Equipment financing

Equipment Financing

Buy or lease what the business runs on, and let the equipment secure it.

Amount: $20,000 – $1,000,000
Term: 2 – 7 years
Down payment: 0% – 20%
Approval: 24 – 72 hours

A chauffeur in white gloves beside the open door of the car he drives.

Equipment financing

What it is, and who it suits

Equipment financing pays for the machine and uses the machine as the security, which is why it reaches the highest amount of the six — up to $1,000,000 — over the longest term, two to seven years. The cash in the bank stays for running the business.

Almost anything a business runs on qualifies: CNC machines and production lines, trucks, trailers and forklifts, servers and software, ovens and refrigeration, medical and dental equipment, heavy plant. It asks the most of any program — two years trading, a credit score of 650, $100,000 in revenue, a profitable business — and a quote or invoice for the equipment itself.

What it is for

Six things equipment financing pays for

Manufacturing: CNC machines, production lines, industrial plant.
Transport and fleet: Vans, trucks, trailers and forklifts.
Technology: Computers, servers and the software on them.
Food service: Commercial kitchens, ovens and refrigeration.
Healthcare: Medical devices and dental chairs.
Construction: Heavy machinery and specialist tools.

The bar

What a lender will look for

At least 2 years in business
Personal credit score of 650 or higher
At least $100,000 in annual revenue
A profitable business
A quote or appraisal for the equipment

A minimum is where an assessment starts, not a promise of an offer.

And what it will ask to see

Three to six months of bank statements
Two years of tax returns
The equipment quote or invoice
The business's financial statements
A personal financial statement

Own it or lease it

The same machine, two ways to pay for it.

Equipment is the one program where the choice is not only how much and how long. A loan leaves the business owning the thing; a lease leaves it using the thing. Which is right depends on how long the equipment earns its keep.

A metalworker at his bench among machines he has owned for years.

Path 1

A purchase loan

Borrow the price, repay it over two to seven years, and the equipment is the business's once the last payment clears.

The business owns it outright at the end
It sits on the books as an asset
Depreciation, and Section 179 where it applies
No mileage or hours limit on how it is used
It can be sold on when it is done

Best for Kit that works for many years: an oven, a lathe, a van, a chair in a dental surgery.

A hotel room whose furniture and fittings are refreshed on a cycle.

Path 2

An equipment lease

Pay for the use of it over an agreed period, and hand it back, renew or upgrade when the period runs out.

Lower monthly payments than buying
Move to the newer model when the term ends
Up to 100% of the cost can be financed
Payments may be deductible
Maintenance can be written into the agreement

Best for Kit that dates quickly: computers, point-of-sale systems, anything with a newer version every few years.

Down payment0% to 20%

What a lender asks up front on equipment financing, depending on the machine, the business and whether it is bought or leased. Some leases are written with nothing down.

Tax treatment depends on the business and the year; an accountant, not this page, is the one to ask.

The application