Equipment
Equipment financing
Equipment financing pays for the machine and uses the machine as the security. Because there is a real asset behind it, these are often easier to arrange than a general business loan — and the paperwork is usually shorter.
Step 1 of 5
Finance equipment
What are you financing?
Tell us what you need and roughly what it costs.
How equipment financing works
The lender funds the purchase and takes a security interest in the equipment itself. If the loan goes unpaid, the equipment is what they look to first. That changes the underwriting: the asset carries part of the risk, so the business does not have to carry all of it.
There are two broad shapes. A finance agreement buys the equipment — you own it at the end. A lease rents it, sometimes with an option to buy at the close of the term. Which is better depends on how long you will keep the machine and how you and your accountant want it treated.
New and used are both financeable, but they are not the same file. Age, hours, make and resale market all matter, because the lender is lending against something they may one day have to sell.
What lenders look at
The equipment itself
Make, model, age, hours and how easily it resells. The stronger the resale market, the easier the file.
New or used
Both are financed. Used equipment is underwritten more closely — its age and condition carry more weight.
Who you are buying from
A dealer and a private seller are handled differently. Say which at the start; it affects documents and timing.
Time in business
It matters, but often less than on a general business loan, because the asset is doing some of the work.
Revenue
Enough consistent income to carry the payment. Bank statements are usually the evidence.
Credit
Personal and business. It tends to move the terms rather than decide the outcome outright.
Your contribution
Some files fund the whole purchase; others ask for a share from you, often depending on the equipment and your history.
Industry experience
Buying your first machine in a trade you have worked in for a decade reads differently from a first venture.
Questions we get asked
Can I finance used equipment?
Yes, commonly. Age, hours and condition are looked at more closely, and some lenders set limits on how old an item they will fund.
Can I buy from a private seller?
Many lenders allow it, with extra verification — the title, the seller and the condition. Tell us at the start, because it affects who we approach.
Lease or finance — which is better?
Finance if you will keep it for the long haul and want to own it. Lease if you replace equipment regularly or your accountant prefers that treatment. It is a decision worth having with your accountant.
Is the equipment the only security?
Usually the equipment plus a personal guarantee. Some larger files ask for more.
How fast can this move?
Equipment files are often shorter than general business loans because the asset is identified. We will tell you what the specific lender's process looks like rather than quote a number here.
Can a newer business finance equipment?
It is frequently more achievable than a general business loan, for exactly the reason above — the machine carries part of the risk.
What about soft costs like delivery and installation?
Some lenders include them, some do not. Ask before you sign, so the invoice and the funding match.
Who this page is for
- Contractors buying machines, attachments or tools.
- Restaurants fitting out a kitchen.
- Medical and dental practices buying equipment.
- Manufacturers and shops adding capacity.
- Any business that would rather not pay cash for a machine.
What gets financed this way
- Construction and heavy equipment.
- Kitchen and restaurant equipment.
- Medical, dental and veterinary equipment.
- Manufacturing and machine-shop equipment.
- Technology, point of sale and office systems.
- HVAC, refrigeration and specialty equipment.
The words you will hear, in plain English
- Equipment finance agreement
- A loan to buy equipment, secured by that equipment. You own it at the end.
- Capital lease
- A lease structured so you end up owning the item, often for a nominal sum. It behaves much like financing it.
- Operating lease
- Closer to a rental. You use it for a term and hand it back or renew. Common where equipment dates quickly.
- Residual
- The value assumed at the end of a lease. It affects the payment and what it costs to buy the item outright.
- Soft costs
- Delivery, installation, training and tax. Some lenders finance them; some fund only the equipment invoice.
- Title and lien
- Who is named as owner, and the lender's registered claim. On vehicles especially, get this right at purchase.
- Private-party purchase
- Buying from an individual rather than a dealer. Financeable at many lenders with extra verification.
- Section 179
- A US tax provision often mentioned with equipment purchases. It is your accountant's question, not ours — we do not give tax advice.
How these are usually put together
Illustrative structures, to show how equipment files are assembled and what a lender weighs. Not offers, not quotes, and not terms available to anyone in particular — products, eligibility and figures vary by lender and by business.
A machine from a dealer
A contractor buying an excavator from a dealership. The invoice identifies the asset, the lender funds it and registers its interest, and the machine secures the loan.
Used, bought privately
The same machine from another contractor. Financeable at many lenders, with more verification of title and condition, and fewer lenders to choose from.
Lease where kit dates fast
A practice replacing imaging or computing equipment every few years. A lease can suit that cycle better than owning something that will be obsolete.
Equipment instead of a general loan
A newer business that would struggle to get an unsecured business loan can often still finance a specific machine, because the asset carries part of the risk.
What to prepare
Send the equipment details first. An identified asset is what makes these files shorter than general business lending.
- The invoice or quote for the equipment
- Make, model, year and hours or mileage
- Seller details — dealer or private party
- Recent business bank statements
- A completed application
- Government-issued ID for each owner
- Entity papers: articles, operating agreement, EIN letter
- Proof of insurance, at or before funding
From application to delivery
- 1
Tell us what you are buying
The machine, the price, the seller and the condition. That is most of the file.
- 2
Finance or lease
We set out how each is treated so you can take that question to your accountant before deciding.
- 3
Application and documents
The invoice, bank statements and entity papers. Short by business-lending standards.
- 4
Underwriting
The lender reviews the asset, the business and the guarantor.
- 5
Documentation
Agreements signed, insurance confirmed, and the lender's interest registered.
- 6
The seller is paid
Funding usually goes to the seller rather than to you, and the equipment is released.
What goes wrong
Paying a deposit before financing is arranged
Deposits are hard to recover if the file does not complete. Get the financing sorted first.
Not mentioning a private seller early
It changes which lenders will look at it and what verification is needed. Late disclosure costs days.
Forgetting soft costs
Delivery, installation and tax can be a real share of the bill. Confirm what is included before signing.
Buying more machine than the work supports
The payment runs whether the machine does or not. Size it to the contracts you actually have.
Insurance arranged late
Funding waits for proof of insurance more often than people expect. Line it up in advance.
Treating lease and finance as the same thing
They differ in ownership and in how your accountant treats them. Ask before you choose.
Related financing
- Vehicle and fleet financing →Trucks, vans and fleets — a different file from a machine.
- Business loans →When the cost is not a single identifiable asset.
- Business line of credit →For the needs that come and go around the purchase.
- SBA financing →Some SBA programmes fund long-life equipment.
- All equipment and fleet →Start from the question rather than the product.
Tell us about the equipment
What you are buying, from whom, and roughly what the business turns over.
Step 1 of 5
Finance equipment
What are you financing?
Tell us what you need and roughly what it costs.
This is not an offer and not an approval. Terms are set by a lender, in writing, after underwriting, and vary by lender, by property and by file.
See your equipment financing options
Send us the quote or the listing and a little about the business. Equipment files are usually the shortest ones we handle.