Equipment financing for small businesses
The lender pays the vendor and you repay over a set term, with the equipment itself as collateral. Because the equipment secures it, this is often the most realistic financing for a newer business.
At a glance
- Typical amount
- $5,000 to $5 million, secured by the equipment
- Time to funds
- Often 1–2 weeks
- What lenders look at
- The equipment quote, credit and time in business. Some lenders work with newer businesses.
- How it's repaid
- Fixed monthly payments over a term tied to the equipment's useful life. The lender holds a lien on the equipment until it's paid off.
Ranges vary by lender and are not offers.
When it fits
- You're buying a specific machine, vehicle or fit-out: an oven, a walk-in cooler, a van, a lift.
- You have a vendor quote and want to keep cash in the bank.
- The equipment will last at least as long as the loan.
- You've been in business a short time. Some lenders work with businesses under a year old.
When it doesn't
- You need cash for payroll, inventory or rent. Compare a line of credit instead.
- The equipment will be out of date before the loan ends. A lease may suit it better.
- You're buying a building along with equipment. An SBA 504 loan may cover both; see SBA 7(a) loans for how SBA programs compare.
Loan or lease
| Feature | Equipment loan | Equipment lease |
|---|---|---|
| Who owns it | You, with a lien until it's paid off | The leasing company, unless you buy it at the end |
| Upfront cash | Often a down payment | Often the first and last payment |
| At the end | You own it outright | Return, renew or buy, depending on the lease |
Equipment: lease or buy? walks through the total-cost comparison and where Section 179 fits.
What it costs
Cost depends on your credit, time in business, the equipment and how long it holds its value. Many lenders ask for a down payment, and some charge documentation or origination fees. Compare quotes by the total you'll pay, including fees and any end-of-lease purchase price, not by the monthly payment.
The payment calculator shows the monthly payment and total interest for a fixed-rate loan at the rate you're quoted. For tax treatment, talk to your tax preparer.
What to have ready
- Business bank statements. The last three to six months. Nearly every lender asks for these first.
- Profit and loss statement and balance sheet. Year to date is usually enough. Your bookkeeping software can export both.
- Formation documents and EIN. Articles of organization or incorporation, plus your IRS EIN letter.
- Business licenses. Your state or city operating license, and any trade or health permits your work needs.
- ID for each owner with 20% or more. A driver's license or passport. Lenders verify everyone with a significant stake.
- Equipment quote. For equipment financing: the vendor's quote or purchase agreement.
Related guides
Sources
- IRS: About Form 4562, depreciation and amortization
- IRS Publication 946, how to depreciate property
- SBA: 504 loans
Last reviewed October 14, 2026.
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