Navigating equipment financing can feel overwhelming—especially for small and growing businesses. To help, we’ve compiled answers to the most common questions business owners ask about equipment loans, leases, and everything in between.
What is equipment financing?
Equipment financing is a loan or lease used to purchase business equipment. It lets companies acquire tools, vehicles, or machinery while preserving capital.
Equipment financing typically refers to a loan where you eventually own the equipment.
Leasing allows you to use the equipment for a set period with the option to buy, upgrade, or return it.
Related: Lease vs. Loan: Choosing the Right Option for Your Equipment
Most physical, tangible equipment qualifies for financing, including:
Construction and industrial machinery
Medical and diagnostic devices
Commercial vehicles and delivery trucks
Restaurant and kitchen equipment
IT and office technology
Manufacturing tools and robotics
While a strong credit score helps, many lenders offer options for:
Startups with no credit history
Businesses with fair credit (600–650)
Financing based on cash flow or collateral value
Pro tip: Consistent payments can help build your business credit over time.
Loan terms: Usually 2 to 7 years
Lease terms: Commonly 24 to 60 months
Interest rates: 5%–15% depending on credit and lender
Buyout options: $1 buyout, fair market value (FMV), or fixed purchase price
Yes—lease payments are typically fully deductible as an operating expense. For financed purchases, businesses can often use Section 179 depreciation to write off the equipment value.
Yes, many lenders offer financing for pre-owned equipment, especially in construction, transportation, and manufacturing. Used equipment often results in:
Lower monthly payments
Reduced overall cost
Faster ROI
Requirements vary by lender, but generally include:
Business license or formation documents
Recent bank statements (3–6 months)
Equipment quote or invoice
Credit score or report
Proof of income or tax returns (for higher-value loans)
At lease-end, you typically have 3 options:
Buy the equipment (often for $1 or FMV)
Renew the lease
Return the equipment
Choose based on performance, technology updates, and business needs.
Yes—many lenders work with startups by evaluating:
Business plan and projections
Collateral or down payment
Industry-specific risk
Tip: Consider equipment leasing if you want to conserve capital while launching.
In many cases, no down payment is required, especially for leasing. However, larger equipment loans may require:
5%–20% down
Security deposits
First month’s payment upfront
Leasing and financing differ in structure, ownership, and tax benefits
Most equipment types qualify, including used gear
Flexible terms exist for startups and low-credit businesses
Tax deductions and payment flexibility make equipment financing an attractive option
Understanding your options is the first step to making a smart financial decision. Whether you're upgrading tools, scaling locations, or outfitting a new business, equipment financing offers flexibility, speed, and stability.
Still have questions?
Connect with a trusted equipment finance provider to explore personalized options and unlock your business’s next stage of growth—without the financial strain.