Equipment Financing for Small Businesses
Equipment financing is a loan or lease used to purchase business equipment, where the equipment itself typically serves as collateral.
It fits businesses buying machinery, vehicles, medical or restaurant equipment, or technology that will generate revenue over several years.
Equipment Financing quick facts
These are the typical terms for equipment financing. Your actual terms depend on underwriting.
| Typical amount | $10,000 to $5,000,000 |
|---|---|
| Typical term | 2 to 7 years, often matched to equipment life |
| Typical funding speed | Typically 2 to 10 business days |
| Typical minimum requirements | 1+ year in business preferred, 600+ credit, equipment quote |
| Cost structure | Fixed rate or lease factor, possible documentation fee |
Equipment Financing: good fit or not?
This option works well for some situations and is a poor match for others.
Good fit
- New or used equipment with a clear useful life
- Contractors, trucking, medical, manufacturing, and restaurants
- Businesses that want to preserve cash and credit lines
- Newer businesses with strong personal credit (case by case)
Not a good fit
- Soft costs such as payroll or marketing
- Highly specialized equipment with little resale value (may be limited)
- Purchases from private sellers without proper documentation (may be limited)
Documents usually needed
Having these ready typically speeds up review. A funder may request additional items.
- Completed application
- Equipment quote or invoice from the vendor
- Most recent 3 months of business bank statements
- Driver license for each owner
- Business tax returns and financials (for larger amounts)
Equipment Financing: how it works
The process typically follows 4 steps from first conversation to funding.
Get a quote
Send us the vendor quote and your application.
Compare structures
We review loan and lease options, terms, and end-of-term choices.
Approve and sign
The funder approves and issues documents.
Vendor is paid
The funder typically pays the vendor directly and you take delivery.
Equipment Financing vs. Term Loan
The main difference comes down to structure, cost, and timing. Here is how they typically compare.
| Feature | Equipment Financing | Term Loan |
|---|---|---|
| Collateral | The equipment itself | General business assets or none |
| Use of funds | Equipment purchase only | Most business purposes |
| Credit flexibility | Often higher, since collateral is tied to the loan | Moderate |
| Typical term | 2 to 7 years | 1 to 5 years |
Typical characteristics. Terms vary by funder and file.
Equipment Financing FAQs
Should I lease or finance equipment?
Financing usually means you own the equipment once the loan is paid. Leasing may offer lower payments and easier upgrades. The better fit depends on how long you plan to use the equipment and your tax situation. Ask your tax professional about deductions.
Can I finance used equipment?
Yes. Many funders finance used equipment, though terms may be shorter based on the age and condition of the equipment.
Is a down payment required?
Some programs finance up to 100% of the equipment cost. Others may ask for 10% to 20% down, depending on credit and equipment type.
Can startups get equipment financing?
Sometimes. Because the equipment secures the loan, some funders work with newer businesses that have strong personal credit.
Can I include delivery and installation?
Many funders allow soft costs such as shipping, installation, and training to be included, often up to a set percentage of the total.