Guide · Equipment Financing
Equipment Financing for Small Business
Equipment financing is one of the most accessible ways for small business owners to buy the trucks, machinery, and tools they need to grow — even when personal credit is imperfect. Because the equipment itself serves as collateral, lenders take less risk, which usually means easier approvals and better rates than a comparable unsecured loan.
Why equipment financing is different
With a term loan or line of credit, the lender is betting on you — your credit, revenue, and history. With equipment financing, the lender is also betting on the asset. If something goes wrong, they can repossess and resell the equipment, which caps their loss. That collateral structure is why equipment lenders often say yes to owners that a bank would decline.
This is especially useful for owners with FICO scores in the 600s (or lower with a down payment), startups without two years of revenue, and industries banks consider risky — trucking, construction, restaurants, salons, and medical practices.
What you can finance
Trucks & trailers
Class 8 tractors, box trucks, reefers, dump trucks, and trailers. Popular for owner-operators expanding a fleet.
Construction equipment
Excavators, skid steers, bulldozers, cranes, and attachments — new or used.
Restaurant & food service
Ovens, walk-in coolers, POS systems, and full kitchen build-outs.
Medical & dental
Imaging equipment, dental chairs, lab equipment, and practice technology.
Manufacturing & machinery
CNC machines, forklifts, packaging lines, and industrial equipment.
Technology & software
Servers, computers, and even some SaaS implementations under equipment-as-a-service structures.
How the numbers work
A typical equipment loan is structured over the useful life of the asset — often 24–72 months. Rates vary by credit, industry, and equipment type, but they are generally lower than merchant cash advances or unsecured term loans because of the collateral. Expect 8%–30% APR depending on your profile, with the strongest borrowers landing in single digits.
You can finance new or used equipment, and many lenders will roll in soft costs like taxes, delivery, and installation. Section 179 of the tax code often lets you deduct the full purchase price of qualifying equipment in the year it is placed in service — check with your accountant, but this can significantly reduce the effective cost.
Loan vs lease: which is right for you?
Equipment loan
You own the equipment. Monthly payments are higher, but you build equity and keep the asset once paid off. Best when the equipment has a long useful life and you plan to keep it.
$1 buyout lease
Structured like a loan for tax purposes but classified as a lease. You buy the equipment for $1 at the end of the term. Popular for equipment you know you want to own.
Fair market value (FMV) lease
Lower monthly payments; at the end, you can return, renew, or buy at market value. Best for technology or equipment you may want to upgrade.
Equipment financing agreement (EFA)
A hybrid where you own the equipment from day one but the lender holds a security interest. Common for six-figure deals.
What you need to apply
For applications under $150,000, most lenders only need a one-page application and the invoice or quote from the equipment vendor. Above that, expect to provide 3–6 months of business bank statements and a personal financial statement. Time in business, industry, and equipment type matter more than perfect credit.
If you are worried about qualifying, pre-qualify through a broker like BizKred first — one application is routed to multiple equipment lenders whose programs actually match your profile, without a hard credit pull.
See what you qualify for
Have a quote from a dealer or vendor? Get pre-qualified in minutes and compare offers from equipment lenders that fund your industry.
Frequently asked questions
What is equipment financing?
Equipment financing is a loan or lease used to purchase business equipment — trucks, machinery, medical devices, restaurant gear, computers — where the equipment itself serves as collateral. If you default, the lender recovers the asset instead of chasing personal guarantees alone.
What credit score do you need for equipment financing?
Because the equipment is collateral, credit requirements are often lower than unsecured term loans. Many lenders approve FICO scores starting around 600, and some asset-backed programs go lower with a larger down payment or a strong revenue history.
How much can I finance?
Most programs cover 80–100% of the equipment cost, from a few thousand dollars up to $5 million or more. New businesses may need to put 10–20% down; established borrowers with strong credit often finance the full purchase plus soft costs like delivery and installation.
What is the difference between an equipment loan and an equipment lease?
A loan means you own the equipment outright once it is paid off. A lease means you rent it for a term and either return it, renew, or buy it at fair market value. Loans build equity; leases keep monthly payments lower and preserve cash.
How fast is equipment financing?
Simple applications under $150,000 can fund in 24–72 hours with basic documents (application, invoice from the vendor, bank statements). Larger or more complex deals typically fund in 1–2 weeks.
Can I finance used equipment?
Yes. Most lenders finance used equipment up to a certain age (often 10 years for trucks and heavy machinery). Terms may be shorter and rates slightly higher than for new equipment.