Equipment Financing 101: What Every Business Owner Should Know
Need to purchase machinery, vehicles, or technology? Equipment financing lets you acquire what your business needs without draining your cash reserves.
Equipment financing is a loan or lease specifically designed to help businesses purchase the equipment they need — from trucks and manufacturing machinery to computers and restaurant ovens.
How Equipment Financing Works
The equipment you're purchasing serves as collateral for the loan. This means if you default, the lender can repossess the equipment — but it also means qualification requirements are often less stringent than unsecured loans.
Key Features
- Loan amount: Typically covers 80–100% of the equipment cost
- Repayment terms: 2–7 years (often matching the equipment's useful life)
- Rates: 6–30% depending on credit, equipment type, and lender
- Funding speed: Often within 24–72 hours
What Can You Finance?
- Vehicles — trucks, vans, delivery vehicles
- Heavy machinery — excavators, tractors, forklifts
- Technology — computers, servers, software
- Restaurant equipment — ovens, refrigerators, POS systems
- Medical equipment — exam tables, imaging machines
- Office furniture — desks, chairs, conference tables
Equipment Loan vs. Equipment Lease
Equipment Loan
You own the equipment outright once the loan is paid off. Best when the equipment has a long useful life and you want to build equity.
Equipment Lease
You essentially rent the equipment for a set term. At the end, you may have the option to purchase it, return it, or upgrade. Best for equipment that becomes outdated quickly.
Benefits of Equipment Financing
Preserve Working Capital
Instead of paying cash upfront, spread the cost over time. Keep your cash reserves for operations and growth.
Tax Advantages
Under Section 179 of the IRS tax code, you may be able to deduct the full purchase price of qualifying equipment in the year it's purchased.
Easier to Qualify
Because the equipment serves as collateral, credit requirements are typically lower than unsecured loans.
Flexible Terms
Repayment schedules can often be structured to match your seasonal revenue patterns.
How to Qualify
Most lenders look for:
- Credit score: 600+ (some accept lower)
- Time in business: 12+ months
- Down payment: 0–20% depending on credit and equipment type
- Business bank statements: Last 3–6 months
Get Started
ASBCLF works with lenders specializing in equipment financing across all industries. Contact us or apply online to get matched with the right lender for your equipment needs.