Understanding Equipment Financing & Leasing
Because the machine is the collateral, equipment lenders underwrite the asset as heavily as the borrower. That single structural fact makes equipment financing one of the most accessible products available to a business with imperfect credit or limited operating history.
Equipment Financing terms at a glance
Equipment Financing — typical parameters
Illustrative market ranges. Your actual terms depend on lender underwriting, credit, collateral and program availability.
| Amount financed | $5,000 – $5,000,000 |
|---|---|
| Speed to funding | 24 hours – 5 days |
| Interest rate | 6% – 30% |
| Term | 24 – 84 months |
| Down payment | 0% – 20% |
| Minimum credit score | 575 |
| Time in business | 6 months (startups considered) |
| Collateral | The equipment itself |
| New or used | Both, including private-party sales |
| Soft costs | Delivery, install, training often included |
How Equipment Financing can help you
Equipment is one of the few purchases where financing is almost always the right answer, because the asset produces revenue across years while cash pays for it all at once.
You preserve cash the business needs elsewhere
Paying $180,000 cash for a machine leaves you with a machine and no cushion. Financing the same machine at roughly $3,100 a month keeps $180,000 available for payroll, materials and the unexpected. The machine earns either way; only your liquidity differs.
The equipment pays for its own payment
This is the cleanest financing case in business. A $2,900 monthly payment on a delivery truck that generates $9,000 a month in additional route revenue is not really a cost — it is a margin split. Model the incremental revenue against the payment before you sign and the decision usually makes itself.
Approval is realistic even with weak credit
Because a lender can repossess and resell a titled excavator or a CNC machine, the downside is contained in a way an unsecured loan's never is. We regularly close equipment deals at 575 to 620 credit that would be automatic declines for a working capital loan.
You can free cash from equipment you already own
Equipment refinancing — sometimes structured as a sale-leaseback — turns machinery you own outright into working capital while you keep operating it. A contractor with $600,000 of unencumbered iron sitting in the yard is sitting on an unused credit facility.
There are real tax advantages
Section 179 allows many businesses to deduct the full purchase price of qualifying equipment in the year it is placed in service, even when it was financed. Deducting the whole asset while paying for it over five years is a meaningful timing benefit. Confirm the specifics with your CPA.
How the process works
Send the quote or invoice
A vendor quote, invoice, or even a private-party listing. We need to know the asset, the year, the condition and the price.
Application and approval
A one-page application for most requests under $250,000. Approvals commonly come back the same day or next morning.
Choose finance or lease
An equipment finance agreement builds ownership; a lease lowers the payment with a purchase option at the end. We model both so you can see the total cost side by side.
Vendor gets paid directly
We pay the seller, you take delivery, and your first payment is typically due 30 days later. Private-party and auction purchases are handled the same way.
What you will need to qualify
- 6+ months in business (startups considered)
- 575+ personal credit score
- Equipment quote or invoice
- 3 months of bank statements
- Business checking account
- Proof of insurance at funding
The honest drawbacks
What we would want to know if we were you
Watch the difference between a $1 buyout lease and a fair market value lease. The FMV lease shows a lower monthly payment, which is how it gets sold, but at term end you either return the asset or pay market value to keep it. If you intend to own the equipment for its full life — which is true for most buyers — the $1 buyout or a straight equipment finance agreement is almost always cheaper in total. We will show you both columns.
Equipment Financing — frequently asked questions
Yes. Used equipment is financed constantly, including private-party and auction purchases. Expect slightly shorter terms and modestly higher rates on older assets, and note that most lenders cap total age at roughly 10 to 15 years depending on the equipment type.
Frequently zero. Strong credit and established time in business routinely earn 100% financing, and many programs include soft costs like freight, installation and training. Weaker credit or specialised equipment may require 10% to 20%.
Finance if you will use the asset for its full life and want to own it; you build equity and it is usually cheaper overall. Lease if the technology turns over quickly, if you want the lowest possible payment, or if off-balance-sheet treatment matters to you.
Construction and heavy equipment, commercial trucks and trailers, manufacturing and CNC machinery, restaurant and commercial kitchen equipment, medical and dental, agricultural, printing, IT and server infrastructure, salon and fitness equipment, and more. If it has a serial number and a resale market, it is almost certainly financeable.
Often yes, particularly where the owner has direct industry experience and the equipment has strong resale value. Startup deals typically require 10% to 20% down and a personal guarantee, but they close regularly.
Related business programs
Equipment Financing sits alongside a number of related structures. If your situation is close to but not quite this product, one of these is probably the better fit — and the same single application reaches all of them.
- SBA Express — A streamlined SBA path to $500,000 with a 36-hour SBA response instead of the standard review.
- Asset-Based Lending (ABL) — A facility sized against your receivables, inventory and equipment rather than your profit history.
- Accounts Receivable Financing — Borrow against your open invoices while keeping ownership of the receivable and the customer relationship.
- Payroll Funding — Dedicated capital to make payroll on time when client payments and pay periods do not line up.
- Supply Chain Financing — Extend your own payment terms while your suppliers still get paid early.
- Contract Financing — Capital advanced against signed government or commercial contracts before the work is billed.
- Inventory Financing — Funding to buy stock ahead of a season, using the inventory itself as collateral.
- Vendor Financing — Programs that let you offer your own customers payment terms without carrying the risk.