Equipment financing lets you purchase business equipment by borrowing money with the equipment itself as collateral. You make fixed monthly payments over the loan term, and at the end you own the asset outright. It is faster and more accessible than most other business loans because the collateral reduces lender risk.
Definition
Equipment financing (also: equipment loan): A loan used to buy business equipment, with the equipment itself serving as collateral. Terms are matched to the equipment's useful life, and you own the equipment when it is repaid.
See all business financing definitions| Financing type | Business Financing |
|---|---|
| Typical amounts | Term loans $25K–$2M; equipment financing $10K–$500K |
| Decision time | As fast as 24 hours |
| Credit | All credit profiles considered; soft credit pull to start |
| Cost to apply | Zero cost to apply |
| Who we are | A business financing broker. We compare offers from our lender network; we are not a direct lender. |
In detail
Apply online with 3 months of bank statements and a vendor invoice or equipment quote. A soft credit pull is used for pre-qualification. Once matched with a lender, a hard pull is done for final approval. Most approvals arrive within 24–48 hours. The lender then pays the vendor or dealer directly — you never handle the purchase funds.
In detail
Equipment financing rates depend on your credit score, time in business, equipment type, and loan amount. Rates typically range from 6% to 30% APR depending on risk profile. Terms run 24–84 months. Newer, more valuable equipment with long useful lives qualifies for better rates and longer terms than used or specialized equipment.
In detail
Equipment financing results in full ownership once the loan is paid. This is the key difference from leasing, where you return the equipment at term end. Financing is better for equipment you plan to keep and use beyond the loan period. Leasing is better for technology or vehicles you want to upgrade frequently.
Preparation checklist
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Equipment financing
Equipment financing vs. term loan
Qualification requirements
How it works
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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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For a large equipment purchase it usually is, because the equipment itself secures the financing, the cost is spread over a fixed term with fixed payments, and your other credit stays free for day-to-day costs. A credit card can suit a small purchase you plan to pay off quickly. The better choice depends on the price of the equipment and how long you will keep it.
Almost any tangible business asset: commercial vehicles and trucks, construction equipment, restaurant equipment, medical devices, manufacturing machinery, technology and computer hardware, trailers, forklifts, and more. Soft costs (installation, warranty, software) can sometimes be bundled in.
Yes. Used equipment is financed regularly. Lenders typically advance 80–100% of the equipment's current fair market value. Equipment over 10–15 years old may have reduced advance rates or shorter maximum terms.
The lender has the right to repossess the financed equipment. In practice, most lenders prefer workout arrangements — restructuring payments or temporarily deferring — over repossession. If your business faces difficulty, contact the lender immediately rather than missing payments without communication.
Written by lendfloCapital Editorial Team · Last updated
lendfloCapital is a business financing broker, not a lender. This page is general information, not financial, legal or tax advice. Rates, amounts and terms depend on the lender and your business.
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