Lenders offer equipment financing to help you acquire or upgrade machinery. Startups and Businesses with bad credit may also find options for financing.
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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
With a required annual revenue of $250,000 to be eligible, National Funding could be a good fit for high revenue businesses looking for equipment loans. You can finance new or used equipment or secure a competitive lease contract with its Lowest Payment Guarantee program. Their minimum credit score is 600, but a representative says the lender places more emphasis on time on business.National Funding also focuses on providing business loans for minorities, business loans for women, and veteran-owned businesses looking to secure financing.
Commercial Fleet Financing: Best equipment loans for commercial vehicles
Commercial Fleet Financing (CFF) specializes in commercial transportation equipment like trucks and trailers. Since its opening in 1995, CFF has funded over $1 billion to business owners nationwide.The approval process takes around two hours, with time to funding typically within 24 hours. However, CFF doesn’t disclose interest rates in advance, making it hard to compare against other small business lenders.
Taycor Financial: Best equipment loans for startups
Taycor Financial is a great option for a startup business loan. You can borrow up to $2 million with commercial equipment financing or explore other finance options, such as a business line of credit or working capital loan.Taycor Financial also has an equipment leasing program, which provides 100% financing with no down payment. However, interest rates can be steep.
First Citizens Bank (NC) Equipment Finance: Best equipment loans for fast funding
First Citizens Bank Equipment Finance takes the lead when it comes to fast funding. The initial online application only takes three minutes, with funds hitting your bank account as quickly as one business day after approval.In addition to heavy equipment financing, CIT offers franchise financing, working capital loans, SBA loans and commercial real estate loans.
Funding Circle: Best equipment loans for online term loan
Although Funding Circle doesn’t offer specific equipment loans, you can borrow up to $500,000 with their business term loan and use the funds for almost any business-related expense — including equipment repairs and purchases.In addition, a dedicated Account Manager will help guide you through the loan process from start to finish, ensuring you’re on the right track. However, you may need to provide collateral to secure a Funding Circle loan.
Bank of America: Best equipment loans for traditional bank
Bank of America offers various financial services, including business lending, business bank accounts, credit cards and merchant services. With 6,269 branches nationwide, Bank of America can be an ideal choice if you prefer in-person support at any stage of your business’s financial journey.To qualify, you need a minimum of $250,000 in annual revenue. You can also take advantage of extra perks with Bank of America’s Preferred Rewards for Business program.
Fora Financial: Best equipment loans for bad credit
Fora Financial offers small business loans between $5,000 and $1.5 million for any business expense — including equipment repairs, upgrades or leases. Fora Financial is one of our top picks for a bad credit business loan since its credit score requirement goes as low as 500, plus you don’t need to provide collateral. However, you need a minimum of $15,000 monthly revenue to qualify.If you want a speedy application process, Fora Financial claims you can get funded within 24 to 72 hours. While other lenders may charge prepayment penalties for business loans, Fora Financial offers a prepayment discount.
SBA 7(a) loan: Best for SBA loan for equipment financing
If you need to purchase or upgrade equipment to keep your business running, an SBA 7(a) loan provides the most significant amount — up to $5 million. An SBA 504/CDC loan is another option when looking for a heavy equipment loan. You can use the funds for general equipment and inventory, like computers, restaurant appliances, office furniture, technology systems, medical equipment and more.The Small Business Administration guarantees a portion of every SBA loan, allowing lenders to offer affordable rates to small business owners. The SBA recommends a FICO Score of 680 or higher to improve your chances of approval.
Equipment financing is a business term loan that enables companies to purchase equipment needed to operate their businesses — such as computers, vehicles or large machinery. An equipment loan is a type of asset-based financing, meaning the equipment acts as collateral in a secured business loan.
Rates and terms
Equipment loans for small businesses typically come with a fixed term — generally around five years, though specific lenders may offer shorter or longer timeframes.You’ll need to make regular payments on an equipment loan, usually in monthly installments of the principal plus the business loan interest rate, which can be as high as 28%. Some lenders require a down payment, which can help reduce your balance and even shorten the loan’s term.
You have several options when looking to finance equipment for your business.
Alternative lenders
Online lenders that provide alternative business loans utilize a streamlined process to analyze your business’s revenue, assets and general creditworthiness. Because of this, they may offer more lenient credit requirements, higher loan amounts and faster funding times. However, these loans tend to come with shorter terms and higher interest rates.
Banks and credit unions
Most traditional financial institutions offer equipment loans with favorable terms and rates but generally have stricter Why we like it. For example, you’ll need an excellent credit score, several years in business and a high annual revenue to qualify.
The U.S. Small Business Administration
Another option is to work with an SBA lender. An SBA loan generally has longer terms along with capped interest rates. Furthermore, you can use existing equipment plus the equipment you want to purchase as collateral to secure the loan. However, you typically need a solid credit score and a reliable income stream to qualify.
Equipment financing vs. equipment leasing
You can rent equipment with no or low upfront costs with equipment leasing. While leasing seems cheaper than an equipment loan since you don’t need to provide a down payment, you’ll likely pay more in the long run.
Also, you won’t be able to claim depreciation deductions with an equipment lease since you won’t officially own the equipment.
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
Equipment financing
Equipment leasing
Payment terms
Equipment loans cover the costs of equipment in exchange for periodic repayments over a specified term
The borrower makes periodic payments to rent equipment over a specified term
A capital lease allows you to rent equipment with the option to buy at the end of the lease term. On the downside, you can’t cancel a capital lease.
An operating lease is similar to a conventional rental agreement: You make regular payments but will never own the equipment. However, as the lessee, you can usually cancel the lease with prior notice.
Is it better to take out a loan to buy equipment?
If you need equipment for a short time and can’t afford the down payment, then equipment leasing might be a better option than taking out an equipment loan. In addition, leasing equipment lowers your risk of owning obsolete equipment if you’re in an industry where equipment changes or updates often, like an IT firm.
Taking out an equipment loan might be more expensive upfront because of the down payment. However, if the equipment has a long lifespan, then the overall cost of an equipment loan could be worth the initial investment.
Pros and cons of equipment financing
Pros
Fast funding: Online lenders offer fast equipment loans (typically within two business days).
Interest rate: Since equipment loans are secure, you’ll benefit from comparatively lower business loan interest rates.
Monthly payments: You can spread your cost over time with fixed monthly payments.
More cash flow: Equipment loans allow you to have more cash on hand.
Cons
Down payments: Equipment loans may require large down payments (typically 20%).
Credit score requirements: Minimum credit score requirements are generally in the 600s, although some go as low as 500.
Extends equipment lifetime: Loan terms increase the life of the equipment, which may become obsolete.
Lien or personal guarantee: With equipment loans, lenders typically require a lien and personal guarantee in addition to collateral.
How to qualify for equipment financing
To qualify for equipment financing, lenders will typically look at the following:
Personal credit score: Lenders will examine your personal credit score to determine eligibility. Many online lenders, including Commercial Fleet Financing, have minimum credit score requirements in the 600s.
Time in business: Some lenders have a minimum time in business requirement of two years, but certain online lenders only require six months or less in operation. For example, Taycor Financial has no minimum time in business requirements.
Annual revenue: Traditional banks may require minimum annual revenues, which vary greatly. For example, Funding Circle requires $50,000, whereas Bank of America requires $250,000.
To appear on our list of best equipment financing companies, lenders needed to meet the following criteria:
Either a minimum credit score requirement lower than 680 or no credit score requirement
Flexible repayment terms with no prepayment penalties
Funds available within 10 days or less of approval
Frequently asked questions
An equipment loan is designed to help you purchase or repair machinery and equipment for your business. Additionally, you can use other types of small business loans to finance equipment.
Equipment loans generally require regular payments with accruing interest. Payment plans vary by lender and loan type but can include daily, weekly, monthly, seasonal or deferred options.
Yes, some equipment lenders only require six months in business to qualify for equipment financing — and some don’t have any time-in-business requirements. This allows startups to finance any necessary equipment within their first year of business.
While some lenders accept minimum credit scores as low as 500, having a credit score of 670 or higher could help you secure lower interest rates and better terms.
Unfortunately, no-credit-check business loans aren’t an option. However, because the equipment acts as collateral to secure the loan, it’s generally easier to qualify for an equipment loan versus a traditional business loan, as the latter may have stricter business lending requirements. Because of this, borrowers with poor or bad credit may have better luck applying for small business equipment loans.
Equipment financing rates typically range from 3.49% to 28% or higher. Your specific interest rate for an equipment loan will depend on several factors, such as credit score, annual revenue, time in business and your type of industry.
However, every lender differs and will weigh your criteria differently.
Some loans for equipment have generous term lengths of up to ten years. Others may be as short as six months. Just keep in mind that a longer loan term will mean paying more interest over the life of the loan.