Securing business funding isn’t always about perfect credit or large cash reserves. For many small and mid-sized companies, the most reliable path to capital is an equipment financing loan—a lending solution where the equipment itself serves as collateral. This structure reduces lender risk, opens doors for businesses that may not qualify for traditional loans, and makes it easier to access essential tools, machinery, and technology without draining cash flow.
In this guide, we break down exactly how equipment-secured loans work, what you can use as collateral, the qualification process, and how companies like Crestmont Capital help businesses secure the right funding at the right time.
A loan that uses equipment as collateral—commonly called an equipment financing loan or asset-backed equipment loan—allows a business to borrow money by pledging a piece of machinery or equipment as security. Instead of relying solely on credit scores or cash flow, the lender is protected by the value of the asset.
Here’s how it works in simple terms:
If you purchase or already own equipment with strong resale value, a lender can use that equipment as collateral. In return, you receive a loan with fixed payments over a set term. If the loan defaults, the lender can reclaim or liquidate the equipment to recover its losses.
This structure reduces risk for the lender and creates opportunities for businesses that want to expand, replace outdated machinery, or preserve cash flow.
Leveraging equipment to secure funding offers a wide range of advantages. Key benefits include:
Lower credit barriers:
Asset-backed lending makes it easier for businesses with imperfect credit or limited financial history to qualify.
Preserved working capital:
Instead of paying for equipment upfront, you spread payments across time.
Competitive interest rates:
Because the loan is secured, lenders often offer better rates than unsecured products.
Flexible terms:
Loan terms can align with the lifespan of the equipment.
Tax advantages:
Equipment financing may qualify for tax deductions under Section 179 (always consult a tax professional).
Supports business growth:
Funding allows companies to take on new contracts, expand operations, or replace aging machinery.
Easier approval process:
Because collateral reduces lender risk, decisions can be quicker and less documentation-heavy.
Below is a clear, start-to-finish walkthrough of how the process works:
This could be new equipment you plan to purchase or existing equipment you already own. Lenders typically want assets with strong resale value, including machinery, vehicles, or specialized tools.
The lender evaluates the equipment’s value using:
Market pricing
Appraisals
Equipment age and condition
Manufacturer specifications
Remaining useful life
The loan amount is generally based on a percentage of the equipment’s value.
Most lenders require:
Basic business information
Financial statements
Equipment details
Revenue history
Some lenders—including Crestmont Capital—offer streamlined applications requiring minimal documentation.
If approved, the lender presents an offer including:
Loan amount
Interest rate
Payment schedule
Term length
Fees, if any
Terms depend on equipment value, business financials, and overall risk profile.
The lender typically files a UCC-1 lien securing rights to the equipment. You continue using it normally, but if you default, the lender may reclaim or liquidate the equipment.
Payments are usually monthly and remain fixed. The equipment becomes fully yours—free of liens—after repayment.
Successfully repaying an equipment financing loan helps strengthen your credit profile, making future loans easier to obtain.
Virtually any business-essential piece of equipment with durable value may qualify. Here are the most common categories:
Excavators
Bulldozers
Backhoes
Loaders
Cranes
CNC machines
Presses
Conveyor systems
Welders
Molding machines
Commercial trucks
Vans
Trailers
Box trucks
Semis
Imaging machines
Lab testing devices
Sterilization systems
Tractors
Harvesters
Sprayers
Irrigation systems
Servers
Computer systems
POS systems
Specialized software with strong value
Refrigeration units
Ovens
Mixers
Commercial prep equipment
If the equipment is essential to business operations and has predictable resale value, there is a strong chance it can be used as collateral.
This type of financing is ideal for businesses that need to acquire, repair, or refinance equipment without sacrificing cash reserves.
Startups and young businesses:
Low credit history isn’t as much of a barrier when equipment minimizes lender risk.
Companies with fluctuating revenue:
By spreading payments over time, businesses can manage cash flow more easily.
Established businesses expanding rapidly:
Access new machinery to scale operations faster.
Businesses with high-cost equipment needs:
Industries like construction, transportation, trucking, agriculture, manufacturing, and medical services depend on costly assets that can secure strong loan terms.
Companies needing to replace outdated or broken equipment:
Avoid operational downtime by upgrading equipment immediately.
When evaluating your financing choices, it’s helpful to see how equipment-backed loans stack up against other products.
Traditional loans often require strong credit, years of financial history, and collateral beyond equipment. Equipment loans, meanwhile, use the equipment itself as collateral, making approval more accessible.
Unsecured loans offer fast funding but typically come with higher interest rates because there’s no collateral. Equipment-backed loans offer lower rates due to reduced lender risk.
Lines of credit offer flexible spending but are harder to qualify for and often require strong financials. Equipment financing is easier to secure and doesn’t require substantial bank statements or credit score thresholds.
Leasing may offer lower monthly payments, but you never fully own the equipment. Financing allows you to build equity and eventually own the asset outright.
If you already own equipment, refinancing can unlock cash for working capital while keeping the equipment in use.
Crestmont Capital specializes in helping businesses secure fast, flexible, and competitive funding solutions—including equipment financing loans that use machinery as collateral.
Throughout the process, Crestmont Capital supports business owners with guidance, tailored loan options, and transparent terms. Here are ways Crestmont Capital adds value:
A simple application process makes it easy to move forward quickly. Learn more about financing solutions on their Business Loans page:
https://crestmontcapital.com/business-loans/
From equipment financing to working capital, Crestmont offers multiple avenues to secure funding. Explore available options:
https://crestmontcapital.com/equipment-financing/
Many businesses receive decisions quickly so they can acquire equipment without delays. See how flexible the process is here:
https://crestmontcapital.com/about-us/
Crestmont works with a wide range of credit histories, including businesses that may not qualify at traditional banks. Learn more about their loan programs:
https://crestmontcapital.com/programs/
Below are practical examples showing how businesses leverage equipment-backed loans to grow sustainably.
A small construction firm wins a major contract but lacks the upfront cash for an excavator. Using the excavator itself as collateral, they secure a loan and begin work immediately—allowing them to complete the contract and increase revenue.
A manufacturer has equipment nearing the end of its useful life. With an equipment financing loan, they purchase a new CNC machine, boosting productivity and reducing maintenance costs.
A transportation company needs another semi-truck to take on new routes. Using the truck as collateral, they secure funding despite inconsistent monthly revenue.
When a restaurant’s refrigeration system breaks unexpectedly, they turn to equipment financing to replace it quickly—preventing further losses and downtime.
A medical clinic uses equipment as collateral to secure a loan for a new imaging machine that improves diagnostic capabilities and attracts more patients.
Many lenders consider credit, but it’s not the primary factor. Because the loan is secured by equipment, businesses with average or even lower credit scores may still qualify.
Yes. Many businesses refinance existing equipment to free up working capital or consolidate debt.
Terms typically range from 24 to 84 months, depending on equipment type, useful life, and business goals.
Some lenders require a small down payment, while others offer 100% financing. Requirements depend on credit, equipment value, and lender guidelines.
The lender may repossess or liquidate the equipment to recover losses. This is why equipment with reliable resale value is ideal collateral.
Not necessarily. Used equipment is often acceptable if it has durable value and a strong resale market.
If your business needs new equipment or wants to unlock capital from equipment you already own, the next steps are straightforward:
Identify the equipment you want to finance or refinance.
Gather basic business and financial information.
Estimate the equipment’s fair market value.
Review your funding goals—expansion, cash flow, or replacement.
Contact a reputable lender like Crestmont Capital to compare offers and secure the best terms.
Moving quickly is often advantageous, especially when business opportunities depend on having the right equipment available now rather than later.
For many businesses, leveraging equipment as collateral is one of the most accessible, affordable, and strategic ways to secure funding. An equipment financing loan offers competitive rates, flexible terms, and approval options that other financing products can’t match. Whether you’re expanding your operations, upgrading outdated machinery, or seeking cash flow relief, using equipment as collateral can help you grow with confidence and financial stability.
Disclaimer:
The information provided in this article is for general educational purposes only and is not financial, legal, or tax advice. Funding terms, qualifications, and product availability may vary and are subject to change without notice. Crestmont Capital does not guarantee approval, rates, or specific outcomes. For personalized information about your business funding options, contact our team directly.