Business Capital
Equipment Financing
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What is Equipment Financing?
Equipment financing allows businesses to acquire the equipment they need without depleting their working capital. This type of financing is secured by the equipment itself, making it easier to qualify for than unsecured loans.
Whether you need to purchase, lease, or refinance equipment, this financing option provides flexible terms and competitive rates while preserving your cash flow for other business needs.
Key Benefits
Types of Equipment You Can Finance
Manufacturing Equipment
CNC machines, production lines, assembly equipment, and industrial machinery
Vehicles & Transportation
Trucks, vans, delivery vehicles, construction equipment, and fleet vehicles
Technology & IT
Computers, servers, software, networking equipment, and office technology
Medical Equipment
Diagnostic machines, treatment equipment, and medical devices
Construction Equipment
Excavators, bulldozers, cranes, and construction machinery
Office Equipment
Printers, copiers, furniture, and office automation equipment
Equipment Financing Options
Equipment Loans
Traditional loans where you own the equipment outright. The equipment serves as collateral, typically offering lower rates than unsecured loans.
Equipment Leasing
Lease equipment with the option to purchase at the end of the term. Lower monthly payments and flexibility to upgrade equipment.
Equipment Refinancing
Refinance existing equipment loans to get better terms, lower payments, or access additional capital.
Typical Terms
Equipment Financing Requirements
Credit Score
Generally 600+ for most lenders, with better rates for higher scores
Time in Business
Often 6+ months, though some lenders work with newer businesses
Revenue
Minimum monthly revenue requirements vary by lender and equipment type
Documentation
Business financials, equipment quotes, and basic business information
When Equipment Financing May Fit
Often a Good Fit When
- You are buying equipment with a useful life beyond the loan term
- You want to preserve cash while acquiring machinery or vehicles
- The equipment itself can serve as collateral
- You want potential tax advantages from ownership or leasing
Consider Other Options If
- You need funds for payroll or materials (working capital)
- The equipment will be outdated quickly and leasing fits better
- Long-term need is uncertain and renting is more flexible
- The equipment is highly specialized with little resale value, which may limit lender options
Every business is different. Comparing options across lenders may help you find the structure that fits.
How Much Does Equipment Financing Cost?
Equipment financing costs depend on the equipment, your credit profile, and the structure. New equipment with strong resale value typically prices lower than used or specialized assets. Because the equipment serves as collateral, pricing is often lower than unsecured options. Comparing lenders that know your equipment type may help you find better terms.
What Affects Your Cost
- New vs used equipment and its resale value
- Credit profile and time in business
- Down payment
- Loan vs lease structure
- Term length relative to equipment life
- Equipment type and specialization
Funding guides by industry: Contractors & TradesTrucking & TransportationLandscaping & Lawn Care
Frequently Asked Questions
With an equipment loan, you own the equipment outright at the end of the repayment period the equipment serves as collateral. With leasing, you make payments for use of the equipment and may have an option to purchase at the end of the lease term. Leasing typically has lower monthly payments and makes it easier to upgrade to newer equipment, while loans build equity in the asset.
Yes in most equipment financing arrangements, the equipment being purchased serves as collateral. This is one reason equipment financing is easier to qualify for than unsecured business loans. If you default, the lender can repossess the equipment. This also means you typically don't need to put up other business or personal assets as collateral.
Yes, many lenders finance used equipment, though they may have age restrictions (typically no more than 5-10 years old) and may require an independent appraisal. Loan amounts on used equipment are generally lower since the collateral value is less than new equipment. Specialty lenders often focus on specific equipment types and have more flexible programs for used assets.
Many equipment loans require little or no down payment some lenders offer 100% financing. When a down payment is required, it's typically 10-20% of the equipment value. Some lenders require a larger down payment for used equipment or if your credit profile is weaker.
Equipment financing is typically faster than general business loans. Simple applications for smaller amounts ($25K and under) can often be funded within 1-2 business days. Larger or more complex deals may take 1-2 weeks. Having your equipment invoice or quote ready speeds up the process significantly.
Equipment purchases may qualify for Section 179 expensing or depreciation deductions, and lease payments may be deductible as a business expense. Rules change and depend on how the deal is structured, so confirm specifics with a qualified tax professional.
Sometimes. Because the equipment secures the loan, some lenders work with newer businesses, often with a larger down payment or a personal guaranty. Equipment with strong resale value improves the odds.
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