Equipment financing
How does equipment financing work?
Equipment financing is funding used to acquire business equipment — trucks, trailers, machinery, vehicles or technology — where the equipment itself typically secures the financing.
Two common structures are equipment loans, where the business owns the asset from the start and builds equity as it pays down the loan, and equipment leases, where the provider owns the asset and the business pays to use it, sometimes with an option to purchase at the end of the term.
Providers generally weigh the type, age and useful life of the equipment alongside the business’s financials and time in business. New equipment, used equipment and private-party purchases are often treated differently — private-party deals in particular may require additional documentation or carry different terms than purchases from a dealer.
Down payment requirements, term length and total cost vary by provider, and by whether the equipment is considered essential, specialized or easily resold.
Commonly explored when
- Purchasing or replacing trucks, trailers or vehicles
- Adding production, shop or job-site equipment
- Preserving cash by financing rather than buying equipment outright