Equipment Financing

Equipment financing is business financing used to purchase, replace, or upgrade equipment needed to operate a company. Financing may be available for machinery, commercial vehicles, construction equipment, medical equipment, restaurant equipment, technology, manufacturing equipment, and other business assets.

With equipment financing, a business obtains financing to purchase qualifying equipment and repays the financing according to the agreed terms. The equipment being purchased may serve as collateral for the financing, depending on the financing product and provider.

Businesses may be able to finance a wide range of equipment, including:

• Construction equipment
• Manufacturing machinery
• Commercial trucks and vehicles
• Medical and dental equipment
• Restaurant and commercial kitchen equipment
• Agricultural equipment
• Office equipment
• Computers and technology
• Retail and POS systems
• Warehouse equipment
• Landscaping equipment
• Industrial machinery

Eligibility depends on the equipment, business, financing program, and provider.

Potentially. Equipment financing for new and used equipment may be available. For used equipment, financing providers may consider factors such as the equipment's age, condition, value, expected useful life, and resale value.

Equipment financing amounts can vary substantially, from relatively small purchases to multimillion-dollar equipment investments. The amount available depends on factors such as equipment cost, business revenue, cash flow, creditworthiness, time in business, and financing provider requirements.

There is no single credit score requirement for all equipment financing programs. Financing providers may consider personal and business credit along with revenue, cash flow, time in business, equipment value, existing obligations, and ability to repay the financing.

Potentially. Some financing providers offer equipment financing to businesses with less-than-perfect credit. Available amounts, rates, down payment requirements, and repayment terms may differ based on the applicant's credit profile and other qualifications.

A down payment may be required depending on the financing provider, equipment, business qualifications, and financing structure. Some qualified businesses may have access to financing requiring a relatively small upfront investment, while other transactions may require a larger contribution.

In many equipment financing transactions, the equipment being purchased may serve as collateral. Additional collateral requirements vary depending on the financing program, provider, equipment value, and business qualifications.

Documentation requirements vary, but businesses may be asked to provide:

• Business information
• Equipment quote or invoice
• Business bank statements
• Business tax returns
• Profit and loss statements
• Balance sheets
• Personal or business identification
• Information about existing debt

Larger equipment purchases may require additional financial documentation.

Funding timelines vary depending on the financing provider, amount requested, equipment, documentation, and complexity of the transaction. Smaller equipment purchases may require less underwriting than larger or more complex equipment financing transactions.

Equipment financing rates vary based on the financing provider, business qualifications, credit profile, equipment, financing amount, repayment term, and market conditions. The actual rate and financing terms will be provided by the applicable financing provider.

Repayment terms vary depending on the financing product, equipment type, equipment's expected useful life, amount financed, and business qualifications. Larger equipment purchases and assets with longer useful lives may qualify for different repayment structures than smaller purchases.

An equipment loan generally provides financing to purchase equipment, with the borrower typically owning the equipment subject to the financing agreement.

An equipment lease generally allows a business to use equipment for a specified period under a lease agreement. Ownership and end-of-lease options depend on the specific lease structure.

Yes. Certain SBA loan programs can be used to purchase qualifying business equipment. Depending on the amount, equipment, and intended use, SBA 7(a) or SBA 504 financing may be worth considering for eligible businesses.

Potentially. Construction equipment financing may be available for excavators, bulldozers, skid steers, loaders, cranes, backhoes, compactors, trailers, trucks, and other equipment used by construction companies and contractors.

Potentially. Businesses may be able to finance commercial trucks, vans, service vehicles, delivery vehicles, trailers, and other vehicles used primarily for business purposes.

Potentially. Medical equipment financing may help medical, dental, veterinary, and other healthcare practices purchase diagnostic equipment, imaging systems, treatment equipment, dental equipment, technology, and other qualifying assets.

Potentially. Restaurant owners may be able to finance ovens, refrigeration systems, commercial ranges, food preparation equipment, POS systems, furniture, and other equipment required to operate or expand a restaurant.

Potentially. Manufacturing equipment financing may be available for production machinery, CNC machines, robotics, packaging equipment, material handling systems, fabrication equipment, and other industrial assets.

Yes, depending on the financing program. Businesses may use equipment financing to replace aging, inefficient, damaged, or obsolete equipment with newer equipment that can improve productivity or expand capacity.

Potentially. Financing options for startups may be more limited because the business has little or no operating history. Providers may place greater emphasis on the owner's credit, experience, available cash, equipment value, and overall strength of the business plan.

It depends on how the funds will be used. Equipment financing is specifically designed to finance equipment and may be appropriate for larger asset purchases. A business line of credit provides more flexible access to working capital that can generally be used for a broader range of business expenses, subject to the financing agreement.

Qualification requirements vary by financing provider. Factors commonly considered include:

• Personal and business credit
• Business revenue
• Cash flow
• Time in business
• Equipment cost and value
• Type and age of equipment
• Existing financial obligations
• Down payment, if required
• Ability to repay the financing

Start by providing information about your business, the equipment you want to finance, the purchase price, and the amount of financing needed. Your information can then be evaluated to help identify equipment financing options that may fit your business and equipment purchase.