Equipment financing for your next big thing.

Equipment financing is a financial solution that helps your business acquire the machinery, vehicles, or other equipment it needs to operate. Instead of paying the full cost upfront, you’re spreading the cost over time, making it easier on your budget.

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.

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.

There are multiple structures available for equipment leasing including:

• Equipment Financing Agreement: Fixed payments are made over a set term after which you own the equipment in full.
• Fair Market Value: Fixed payments are made over a set term after which you can return the equipment, renew the lease, or purchase the equipment at fair market value.
• Purchase Upon Termination: Require the customer to purchase the equipment at the end of the lease term at a certain percentage of the original purchase price.

Equipment financing is a type of funding that gives you full ownership of the equipment. You’ll pay interest in addition to the principal balance, usually as a fixed monthly payment. But once your financing term is over, you own the equipment free and clear. Choosing the best equipment financing option depends on the type of equipment you need, how long you expect to need it, and how frequently you plan to update those assets. You can also use an equipment loan calculator to help you compare costs.

One of the biggest advantages of equipment financing is that it helps you grow your business with new equipment while spreading out the costs over time. Additionally, you often don’t need any collateral besides the asset itself. By integrating new equipment into your business, you could increase revenue and reach with your services.

A drawback is that funds can only be used for equipment and sometimes soft costs associated with the purchase, such as taxes or delivery fees. Other types of financing, such as a small business loan or business line of credit, have minimal restrictions on how you use the funding proceeds.

Pros of equipment financing

• Scale your business
• Spread out large capital costs
• No additional collateral needed
• Equipment purchases may be eligible for a tax deduction

Cons of equipment financing

• Use restricted to equipment
• Equipment becomes outdated and needs to be replaced

Qualifying for equipment financing can actually be easier than other business financing options because the lender uses the equipment as collateral.

Equipment financing helps you scale your business without covering the full cost through your own cash reserves. Plus, the eligibility requirements are easier to qualify for since there’s physical collateral attached to the funding.

It depends on your lender and funding/financing terms. However, most equipment finance terms range between one to 10 years in length.

To get equipment financing, you’ll typically need to meet the following requirements:

• $50,000 or more in annual revenue
• Credit score of 520 or higher
• Varying time in business requirements: Some equipment financing companies will work with startups from day one. Others will want to see a minimum time in business of two years.

And don’t worry if you don’t meet all of these requirements. Exact qualifications vary by lender and equipment type.

Yes, some equipment financing companies we partner with will work with startups from day one in business. Bear in mind that the financing company may place more stringent requirements on your personal credit score or only offer lower financing amounts if you have been in business less than one year.