Every business relies on equipment to operate, whether it is a restaurant that needs a new commercial oven, a construction company that needs an excavator, or a medical practice that needs diagnostic machines. Equipment financing allows you to acquire the tools your business needs while preserving your working capital for day-to-day operations.
What Is Equipment Financing?
Equipment financing is a type of business loan used specifically to purchase or lease equipment. The equipment itself serves as collateral for the loan, which means you do not need to put up additional assets or personal guarantees in most cases. This structure makes equipment financing one of the most accessible forms of business credit, even for newer businesses or those with less-than-perfect credit.
Equipment Loan vs. Equipment Lease
There are two primary structures for equipment financing. With an equipment loan, you borrow a specific amount to purchase the equipment and own it outright once the loan is repaid. With an equipment lease, you make monthly payments to use the equipment for a set period, with an option to purchase it at the end of the lease term. Loans are better when you want ownership and the equipment has a long useful life. Leases are better for technology or equipment that becomes outdated quickly.
What Can Be Financed?
- Construction equipment (excavators, loaders, cranes)
- Commercial vehicles and trucks
- Restaurant and kitchen equipment
- Medical and dental equipment
- Manufacturing machinery (CNC machines, presses)
- Technology and IT infrastructure
- Agricultural equipment
- Salon and spa equipment
Typical Terms and Rates
Equipment financing terms typically range from 24 to 84 months, depending on the useful life of the equipment. Interest rates vary based on your credit profile, time in business, and the type of equipment, but generally range from 5% to 25%. Most lenders will finance up to 100% of the equipment cost for qualified borrowers, meaning you may not need a down payment at all.
Qualification Requirements
Because the equipment serves as collateral, qualification requirements are more flexible than unsecured loans. Most equipment lenders look for a minimum credit score of 600, at least six months in business, a valid equipment invoice or quote from the vendor, and proof of business revenue through bank statements. Some lenders offer programs specifically for startups with no time-in-business requirement.
Tax Benefits of Equipment Financing
One of the most overlooked advantages of equipment financing is the tax benefit. Under Section 179 of the IRS tax code, businesses can deduct the full purchase price of qualifying equipment in the year it is purchased, rather than depreciating it over several years. This can result in significant tax savings, especially for larger purchases. Always consult with your accountant to understand how this applies to your specific situation.
Get Your Equipment Financed
Slate Financial works with equipment lenders who specialize in fast approvals and competitive rates. Whether you need $10,000 for a used vehicle or $5 million for industrial machinery, we can match you with the right financing solution.
Apply for Equipment Financing and get approved in as little as 24 hours.
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Slate Financial Team
Founder & CEO, Slate Financial
David R. Bizousky is a financial services entrepreneur and the founder of Slate Financial, a leading alternative lending platform that has funded over $2.5 billion for 10,000+ businesses across all 50 states.