Lowest cost
Equipment financing
Equipment financing uses the equipment itself as collateral, which is why it prices better than anything else in this channel. If the money you need has a serial number attached — a truck, a lift, a walk-in, a scanner, a laser — this should be the first structure you look at. It takes a few days longer than an advance and usually costs a fraction as much.
- Amount
- Tied to equipment value
- Term
- 2 – 7 years typical
- Payment
- Monthly
- Collateral
- The equipment itself
- Decision
- 2 – 5 business days
- Down payment
- 0 – 20% depending on file
How it works
The funder pays the vendor. You repay monthly over a term matched roughly to the useful life of the equipment. A lien is filed against the equipment, so if you default the funder can recover the asset.
That security is the whole reason the pricing is different. An unsecured advance is betting on your revenue; equipment financing is backed by something with a resale market.
Financing versus leasing
Financing means you own the equipment at the end. Leasing means you use it and either return it, renew, or buy it out. Leasing can be cheaper monthly and can have different tax treatment, but you may own nothing at the end.
For equipment that holds value and that you will keep — a lift, a walk-in, a truck — financing usually wins. For equipment that becomes obsolete quickly, leasing sometimes makes more sense. Talk to your accountant about the tax side before deciding; that part is genuinely situation-specific.
Who it fits — and who it doesn't
Good fit when
- The money is for a specific, identifiable piece of equipment
- You have a vendor quote or invoice in hand
- The equipment holds resale value
- You can wait a few business days for a better rate
- The equipment will generate revenue over several years
Wrong tool when
- The money is for payroll, inventory or general operating costs
- You need it today
- Private-party used equipment with no clear valuation or title
- Highly specialised equipment with no resale market
The cost, plainly
Meaningfully cheaper than unsecured working capital, because there is collateral behind it. Rates are usually expressed as actual interest rates rather than factor rates, terms run in years rather than months, and payments are monthly rather than daily.
The things to check: whether a down payment is required, whether there is a buyout at the end and at what price, and whether the term matches the equipment's useful life. Financing a five-year machine over seven years means paying for it after it stops earning.
Rates and terms are set by the funding partner and vary based on your business. Nothing here is an offer of credit.
Businesses that use it
Straight answers
Can I finance used equipment?
Often, though terms are shorter and the funder will want a clear valuation. Equipment from an established dealer is straightforward. Private-party sales are the hardest case because condition and title are hard to verify independently.
Do I need a down payment?
It depends on the file and the equipment. Strong files on equipment with good resale value frequently get 100% financing. Weaker credit, older equipment or a specialised asset usually means 10% to 20% down.
How long does approval take compared to an advance?
A few business days rather than same day. The extra time goes into verifying the vendor, the equipment and the valuation. For anything with a serial number, that trade is almost always worth it.
Should I finance or lease?
Financing if you will keep the equipment and it holds value. Leasing if it becomes obsolete quickly or if the tax treatment suits your situation better. That second part depends on your specific circumstances — ask your accountant rather than the salesperson.