Equipment financing is purpose-built for asset purchases — the equipment serves as collateral, enabling lower rates and longer terms. A term loan gives you cash you can use for any business purpose. Both are valid options for buying equipment; the best choice depends on the asset type, your credit, and how you want to structure repayment.
Key facts
Topic
equipment financing vs term loan
Guide
Equipment financing is purpose-built for asset purchases — the equipment serves as collateral, enabling lower rates and longer terms. A term loan gives you cash you can use for any business purpose. Both are valid options for buying equipment; the best choice depends on the asset type, your credit, and how you want to structure repayment.
Definition
Business Financing is a business financing topic that owners research when they need a clear answer — not more jargon. In plain terms: business financing refers to a specific funding structure, product category, or financing concept that affects how a business gets capital, what it costs, and how it is repaid. This guide explains what it means, when it applies, and what to do next.
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When it applies
Business Financing becomes relevant at specific moments in the business lifecycle — when a purchase is being planned, when a cash gap needs covering, when a bank has declined an application, or when an owner needs to compare options before making a commitment. Understanding this topic changes the outcome at those moments.
Planning a significant equipment or inventory purchase
Solving a payroll or operating timing gap
Comparing qualification requirements before applying
Preparing documentation for a stronger application
See which option fits your business best.
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Qualification
Most financing questions depend on the business profile, use of funds, revenue, credit, time in business, and how urgent the request is.
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Preparation checklist
Reading a guide is step one. Use this checklist to prepare before moving into a funding review.
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Product paths
A strong guide should move readers into the product or process page that fits their need.
Equipment financing
Term loans
How it works
Qualification requirements
See which option fits your business best.
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Compare
Owners should compare fit, cost, timing, payment burden, documentation, and how each option supports the business goal.
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Do I qualify?
Most business owners who research this topic are eligible to begin a review. Here is what usually qualifies and what owners should not worry about.
Who qualifies
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Process
The best next step is to define the request, organize the basics, and apply when the use case is clear.
Define the amount
Clarify the use
Gather recent bank activity
Review product fit
Approved in as little as 24 hours.
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Questions
These questions help owners decide whether to move forward now or keep preparing.
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What owners say
Real feedback from owners who used the guide to understand their options before submitting an application.
“Read the guide Monday, applied Tuesday, funded Thursday — $67,000 in working capital in 3 days. Exactly as straightforward as it looked.”
“The plain-language explanation gave me confidence to apply with the right product. Approved on the first try.”
“Never understood factor rates vs interest until this guide. Applied to the right product first time, funded in 48 hours.”
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Quick answers
Direct answers to the questions most owners have after reading this guide.
Can I use equipment financing for used equipment?
Yes. Most lenders finance new and used equipment. Used equipment over 10–15 years old may have lower LTV (loan-to-value) limits, and some lenders cap financing on older equipment at 80% of appraised value.
What is the difference between equipment financing and equipment leasing?
Financing results in ownership at the end of the term. Leasing is a rental arrangement — you return the equipment or pay a residual to buy it at lease end. Financing is generally better when you plan to keep the asset long-term; leasing is better for technology that needs frequent upgrades.
Do I need a down payment for equipment financing?
Not always. Many lenders offer 0% down for creditworthy borrowers. Some may require 10–20% down for higher-risk applicants or for equipment with low residual value.
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What it costs
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lendfloCapital gives owners a short path from reading to reviewing practical funding options.
Yes. Most lenders finance new and used equipment. Used equipment over 10–15 years old may have lower LTV (loan-to-value) limits, and some lenders cap financing on older equipment at 80% of appraised value.
Financing results in ownership at the end of the term. Leasing is a rental arrangement — you return the equipment or pay a residual to buy it at lease end. Financing is generally better when you plan to keep the asset long-term; leasing is better for technology that needs frequent upgrades.
Not always. Many lenders offer 0% down for creditworthy borrowers. Some may require 10–20% down for higher-risk applicants or for equipment with low residual value.
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