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Equipment Financing:
How to Fund Business Equipment
Equipment financing lets you acquire the machinery, vehicles, and technology your business needs without paying the full cost upfront. The equipment secures the loan, making it faster and more accessible than traditional bank financing. Here is how it works in 2026.
Industry averages through NBC lender network.
Summary
- Equipment financing uses the equipment being purchased as collateral, making it faster and more accessible than unsecured loans.
- Funding can happen in 24 to 72 hours for smaller deals, making it one of the fastest business financing options available.
- Credit requirements are more flexible than SBA or conventional bank loans, with many lenders accepting scores in the 600-650 range.
- Both new and used equipment can be financed, including vehicles, machinery, medical devices, and technology.
- Down payments typically range from 0% to 20%, and terms align with the useful life of the equipment (2-7 years).
Advertiser Disclosure: Manu Business Lending is a paid referral partner of National Business Capital. Financing is provided by NBC and its lender network, not by Manu. All loans subject to lender approval, terms, and conditions.
What Is Equipment Financing?
Equipment financing is a funding solution where a lender pays for business equipment upfront, and you repay the cost plus interest over a fixed term. The equipment itself serves as the collateral for the loan, which means the lender can repossess the asset if you default. This self-securing structure is why equipment financing is faster and easier to qualify for than unsecured loans.
For businesses that need machinery, vehicles, or technology to operate or grow, equipment financing eliminates the need to tie up working capital in a large upfront purchase. Instead of paying $50,000 for a truck or $120,000 for a CNC machine all at once, you spread the cost over monthly payments that align with the revenue the equipment generates.
According to the Equipment Leasing and Finance Foundation, U.S. businesses invested over $2.3 trillion in equipment and software in 2024, with approximately 58% of that total funded through financing or leasing rather than cash purchases. Equipment financing is not a niche product. It is the primary way American businesses acquire capital equipment.
How Equipment Financing Works
The process is straightforward compared to SBA or conventional bank loans:
- Get a quote. Obtain a purchase quote from the equipment vendor, dealer, or auction. The lender needs to know exactly what you are buying and how much it costs.
- Apply. Submit basic business information, bank statements, and the equipment quote. Most lenders do not require full tax returns or financial statements for deals under $150,000.
- Underwriting. The lender evaluates your credit, business revenue, and the equipment value. Because the equipment secures the loan, the asset appraisal often matters more than your credit score.
- Approval and funding. The lender pays the vendor directly, and you take delivery of the equipment. You begin making fixed monthly payments.
- Payoff. Once you complete the payment schedule, you own the equipment outright. Some loans include a $1 buyout at the end; others may have a residual balloon payment.
For deals under $150,000, many lenders offer a one-page application with same-day approval. For larger deals, expect to provide additional documentation and allow 1-2 weeks for appraisal and closing.
Rates, Terms, and Costs
Equipment financing rates depend on your credit, time in business, the equipment type and age, and the loan amount. Here is what to expect:
| Factor | Typical Range |
|---|---|
| Interest rates | 6% to 30% APR (varies by credit profile and equipment type) |
| Loan amounts | $10,000 to $5,000,000+ |
| Repayment terms | 2 to 7 years (aligned with useful life of equipment) |
| Down payment | 0% to 20% (depends on credit and equipment value) |
| Funding speed | 24-72 hours for small deals; 1-2 weeks for large deals |
| Collateral | The equipment being financed (no additional collateral required) |
| Prepayment | Varies by lender; some charge no prepayment penalty |
Equipment Loan vs. Equipment Lease
Both let you acquire equipment without paying the full cost upfront, but they work differently:
| Feature | Equipment Loan | Equipment Lease |
|---|---|---|
| Ownership | You own the equipment from day one | Lessor owns it during the lease; you may buy at end |
| Best for | Long-term use, building equity, equipment that holds value | Preserving cash, short useful life, frequent upgrades |
| Down payment | Typically 0-20% | Often lower or none (first payment only) |
| Tax benefits | Section 179 deduction (up to $2.5M in 2025); 100% bonus depreciation; depreciation | Lease payments may be fully deductible as operating expenses |
| End of term | You own the equipment | Return, renew, or purchase at fair market value or $1 |
| Watch out for | Total interest cost; equipment obsolescence | Residual value risk; end-of-lease terms; mileage/usage limits |
How to Qualify for Equipment Financing
Equipment financing has some of the most flexible qualification requirements of any business loan type:
| Requirement | Typical Standard |
|---|---|
| Credit score | 600+ (some lenders accept 550+ for strong equipment deals) |
| Time in business | 12+ months preferred; startups can qualify with strong equipment value |
| Annual revenue | $100,000+ typical; varies by lender |
| Down payment | 0-20% depending on credit and equipment age |
| Bankruptcies | Must be discharged for 2+ years for most lenders |
| Documentation | Equipment quote, bank statements, business info. Full financials for large deals only. |
Because the equipment itself serves as collateral, lenders are more focused on the asset value and your ability to make payments than on a perfect credit history. A business with a 620 credit score financing a $80,000 excavator with a 15% down payment is a more attractive deal to an equipment lender than the same business applying for an unsecured $80,000 term loan.
What Types of Equipment Can Be Financed
If it has tangible value and a useful life of more than one year, it can likely be financed:
| Category | Examples |
|---|---|
| Construction & trades | Excavators, bulldozers, cranes, forklifts, generators, scaffolding |
| Vehicles | Box trucks, delivery vans, semi-trucks, trailers, service vehicles |
| Manufacturing | CNC machines, lathes, presses, 3D printers, robotics, assembly lines |
| Medical & healthcare | MRI machines, dental chairs, exam tables, diagnostic equipment |
| Restaurant & food | Ovens, refrigerators, espresso machines, POS systems, ice makers |
| Technology | Servers, computers, networking hardware, software licenses |
| Agriculture | Tractors, combines, irrigation systems, grain storage |
| Fitness & recreation | Treadmills, weight machines, pool equipment, sound systems |
Explore industry-specific equipment financing: electrical contractor equipment, HVAC equipment, restaurant equipment, or manufacturing equipment.
One application. 75+ lenders. No hard credit pull to pre-qualify.
Check Equipment Financing OptionsHow to Apply for Equipment Financing
- Identify the equipment. Know what you need, the vendor, and the total cost including delivery and installation. Get a formal quote or purchase order.
- Gather basic documentation. For deals under $150,000: a one-page application, 3-6 months of bank statements, and the equipment quote. For larger deals: add business tax returns, financial statements, and equipment appraisal.
- Submit through a lending network. One application through NBC reaches 75+ lenders, so you compare offers instead of applying to lenders one at a time. No hard credit pull to pre-qualify.
- Compare offers. Review the APR, total cost, down payment, term, and end-of-term options ($1 buyout vs. fair market value). Factor in any origination fees or documentation fees.
- Accept and close. The lender pays the vendor directly, and you take delivery. For small deals, this can happen in 24-72 hours. For large deals, allow 1-2 weeks for appraisal and documentation.
- Start payments. Fixed monthly payments begin the month after funding. Set up auto-pay if available to avoid missed payments.
Frequently Asked Questions
What is equipment financing?
Equipment financing is a loan or lease where the equipment being purchased serves as the collateral. You make fixed monthly payments over a set term, and you own the equipment once the loan is paid off.
What credit score is needed for equipment financing?
Credit score requirements are more flexible than SBA or bank loans. Many lenders approve borrowers with credit scores in the 600-650 range. The equipment itself secures the loan, so the asset value matters as much as credit history.
How long does equipment financing take to fund?
Equipment financing is one of the fastest funding options. Many deals close in 24 to 72 hours, especially for amounts under $150,000. Larger deals requiring appraisals may take 1-2 weeks.
Should I finance or lease equipment?
Financing is better when you want to build equity and use the equipment long-term. Leasing is better when you need to preserve cash, the equipment has a short useful life, or you want to upgrade frequently. Leases often have lower upfront costs but no ownership at the end.
Can I finance used equipment?
Yes. Many lenders finance used, refurbished, and auction-purchased equipment. The loan amount is based on the appraised or market value of the equipment, not just the purchase price. Expect slightly higher rates for used equipment vs. new.
What is the typical down payment for equipment financing?
Down payments typically range from 0% to 20%. Some lenders offer zero-down financing for well-established businesses or when the equipment value significantly exceeds the loan amount. Startups or businesses with weaker credit may need 10-20% down.
What types of equipment can be financed?
Almost any business equipment can be financed: heavy machinery, vehicles, trucks, medical devices, restaurant equipment, computers, manufacturing equipment, construction equipment, and fitness machines. If it has tangible value and a useful life, it can likely be financed.
Sources
- Equipment Leasing and Finance Association: elfaonline.org
- IRS, Section 179 Deduction: irs.gov/pub/946
- Federal Reserve, Small Business Credit Survey: fedsmallbusiness.org
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This article was last reviewed July 10, 2026 by Malik Samara, Managing Partner. Our editorial team reviews and updates content on a rolling basis. Learn about our editorial standards.
Manu Business Lending is a paid referral partner of National Business Capital. Financing is provided by NBC and its lender network, not by Manu, and all loans are subject to lender approval, terms, and conditions. The information on this page is for educational purposes and does not constitute financial advice. Consult a licensed financial advisor for guidance specific to your business.