What is the difference between equipment financing and equipment leasing?

The largest difference between an equipment lease and an equipment loan is that an equipment lease has a fixed term, in which you pay a monthly rental fee, with no prepay benefits, and an equipment loan can be paid off at any time, with any remaining interest wiped clean.

Can I use Section 179 Tax Deduction for equipment financing?

Yes, you can use the Section 179 tax deduction for equipment financing for your business. This write-off allows you to deduct the entire purchase price of the equipment you purchased in the qualifying year. A good accountant will ensure that all your expenses are accounted for and deducted correctly.

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Equipment Financing Overview

Average Loan Amount

$10K - $2M

&

Approved within?

Less Than

48 hours

What is Equipment Financing?

Equipment financing is a tailored financial solution that allows businesses to purchase essential new or used equipment without the burden of heavy upfront costs. This specialized form of business lending is crucial for companies looking to enhance their operational capacity or update their technology and machinery.

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Farming Equipment

Medical Equipment

Logistics Equipment

Construction Equipment

Commercial Vehicles

Restaurant Equipment

How do I Apply for Equipment Financing?

STEP 1

Get Pre-qualified

To get pre-qualified for equipment financing, click the "Apply Now" button and enter general information about your business.

STEP 2

Await Approval

Once processed, one of our Business Consultants will contact you to discuss the available options for which you qualify.

STEP 3

Receive Funding

Once approved and the offer is accepted, the funds will be directly deposited into your bank account, allowing you immediate access to capital

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Documentation and Qualifications needed for Equipment Financing

Documentation Needed:

Application
3 Months of Business Bank Statements
Information Detailing Equipment (Year, Make, VIN, Miles, Etc.)

Qualifications:

600+ Credit Score
$100,000 in annual revenue
12+ months in business

When seeking equipment financing, businesses must be prepared to meet specific documentation and qualification requirements. The application process starts with a straightforward application form, which gathers basic information about the company. Along with the application, lenders typically require three months of business bank statements to assess the financial stability and cash flow of the business. Additionally, detailed information about the equipment to be financed is essential. This includes the year, make, model, Vehicle Identification Number (VIN), mileage, and other relevant details that help the lender understand the value and condition of the equipment.

In terms of qualifications, lenders look for businesses with a solid financial foundation. A minimum credit score of 600 is often required, reflecting a reasonable level of creditworthiness. Businesses should also demonstrate a minimum of $100,000 in annual revenue, ensuring they have the financial capacity to meet repayment terms. Furthermore, it is typical for lenders to require that a business has been operational for at least 12 months, which helps in assessing the historical performance and viability of the business.

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Frequently asked questions

Getting an equipment lease or financing can help you fund a variety of business needs. This financing solution can be used for things like:

Vehicles
Heavy machinery
Restaurant appliances
Medical equipment
Office furniture
Technology systems

Regardless of your company’s industry, exploring your equipment finance options could help the success of your business. Plus, equipment lenders usually report to business credit. The more business credit you build the greater opportunity you have in the future to receive the best rates and terms for the money you receive and increase your business’s ability to receive future loans without a personal guarantee.

An equipment loan could make sense for a small business, depending on the nature of the equipment, its useful life, and whether or not the intention is to keep it as a long-term asset.

Because in some situations, a lease can cost more than a loan, many businesses choose to finance the purchase of equipment rather than lease it. Additionally, the entire lease payment amount may not be tax-deductible if your lease terms include any provision allowing you to own the equipment at the end of the lease. You’ll need to consult with your accountant or financial advisor to see if this is the case for your situation.

Equipment financing is specifically designed for acquiring business equipment, covering a wide range of assets such as office technology, furniture, industrial machinery, and commercial vehicles. Many financing options provide up to 100% of the equipment’s cost, though some may require a down payment, helping businesses manage cash flow more effectively. The financed equipment itself usually serves as collateral, minimizing risk for lenders and simplifying the approval process. Additionally, equipment financing offers tax benefits, as payments may be deductible as business expenses, and businesses can take advantage of equipment depreciation for further financial savings.

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Equipment Financing: Pro Vs Cons

Equipment Financing advantages

Equipment financing allows businesses to retain their cash for other uses, such as operations, marketing, or further expansion, by not requiring a large upfront payment.

Businesses can acquire essential equipment immediately, even if they don't have the funds to purchase it outright, enabling them to start generating revenue with the equipment without delay.

The interest paid on the equipment financing can often be deducted from your tax liabilities. Additionally, businesses might benefit from Section 179 or bonus depreciation tax deductions when they finance equipment.

For technology or machinery that becomes outdated quickly, financing can be a strategic move that allows businesses to upgrade to newer models more frequently.

Equipment Financing disadvantages

As with any form of financing, there are interest and possibly other fees involved, which increase the overall cost of the equipment over time.

The equipment serves as collateral for the loan. If the business fails to make payments, it risks losing the equipment, which can be critical to its operations.

Borrowers may encounter various fees with SBA loans, such as guarantee fees and packaging fees, and in some cases, prepayment penalties.

The financing agreement locks a business into a contract for the duration of the loan, which can be several years, during which the business's needs might change.

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