Can a startup get equipment financing with no business history?

Yes, some lenders offer equipment financing to startups with little or no business history. Because the equipment serves as collateral, lenders may be willing to work with newer businesses. However, you'll likely need strong personal credit, a solid business plan, and a meaningful down payment. Options are more limited than for established businesses, and rates will typically be higher.

What credit score do startups need for equipment financing?

There is no single required credit score, as it varies by lender. Generally, a personal credit score of 650 or above gives you access to more options and better terms. Some lenders will work with scores in the 550 to 600 range, but expect higher rates and larger down payment requirements.

Is it better for a startup to lease or finance equipment?

It depends on your situation. Leasing typically requires less money upfront and can be easier to qualify for, which helps startups conserve cash. Financing (purchasing) means you build equity in the equipment and own it outright after repayment. If the equipment has a long useful life and is central to your business, buying may make more sense. If you need flexibility or the equipment becomes outdated quickly, leasing could be the better fit.

How much of a down payment is required for startup equipment loans?

Down payments for startup equipment loans commonly range from 10% to 30% of the equipment's purchase price. Some lenders may require more, especially if your credit is limited or the equipment has lower resale value. A larger down payment can improve your chances of approval and may result in better terms.

Can I get equipment financing with bad personal credit?

It's possible, but your options will be more limited and the costs will be higher. Strategies that can help include offering a larger down payment, bringing on a co-signer with strong credit, or considering equipment leasing instead of a loan. Some lenders specialize in working with borrowers who have imperfect credit.

What documents do startups need to apply for equipment financing?

Typical documents include personal identification, personal tax returns (usually the most recent two years), bank statements, a business plan with financial projections, a quote or invoice for the equipment you want to finance, and proof of any existing business revenue if applicable. Requirements vary by lender.

How long does the equipment financing approval process take?

Timelines vary by lender and loan type. Online lenders and leasing companies may provide decisions within one to three business days. SBA loans can take several weeks to a few months due to additional documentation and underwriting requirements. Having your documents organized and ready can help speed up the process.

Does equipment financing require a personal guarantee for startups?

In nearly all cases, yes. Lenders require a personal guarantee from startup founders, which means you are personally liable for repayment if the business cannot make payments. This is standard practice for businesses that lack an established financial track record.

Equipment Financing for Startups: A Practical Guide

Starting a business often means you need equipment before you have the revenue or track record to prove you can pay for it. Whether it's a commercial oven for a new restaurant, excavators for a construction company, or diagnostic tools for a medical practice, the equipment comes first and the income follows.

That creates a real challenge. Most traditional lenders want to see established revenue, years in business, and strong credit history. Startups typically have none of those things, or very little of them.

The good news is that equipment financing is one of the more accessible financing options for new businesses. Because the equipment itself serves as collateral, some lenders are willing to work with startups that might not qualify for other types of business loans.

This guide walks through how Equipment Financing works for startups, what options are available, what lenders look for, and how to improve your chances of getting approved. BreadRoute is a marketplace that connects startups with lenders who specialize in working with newer businesses.

What Is Equipment Financing?

Equipment financing is a type of business funding used specifically to purchase equipment. The equipment you're buying serves as collateral for the loan or lease. If you stop making payments, the lender can repossess the equipment to recover their loss.

This built-in collateral arrangement is what makes equipment financing different from unsecured business loans. The lender takes on less risk because there's a tangible asset backing the financing.

There are two primary structures:

Equipment loans: You borrow money to buy the equipment and make fixed payments over a set term. Once you pay off the loan, you own the equipment outright.
Equipment leases: You make regular payments to use the equipment for a set period. At the end of the lease, you may have the option to buy the equipment, return it, or renew the lease.

Each structure has tradeoffs depending on your situation. For a detailed comparison, read our guide on equipment financing vs. leasing.

Why Equipment Financing Can Work for Startups

Startups face an uphill battle with most business financing. Lenders want to see proof that your business can generate enough revenue to repay the debt, and a brand-new business simply doesn't have that track record.

Equipment financing is often more accessible for startups for a few reasons:

Built-in collateral reduces lender risk. The equipment itself secures the loan, so the lender isn't relying solely on your business's financial history.
Some lenders specialize in newer businesses. Certain lenders focus specifically on equipment financing for startups and pre-revenue companies.
The equipment's value matters. Lenders evaluate the equipment's useful life, resale value, and how essential it is to your operations. A piece of equipment with strong resale value can offset some of the risk of lending to a new business.

That said, it's important to be realistic. Startups typically face higher rates, larger down payment requirements, and more scrutiny than established businesses. Qualifying is possible, but it's not automatic.

Equipment Financing Options for New Businesses

Startups generally have several pathways to finance equipment. The right option depends on your credit profile, how much capital you have available upfront, and the type of equipment you need.

Equipment Loans

A traditional equipment loan lets you purchase the equipment and own it after the loan is fully repaid. Loan terms typically range from two to seven years, depending on the equipment's expected useful life.

For startups, here's what to expect:

Down payments often range from 10% to 30% of the equipment's value. Startups are frequently asked to put down more than established businesses.
Personal credit plays a significant role, since your business likely doesn't have its own credit profile yet.
A personal guarantee is almost always required for startup equipment loans.
Terms and rates vary widely based on the lender, your credit, and the equipment type.

For a broader overview, check out our equipment financing guide.

Equipment Leasing

Leasing can be a lower-barrier entry point for startups that want to conserve cash. There are two main types:

Operating leases function like rentals. You use the equipment for a set term and return it at the end. Monthly payments are typically lower, and the equipment stays on the lessor's balance sheet.
Capital leases (finance leases) are structured more like loans. You may have the option to purchase the equipment at the end of the lease, often for a nominal amount.

Leasing may require less upfront capital than purchasing, which can be attractive for cash-strapped startups. However, you don't build equity in the equipment with an operating lease, and the total cost over time can be higher than buying outright.

SBA Loans for Equipment

The Small Business Administration (SBA) offers loan programs that can be used to purchase equipment. Two programs are particularly relevant:

SBA 7(a) loans are the most common SBA loan type and can be used for equipment purchases, among other business purposes.
SBA 504 loans are designed for major fixed-asset purchases, including heavy equipment.

SBA loans generally offer longer repayment terms and potentially lower interest rates compared to conventional equipment loans. However, the application process involves more documentation, longer processing times, and stricter qualification requirements.

Startups can qualify for SBA loans, but the process is competitive. You'll need a strong business plan, relevant industry experience, and solid personal credit. For more details, read our guide on getting started with SBA loans.

Vendor and Manufacturer Financing

Some equipment manufacturers and dealers offer their own financing programs. These can sometimes be easier to qualify for because the vendor has a direct incentive to make the sale.

Vendor financing can be convenient since you handle the purchase and financing in one transaction. However, the terms aren't always competitive. Interest rates may be higher, and the repayment structure may not be as flexible as what you'd find through a dedicated lender.

It's worth comparing vendor financing against other options before committing.

What Lenders Look for in Startup Applicants

When you apply for equipment financing as a startup, lenders will evaluate a different set of factors than they would for an established business. Here's what carries the most weight:

Personal credit score. For startups, your personal credit is often the primary indicator lenders use. A score of 650 or above opens more doors, though some lenders work with lower scores. Read more about the credit score needed for a business loan.
Industry experience. Lenders want to know that you understand your industry. Prior experience in the same field reduces perceived risk.
Business plan. A detailed business plan that shows how the equipment will generate revenue can make a meaningful difference, especially for pre-revenue startups.
Down payment. A larger down payment signals financial commitment and reduces the amount the lender needs to risk.
Time in business. Even a few months of operations can help. Some lenders require a minimum of six months; others will consider brand-new businesses. Learn more about how long in business to get a loan.
Revenue projections. If you don't have existing revenue, realistic financial projections supported by market research can help your case.
Personal guarantee. Nearly all startup equipment loans require a personal guarantee, meaning you're personally responsible for repayment if the business can't pay.

How to Strengthen Your Application

If you're planning to apply for equipment financing, there are steps you can take to improve your chances:

Check and improve your personal credit. Since personal credit carries outsized weight for startup applications, review your credit report for errors and work on improving your score before you apply.
Write a solid business plan. Include financial projections, your target market, how the equipment fits into your operations, and your strategy for generating revenue.
Save for a larger down payment. Putting 20% to 30% down, rather than the minimum, can make your application more attractive to lenders.
Gather documentation upfront. Having tax returns, bank statements, identification, and your business plan ready speeds up the process and shows lenders you're organized. See our list of business loan documents required.
Start building business credit. Even simple steps like opening net-30 accounts to build business credit or getting a business credit card can help establish your business's credit profile. Our guide on how to build business credit from scratch covers this in detail.

Equipment Financing with Bad Credit or No Business History

If your personal credit score is below 600 or your business has zero operating history, your options will be more limited. But they're not nonexistent.

Here's what to consider:

Larger down payments. Putting down 25% to 50% of the equipment cost can offset credit risk in the lender's eyes.
Co-signers. A co-signer with strong credit can help you qualify for better terms.
Equipment leasing. Leasing companies sometimes have lower credit thresholds than loan providers.
Specialized lenders. Some lenders focus on borrowers with imperfect credit. Rates will be higher, but financing may still be available.

Be prepared for higher interest rates and stricter terms. Our guide on equipment financing with bad credit covers this topic in greater depth.

Costs and Terms to Expect

Equipment financing costs vary significantly based on your credit profile, the equipment type, and the lender. Here are some general ranges for context, though your actual terms will depend on your specific situation:

Interest rates: Startups with strong credit may see rates in the range of 7% to 15%. Those with weaker credit profiles or minimal business history could face rates of 15% to 30% or higher.
Loan terms: Typically 2 to 7 years, often tied to the equipment's expected useful life.
Down payments: Commonly 10% to 30%, though some lenders may require more from startups.
Fees: Origination fees, documentation fees, and processing fees are common. Ask about all fees upfront so you can compare the total cost of financing.

Some lenders, especially those offering shorter-term financing, quote costs as a factor rate rather than an APR. These two figures represent costs very differently, so be sure you understand the distinction. Read our explanation of APR vs. factor rate.

Keep in mind that startup rates are almost always higher than what an established business with years of revenue history would pay. That premium reflects the additional risk the lender is taking on.

Equipment Financing by Industry

Equipment needs and financing options vary widely by industry. A few examples:

Restaurants often need commercial ovens, refrigeration units, and prep equipment. Lenders familiar with the food service industry understand these needs. See our guide on restaurant equipment financing.
Construction companies require heavy machinery like excavators, loaders, and cranes. These high-value assets can often be financed with favorable loan-to-value ratios. Read about construction business financing options.
Medical practices need diagnostic and treatment equipment that can be expensive but holds value well.
Technology companies may need servers, specialized hardware, or manufacturing tools.

The type of equipment, its resale value, and how long it remains useful all factor into the financing terms a lender will offer.

How to Apply Through BreadRoute

BreadRoute is a marketplace that connects small business owners with lenders. Here's how the process works for startup equipment financing:

You submit a single application through BreadRoute.
BreadRoute matches you with lenders from our network who work with startups and handle equipment financing.
You review the options presented to you and choose the one that fits your needs.

BreadRoute is not a lender. We don't make lending decisions or set rates. Our role is to help you find lenders who may be a fit for your situation, so you can compare options without submitting multiple applications to different lenders individually.

Apply for Business Financing

For more on how startup funding works, explore our guide on startup business loans or our broader small business financing guide.

This article provides general information and should not be considered financial or insurance advice. Qualification for equipment financing depends on individual circumstances, including credit profile, business history, and lender requirements. Rates and terms mentioned are illustrative and not offers or guarantees.