Best Equipment Financing Options of 2024

Can I finance both new and used equipment?

Sometimes it makes sense to find finance for used equipment. So long as the equipment is in good repair and not obsolescent the amount of finance you need will be dramatically reduced. In addition, the balance between usage and cost means that the returns you get will be proportionately greater.

There are two main types of equipment leases you should consider:

• An operating lease – the cheaper option.
• A capital lease – you get to buy the equipment outright at the end of the lease.

Alternatively, you may find a business term loan is a better option for you in these circumstances.

How long can equipment be financed?

The period an equipment loan or lease lasts depends on several factors: the capital involved, its likely depreciation, and how long the lender wants to supply the money. Periods of one to seven years are common but it really depends on the equipment in question. High tech kit needs updating often while other equipment may hold its value for much longer.

How do loan repayments work when financing equipment?

An equipment loan may be like any other sort of loan. The lender agrees to give you a sum of money which you pay back plus interest at regular intervals, usually monthly, for an agreed period.

With a lease agreement, again the cost is spread over an agreed period, but at the end, you can either walk away, become the owner of the equipment or agree to pay the residual costs and own the equipment outright. Each agreement may be different so make sure you understand exactly what is involved.

How do you get equipment financing?

There are a few different ways to get equipment financing. They are:

• Attain financing through the manufacturer of the equipment (this can be the easiest way to attain funding in some circumstances, but also may be the most expensive)
• Work with an online lender or bank to supply the equipment loan for you - some may pay for the equipment directly
• Choose a term loan through an online lender and use the money to purchase the equipment you need (this will be unsecured, however)
• Consider equipment leasing - this is the best option if you’ve not been in business long enough to be eligible for other forms of financing.

Once you’ve chosen the route you want to take, compare rates and find the best lender for you. You’ll then need to gather the right documentation (such as personal and business tax returns, profit and loss statements, and similar) to supply with your application. Once approved, you’ll either get the equipment you need or be given the funds to purchase it.

How to qualify for equipment financing

To qualify for equipment financing, you’ll generally need:

• To have been in business for 12 months (2+ years is best)
• Have $50,000 or more in yearly revenue
• A personal credit score of 650 or more

These aren’t hard and fast rules, and you should research any lender you’re considering working with to find out what they require before you apply. In many cases, good cash flow and being able to prove your rate of growth will trump a poor personal credit score.

Find and compare the best equipment financing rates

Once you’ve decided that equipment financing is the right form of financing for you, it’s time to start comparing rates. The key to making your equipment financing affordable is in getting a low rate of interest, so take your time and browse through the loans in our comparison tables to find the one that's right for you.

Once you’ve found one that suits your needs, it’s time to apply. Gather the information you need and start your application - in many cases, you’ll have the equipment you need to grow your business within a few weeks of being accepted.