two people using business equipment
Camino Financial
By: camino-financial
Read in 18 minutes

Equipment Financing Guide: All You Need To Know

When it comes to equipment financing, there are various options available. Understanding the different types is essential to making the best business decision.

This guide will provide an overview of the most common types of equipment financing and what you need to know before you borrow money.

So, whether you’re looking for new or used equipment, here’s everything you need to know about how to finance it.

Table of Contents
1. Top 7 equipment financing companies
2. What is equipment financing?
3. How much does equipment financing cost?
4. Equipment financing loans pros and cons
5. What kind of equipment can I finance?
6. When to get equipment financing
7. Where to get equipment financing
8. Should you get equipment loans?
9. How to choose equipment loans for business
10. Financing for equipment requirements
11. How to get business equipment loans
12. Other financing alternatives
13. Equipment leasing and finance: Main differences
14. FAQs

Top 7 Equipment Financing Companies

Below are the best equipment financing companies and what you need to know about them.

Camino Financial

Camino Financial offers some of the best small business loans on the market. With us, you can get microloans up to $35,000 and 24 to 36 months to pay back your loan.

Even though Camino Financial loans are not specifically for equipment financing, you can use them to purchase machinery, equipment or even vehicles.

Here are our minimal requirements:

  • Have an active and registered business for at least nine months
  • Generate sales of $30,000 a year
  • You can apply if you don’t have a previous credit history
  • If you don’t have an SSN, you can apply with an ITIN

Most of the time, we will tell you if you prequalify almost instantly after you submit your application. We also use bank-level apps, like Plaid, as part of our application process to keep your private information secure.

If you need capital to purchase equipment, we’re your best option:

Apply for a business loan today

Small Business Administration (SBA)

The Small Business Administration provides the SBA 7(a) and SBA 504 programs you can use as business loans for equipment.

  • The 7(a) program currently offers loans up to $5 million, with interest rates as low as 5.50%. The repayment terms of an SBA loan can be as long as 25 years, but most are around 10 years.
  • The 504 program has a higher loan limit of $5.5 million, but the interest rates are a little higher, around 10%.

The loan application process is lengthy, and their requirements are very stringent. You’ll also need a minimum credit score of at least 660.

CIT Bank

This bank offers equipment financing that can help your small business.

  • Starting as low as $5,000 and up to $500,000.
  • In addition, they offer repayment terms of six to 72 months.
  • Their interest rates start at 5.5%.

They require a minimum credit score of 620, though.

Credibility Capital

Credibility Capital provides low-cost financing solutions to small businesses with a proven track record.

Their installment loan is a good option for equipment financing.

  • From $50,000 up to $500,000
  • Terms up to 5 years
  • Fixed monthly payments
  • Interest rates start at 7.99%
  • One-time loan downpayment at close

Funding Circle

Funding Circle is the leading global small business loan provider. Their business equipment loans offer low monthly payments, no prepayment penalties, and expedited decisions.

  • Borrow $25,000-$500,000
  • Terms up to seven years
  • Requires a decent minimum credit score to qualify

National Funding

National Funding supports small businesses thanks to its flexible equipment financing. They offer dedicated equipment financing for small business owners.

  • Up to $150,000
  • Instead of interest rates, they have pay rates starting at 1.1
  • Terms of 2 to 5 years
  • Can deposit funds 24 hours after approval

On Deck

OnDeck offers term loans for business investments in equipment. Borrowers receive a lump sum of cash upfront with the option to reapply for extra cash down the line. They have stringent requirements.

  • Minimum of at least one year in business
  • FICO score above 600
  • $100,000+ in annual revenue
  • Business bank account
  • Up to 24 months to repay.

What Is Equipment Financing?

Business loans for equipment give companies a lump sum that allows them to buy machinery without spending their own money upfront.

Different lending companies will have different restrictions for:

  • how to use the heavy equipment financing
  • to whom they will lend the money

You can finance almost any type of machinery. That said, the most critical factor in determining what you can finance is the value and purpose of the equipment.

Talk to a lender about your specific needs and business to get an idea of what equipment you can finance with a business loan.

How does equipment financing work?

The repayment period for these term loans is 3 to 10 years, and the lender generally offers fixed interest rates for the life of the loan.

Lenders typically only finance up to a certain percentage of the equipment’s value (usually 80-90%).

Lenders may be more willing to finance certain types of equipment that are essential to your business.

Fortunately, the equipment often works as collateral for the loan itself, so you shouldn’t have to put other assets at risk to secure the loan.

How Much Does Equipment Financing Cost?

The cost of your equipment financing depends on a few factors, including:

  • The loan provider
  • Funded amount
  • Interest rate
  • Equipment loan term and length
  • Collateral
  • The kind of equipment borrowed

Certain equipment is more valuable and expensive and thus costs more.

Business equipment loan rates

The interest rates of equipment financing can range from 4% to more than 50%, depending on the type of loan and the lender.

They will depend on several factors (like your credit score).

Equipment Financing Loans Pros And Cons

Of course, there are some pros and cons to taking microloans for business equipment.


  • Updated or new equipment can help you increase your sales.
  • The business owner will own whatever equipment they’re financing (compared to leasing).
  • The interest paid is tax-deductible, and you can write off its depreciation.
  • Some lenders will help you build business credit. Make sure to ask your lender.


  • The equipment may become outdated when you pay off the equipment financing.
  • Some lenders may require a substantial down payment.
  • Small business owners may need a good business and personal credit score to qualify.

What Kind Of Equipment Can I Finance?

There are many different pieces of machinery that you can finance with business loans for equipment, including:

  • New or used equipment
  • Commercial vehicle financing (trucks, cars, vans, etc.)
  • Hardware and software for payment processing
  • Machinery and tools (freezers, ovens)
  • Office fixtures and furniture
  • Computers and computer software
  • Telephone systems
  • HVAC equipment or solar panels

When To Get Equipment Financing

There are a few key considerations that should be taken into account.

  • The first is whether or not the equipment you purchase is essential to your business operations and if it will positively impact your bottom line.
  • If the answer is yes, then financing may be an attractive option as it allows you to spread the cost of the equipment over time rather than investing in a large upfront cost.
  • Additionally, equipment financing may prove to be advantageous if it allows you to take advantage of tax benefits or access funds that would not have been accessible otherwise.
  • It’s also important to consider the repayment terms, as this will determine how much cash flow is available for other business expenses.
  • Ultimately, equipment financing can be a great way to get the essential resources necessary for your business operations without putting too much strain on your budget.
  • It’s important to do your research and ensure that you are getting the best terms available to make the most of this opportunity.
  • Finally, leasing may be an option worth exploring if you’re looking for a long-term solution, as it offers lower monthly payments and greater flexibility.
  • Leasing allows businesses to upgrade their equipment as technology advances and can be beneficial if long-term reliability is a priority.
  • It’s crucial to consider all the pros and cons of leasing and financing before making a decision, as well as consider any particular business needs that may factor into the choice.

Using a loan vs. paying upfront

When it comes to financing a purchase of equipment, there are two main options: securing a loan or paying upfront.

A key benefit to taking out a loan is that you may be able to get the equipment right away rather than having to wait until you have saved up enough money.

Loans also offer more flexibility in terms of repayment plans, allowing you to make payments over a longer period and potentially spread out the cost.

However, taking out a loan can be risky if it is not planned properly.

It is important to consider the amount you are borrowing, the repayment period, and any associated fees or interest rates.

Paying outright for equipment financing eliminates some of these risks, as no interest payments or repayment plans are involved.

This option may also be beneficial if you have saved up enough money to cover the cost, as it can potentially be a less expensive option.

Additionally, paying upfront for equipment financing allows you to avoid taking on additional debt and the responsibility of making regular payments.

Where To Get Equipment Financing

Equipment financing can come from a variety of sources, including banks, credit unions, online lenders, and more.

  • Banks and credit unions offer competitive rates and terms as well as the potential to build a business relationship with your local community.
  • Online lenders are often cheaper and easier to apply for but may have less flexible repayment options.

Comparing rates and terms from different lenders before committing to a loan is important.

Additionally, make sure that the equipment you are financing is worth the investment.

Knowing the potential return on investment (ROI) can help ensure you get your money’s worth in the long run.

Should You Get Equipment Loans?

If you need new or updated equipment but don’t have the upfront cash to cover the costs, equipment financing can help you finance the purchase. But there are a few key factors to consider:

First, consider whether you can afford the monthly payments on the loan.

Remember that equipment loans typically have higher interest rates than other types of loans.

Another factor to consider is if the equipment is essential to your business and will help you grow or improve your operations, then an equipment loan may be a good option.

However, if the equipment is not essential or will not significantly impact your business, you may want to consider other options.

Finally, consider the impact of taking out an equipment loan on your business’s cash flow.

Equipment loans can be a great way to finance necessary purchases, but you’ll want to ensure that the loan doesn’t put your business in a difficult financial situation.

If you have an urgent need for cash, emergency loans could be a better option for you.

    How To Choose Equipment Loans For Business

    Before you get business loans for equipment, you should take into consideration a few factors, like:

    • Down payment. Do you have enough money to afford this payment, which could be up to 20% of the purchase price?
    • Needs. Does your company need this equipment now, or can you wait to buy it until you save up the money to pay in cash?
    • Usable life. If the equipment’s expected lifespan is only equal to or less than the length of the equipment financing, other options might be more feasible.
    • Timeline. Some lenders fund loans rapidly, while others have a much more drawn-out process.

    Financing For Equipment Requirements

    Many lenders want the borrower to have a good credit score and credit history.

    They’d also need to meet a set number of years in business and minimum annual revenue.

    Most lenders will want to see bank statements to review your cash flow and will ask you to provide supporting documentation.

    Some may ask you to submit a business plan, which could include:

    • a detailed description of your business
    • its current state
    • the plans for the future
    • how the equipment you’re financing would help in that regard

    Fortunately, there are lenders with minimal requirements, like Camino Financial.

    You can use our loans for equipment finance purposes. Plus, we won’t ask for a business plan, and you can apply with an ITIN if you don’t have an SSN.

    Apply for a business loan today

    How To Get Business Equipment Loans

    Getting equipment financing is a straightforward process.

    Here are the steps you should take to do so:

    1. Research different pieces of equipment and hone in on 5 different options.
    2. Find a lender that fits your needs by analyzing multiple companies.
    3. Make sure the amount they offer matches the piece of machinery you chose.
    4. Fill out an online or in-person application. They might ask for details on the equipment.
    5. Provide any supporting documentation the lender requires.
    6. Offer proof of funds for the down payment (if required).
    7. If approved, you’ll receive funding directly into your bank account.

    Camino Financial has an easy application process. We won’t ask for a down payment or information about the equipment.

    Other Financing Alternatives

    Maybe you need equipment, but you’re still unsure if a loan is a correct option for you. Well, here are other alternatives:


    Grants are like loans because you receive a set amount of money upfront. The difference is that you don’t have to pay them back.

    Even though you might not find specific equipment grants, there are still many of them that you can use to buy machinery.

    There are many government and private grants out there. Visit to find one.


    Business loans for equipment aren’t the only option to help your company get the necessary equipment. You could opt for equipment leasing.

    You’ll rent the machinery with equipment leasing instead of purchasing it outright. It works a lot like leasing a personal vehicle.

    When the equipment lease term ends, you’ll give the equipment back to the company from whom you’ve leased it.

    You might have the option of purchasing that exact piece of equipment or starting a new lease.

    It might be beneficial if the equipment you need has a short lifespan or you only need it for a relatively short period.

    Leasing equipment could also save you money, as it can be cheaper on a short-term basis.

    Business Line Of Credit

    A business line of credit is a product that allows a company to borrow money up to a specific limit. The lender usually determines the limit.

    This type of financing can be helpful for companies that have seasonal fluctuations in their cash flow or need some extra working capital.

    Business lines of credit typically have lower interest rates than other types of loans.

    However, the lender usually charges an annual fee, and the company will need to maintain a good credit rating to keep the line of credit open.

    Business Credit Cards

    Business credit cards can help you manage your expenses, build your credit score, and earn rewards.

    Some business credit cards also offer perks like free employee cards, extended warranties, and purchase protection. These can be helpful if you often travel or make many business purchases.

    Most times, when it comes to buying equipment, short-term business loans are a better alternative to credit cards.

    When you’re ready to apply for a business credit card, be sure to compare different offers to find the one that’s right for you.

    Equipment Leasing And Financing: Main Differences

    Here are some key points to consider:

    • With a loan, you’ll own the equipment outright and can do with it as you please. With an equipment lease, you’ll be renting the equipment from the leasing company and have to abide by their rules.
    • Equipment loans usually have lower payments than leases, but you’ll ultimately pay more in the long run since you’ll pay the total price of the equipment.
    • Leases typically have shorter terms than loans, so you’ll have the opportunity to get new equipment more often.
    • If you decide to purchase the equipment at the end of a lease, you may have to pay a “buyout” fee.

    Ultimately, whether to finance your equipment with a loan or a lease comes down to what makes the most financial sense for your particular situation.

    Be sure to compare the total cost of ownership, payments, and terms before making a decision.

    Ready To Purchase The Equipment You Need?

    It can be pretty expensive to buy equipment and machinery. That’s why many small business owners look to business loans for equipment. These loan products can be a great way to get the equipment you need now while allowing you to pay for it later.

    There are various types of equipment loans, each with different timelines, interest rates, and fees.

    As a business owner, you want to do the right thing and make the best financial decision. The last thing you want is to get into debt, but the right loan can help your company continue growing.

    Fortunately, you can use Camino Financial loans for equipment financing.

    Request a quote for a business loan today so you can get the equipment your business needs.

    Apply for a business loan today


    What does an equipment loan cover?

    Equipment loans cover a percentage of your business’s total purchase price of a piece of machinery.

    How long can you finance equipment?

    The average repayment period is 1 to 25 years.

    Can I use Section 179 tax deduction for equipment financing?

    Yes, you can use Section 179 to take a tax deduction for business equipment financing.

    How do you qualify for equipment financing?

    Many lenders will look at your credit score, history, time in business, annual revenue, and official business plan.

    Does the SBA offer equipment loans?

    The SBA offers many loan programs. You can use most of them for equipment financing.

    Where to get equipment financing?

    You have several equipment financing options. Some are SBA, CFDI lenders, online lenders, a bank, or credit unions.

    Are there equipment loans for startups?

    Yes, there are equipment loans for startups. But because they’re for new businesses with no track record, interest rates might be higher.

    Can I get equipment loans with bad credit?

    It’s possible to get equipment loans with bad credit, but it may be more difficult or expensive than if you had good credit.

    If you have bad credit, you may want to consider finding a cosigner or putting up collateral to improve your chances of receiving approval.

    Can I get an equipment loan for used equipment?

    Yes, but it depends on the lender and the financing you seek. Some lenders may have restrictions on loaning money for used equipment, while others may be more flexible.

    How hard is it to get an equipment loan?

    It depends on the lender and what equipment you’re looking to finance.

    Generally, getting equipment financing shouldn’t be too difficult as long as you have decent credit and can provide collateral.

    Is an equipment loan an asset?

    If the business uses the accrual basis of accounting, then the loan is an asset. On the other hand, if the company uses the cash basis of accounting, then the loan is not an asset.

    Is having access to equipment loans good for small businesses?

    A loan may be a good option if the small business needs new or updated equipment and cannot afford to purchase it outright. This way, the business can spread out the cost of the equipment over time, making it more manageable.

    On the other hand, if the small business is already struggling to make ends meet, taking on additional debt as an equipment loan may not be the best idea.

    In this case, looking for alternative financing options, such as grants or crowdfunding, might be better.

    What are typical terms for equipment financing?

    The most common terms for equipment financing are a lease, a loan, or equipment financing, which includes both.

    Is it hard to get financed for equipment?

    Some businesses can get financed through banks or other lending institutions, while others may need to look into private funding sources or crowdfunding platforms.

    No matter your route, it’s important to have a well-crafted business plan and credit history that shows you’re a trustworthy borrower.

    What credit score is needed for an equipment loan?

    A credit score of 680 or higher is generally needed to get approved for an equipment loan.

    Your credit score measures how likely you are to repay debt, and lenders use it to determine how much interest to charge on loan.

    Is equipment financing a good idea?

    It can be a good idea, but it depends on your situation. If you’re not sure whether or not equipment financing is a good idea for you, here are a few things to consider:

    What is the interest rate? how long do you have to pay it off? is there a prepayment penalty? are there any other fees? what is the equipment worth at the end of the loan?

    Check if you
    qualify for a loan