Equipment financing

What is equipment financing?

You pick the equipment, the lender pays the vendor, and you repay in fixed monthly payments until you own it outright. The lender files a lien on that specific asset, and usually nothing else, which is the difference from a term loan secured by a blanket lien on the whole business.

Almost anything with a serial number qualifies: trucks, construction machinery, restaurant kitchens, medical and dental equipment, manufacturing lines, computers and software. Used equipment is fine with most lenders, usually with a shorter term. If you would rather not own the asset at the end, compare with equipment leasing.

Who qualifies for equipment financing?

Most lenders want one year in business, owner credit of 600 or higher and enough revenue to cover the payment. Banks and captive lenders (the finance arm of the manufacturer) want two years and 680 credit in exchange for the lowest rates. Because the equipment secures the loan, this is one of the few products that routinely approves younger businesses.

• Startups can qualify with 10% to 20% down, owner credit of 680 or higher and experience in the industry; see startup business loans.
• Declined most often: equipment that is hard to resell (custom fixtures, very old machines, software with no resale value), owners with recent repossessions, and businesses with heavy existing daily payment debt.

What does equipment financing really cost?

A typical example: you finance an $80,000 machine over five years at 10%. The payment is about $1,700 a month and total interest about $22,000. A documentation fee of $150 to $500 is usual. The same loan at 18%, which is where a one year old business with 620 credit often lands, costs about $2,030 a month and roughly $42,000 in interest.

Watch for two things. Some lenders quote a payment without stating the rate; divide the total of payments by the price to see the real cost. And the term should not outlast the equipment: a seven year loan on a three year laptop fleet means paying for scrap. Our guide to business loan rates covers how to compare offers.

How do you qualify, and what documents do you need?

For amounts under about $150,000, most lenders run an application only process: the vendor quote or invoice, your formation documents, an ID, and three months of bank statements. Above that, add two years of business tax returns, interim financials and a debt schedule. Startups add a personal financial statement and a resume showing industry experience.

Gather everything from our document checklist, and get a written quote from the vendor that lists the equipment, serial numbers if available, and any installation or delivery charges you want financed. Lenders fund against that quote, so a vague one slows everything down.

How long does equipment financing take?

Typically one to ten business days from application to the vendor being paid. Application only deals under $150,000 are often approved the same day and funded within two or three days. Larger amounts, used equipment that needs an inspection, or a bank lender add a week or two.

The vendor controls part of the clock: the lender pays on delivery or installation, so a machine with a six week lead time funds in six weeks regardless of approval. If you need the asset working by a certain date, apply as soon as you have a quote. See how long business loans take for other products.

When should you choose something else?

Choose equipment leasing if the equipment will be obsolete in a few years, you want lower monthly payments, or you prefer to return it at the end; our lease versus buy comparison runs the numbers. Choose an SBA 504 loan for heavy equipment with a useful life over ten years and a price above $500,000, where a 20 year fixed rate beats a five year loan.

Choose a line of credit instead if you are buying many small items over time. Financing a $4,000 purchase costs more in paperwork than it saves.

How do you apply for equipment financing?

Apply once on this site with your vendor quote and your application reaches equipment lenders that cover your industry and ticket size, alongside banks and SBA lenders if a longer term would fit. It is free for your business, and we are paid the same whichever lender you choose. You can also ask your AI assistant to apply through our MCP server; it reads the quote and your statements, fills the application and submits it.