Equipment financing lets businesses purchase or lease revenue-generating assets — trucks, machinery, medical devices, restaurant equipment, technology — without depleting working capital. The equipment itself serves as collateral, removing the need for real estate or other assets. For capital-intensive businesses, equipment financing is typically the most efficient way to acquire productive assets.
How Equipment Financing for Small Businesses Work
Equipment financing comes in two primary structures: equipment loans and equipment leases. With an equipment loan, you own the equipment from day one and make fixed monthly payments until the loan is repaid. With a lease, the lender owns the equipment and you make monthly payments for a defined term, with options to purchase, return, or renew at the end.
The tax treatment differs: equipment loans allow immediate expensing under Section 179 (up to $1,160,000 in 2023, adjusted annually) or MACRS depreciation. Equipment leases may be treated as operating expenses, depending on the lease structure — consult your accountant.
Most equipment lenders will finance 80–100% of new equipment value and 70–90% of used equipment value. Down payments are less common in equipment financing than in conventional loans, though some lenders require one. The equipment’s useful life generally drives the term — lenders won’t finance a 3-year-old truck over a 10-year term.
Rates, Amounts & Terms
| Product Feature | Details |
|---|---|
| Amount | $5,000 – $5,000,000 |
| Term | 2 – 10 years (matches equipment useful life) |
| Rate Range | 6% – 25% APR (varies by equipment type, credit, lender) |
| Collateral | Equipment being financed (self-collateralized) |
| Down Payment | 0–20% depending on lender and equipment type |
| Speed to Funding | 1–7 days under $250K; 2–4 weeks above |
Rates shown are typical market ranges. Actual rates vary by lender, creditworthiness, and business profile. Verify with lenders before applying.
Typical Qualification Requirements
| Requirement | Typical Minimum |
|---|---|
| Time in Business | 12 months (some: 6 months; startups: strong personal credit |
Best For
- Commercial vehicles and trucks
- Medical and dental equipment
- Restaurant and kitchen equipment
- Manufacturing machinery and CNC equipment
- Construction equipment
- Technology and IT infrastructure
- Farm equipment
Not the Right Fit When
- Operating expenses (use working capital)
- Inventory (use inventory financing or LOC)
- Intangible assets like software licenses or IP
How to Apply
- Review the qualification requirements above. Confirm your time in business, monthly revenue, and credit score meet the minimums before applying.
- Prepare documents. Typically: 3–6 months bank statements, most recent tax returns (business and personal), and your business license. Some lenders require additional documents; the list is shorter for fast-funding products.
- Apply through our partner. Submit your information once, receive competing offers, and compare total repayment amount, APR, and payment structure before accepting.
Frequently Asked Questions
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Related: Sba Loans • Working Capital Loans • Term Loans • Construction • Transportation Trucking
Written by the SBLT Editorial Team. This content is informational only and does not constitute financial or legal advice.
Advertising Disclosure: Small Business Loans Today receives compensation when you click links to our partner financing site. Rates and terms shown are typical market ranges — verify with lenders before making financial decisions. Not financial advice.
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