can lenders finance training or software?

Sometimes. It’s easiest when training or software is part of a bundled system and shown clearly on the invoice.

Q: What’s the most common mistake?

Assuming the lender will fund the whole project without confirming what is eligible and how documentation must be presented.

By Brent Finlay, Business Finance Specialist (CPA,CMA MBA)
Originator of $150M+ in Loans & Leases for 100’s of Canadian SME’s | Creator of the BFE 5-Step Strategic Funding Process | Fractional CFO & Change Management Expert.
Published: Feb 18, 2026. Updated: Feb 21, 2026

When Canadian SMEs buy equipment, the biggest cash strain often isn’t just the machine. It’s everything around it: delivery, installation, electrical work, software, training, and sales tax.

Many borrowers assume lenders will finance “the full project.” In reality, lenders treat soft costs differently depending on the asset, vendor, and documentation quality. The right structure can reduce surprises and keep a time-sensitive purchase from stalling.

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Quick answer

Some equipment lenders will finance certain soft costs—but only when the costs are:

directly tied to the equipment being financed, and
clearly documented on a dealer/manufacturer invoice, and
reasonable relative to the equipment value.

Soft costs are most likely to be included when they are bundled with the equipment purchase and easiest for an underwriter to verify.

What “soft costs” usually include

Soft costs are expenses required to put the equipment into productive service, such as:

delivery and freight
installation and commissioning
rigging and placement
electrical and shop modifications (sometimes)
training (sometimes)
software and controls (sometimes)
warranties and service packages (sometimes)
sales tax (often handled differently by structure)

Not every lender will treat these the same way.

What lenders are usually willing to include (and what they don’t like)

The most important rule: lenders finance what they can verify and secure.

Typically easiest to include

Freight/delivery listed on the same vendor invoice
Installation/commissioning charged by the equipment vendor or authorized installer
Rigging costs when itemized and tied to delivery/install
Manufacturer warranty or service package when included on invoice
Certain software/controls when bundled with the equipment system

Sometimes includable (depends on lender and documentation)

Training (especially if provided by manufacturer/vendor and invoiced clearly)
Shop modifications if directly required and minor relative to the equipment cost
Extended maintenance agreements if tied to equipment reliability and value

Often difficult (or excluded)

General working capital “wrapped into” the equipment deal
Large building renovations not tied to the equipment
Unrelated contractor invoices with weak scope detail
Payroll, internal labour, overhead allocation
“Project cost” estimates without final invoices

If it looks like cash-out working capital with an equipment label, underwriting tightens quickly.

How lenders think about soft costs (the underwriting logic)

Soft costs create risk because:

they don’t always become recoverable collateral
they may be hard to verify
they can be inflated or loosely scoped
they can turn into cash-out proceeds

So lenders typically want to see:

a single coherent purchase package
clean documentation from credible vendors
costs that are clearly required to activate the equipment

Common ways to structure soft costs (Canada)

1) Bundle on the equipment invoice (best when possible)

If the dealer/manufacturer can include delivery, install, and commissioning on the main invoice, it is usually the cleanest path.

2) Finance equipment only, pay soft costs separately

This often happens when:

installation is done by a third party
the lender won’t fund non-collateral items
tax treatment is easier separately

3) Split structure: equipment financing + working capital facility

For larger projects, you may need:

equipment loan/lease for the hard asset
A/R or working capital facility to fund ramp-up costs

This is often cleaner than trying to “force” soft costs into equipment financing.

Sales tax: what typically happens

Sales tax treatment depends on structure and province, but generally:

Some lenders will fund tax as part of the financed amount (common in leases)
Other structures may require tax paid upfront or handled separately
The key is not assuming tax is automatically covered—confirm early to avoid last-minute cash surprises.

What slows approvals (and how to avoid it)

Soft costs often stall files because:

invoices don’t match the equipment description
costs are spread across multiple vendors without clear linkage
the lender can’t verify what the money is actually paying for
the costs appear excessive relative to the equipment value
the request looks like working capital disguised as equipment

Best prevention: provide clean, itemized invoices and keep the story simple.

Fast path: how to get soft costs approved

Confirm lender appetite early (don’t assume)
Bundle costs on one invoice if possible
Itemize everything (avoid lump sums)
Keep soft costs proportional to equipment value
Use a split structure when the project is larger than the equipment itself

Checklist: what to provide

equipment quote/invoice with full description
itemized soft costs tied to equipment (delivery, install, commissioning)
vendor contact details and timeline
third-party invoices (if applicable) with clear scope
financing request summary: what is being financed and why
financial statements + bank statements as required

Frequently Asked Questions

Can I finance installation and delivery with equipment in Canada?

Often yes, especially when itemized and billed by the equipment vendor or authorized installer. Third-party install invoices may be treated more conservatively.

Can lenders finance training or software?

Sometimes. It’s easiest when training/software is part of a bundled system and shown clearly on the invoice.

Why do soft costs create extra underwriting conditions?

Because soft costs are harder to recover as collateral and easier to inflate or misclassify as cash-out working capital.

Can I roll working capital into an equipment loan or lease?

Sometimes, but it’s typically harder to approve. For larger projects, a split structure (equipment + working capital facility) is usually cleaner.

What’s the most common mistake?

Assuming the lender will fund “the whole project” without confirming what is eligible and how documentation must be presented.