Equipment Financing 101

Equipment Financing 101

Equipment financing is one of the most common commercial loan products — and one of the easiest to qualify for. The equipment itself serves as collateral, which reduces risk for lenders.

How It Works

You borrow money specifically to purchase business equipment. The equipment is the primary collateral — if you default, the lender can repossess it.

Key Terms

• Loan amounts: Typically $25,000 to $5,000,000
• Terms: 3-7 years typically
• Down payment: Usually 10-20%
• Rates: Based on credit profile, equipment type, and loan amount

SBA Equipment Loans

SBA 7(a) loans are commonly used for equipment purchases. The SBA guarantee (up to 85%) allows lenders to offer better rates and terms than conventional equipment loans.

What Equipment Qualifies?

• Manufacturing machinery
• Commercial vehicles
• Medical equipment
• Technology and IT infrastructure
• Restaurant and food service equipment
• Construction equipment

Fast Approvals

Equipment loans often approve faster than general commercial loans because the collateral is clear and well-defined. Turn times of 7-14 days are common.