Equipment financing loans are specialized, secured loans used by businesses to purchase essential machinery, vehicles, or technology, with the equipment itself serving as collateral. Offering 100% financing, fast approval (often in 24 hours), and terms up to 7–10 years, these loans help preserve cash flow while allowing for full ownership at the end of the term. 

City National Bank +4

Key Features of Equipment Loans

• Collateral: The equipment being purchased secures the loan, reducing risk for the lender and potentially removing the need for additional collateral.

• Ownership: The business owns the equipment immediately or once the loan is fully repaid, unlike leasing.

• Terms: Repayment typically lasts for the expected life of the equipment, often ranging from 4-6 years.

• Costs: Interest rates for these loans often range between 8% to 30%, depending on the borrower's creditworthiness and the lender. 

  J.P. Morgan +5

Pros and Cons

• Pros: Preserves working capital, allows for tax deductions (depreciation and interest), and builds equity.

• Cons: The loan could outlast the useful life of the equipment, and failure to pay allows the lender to seize the assets. 

  Bankrate +3

Equipment Financing vs. Leasing
While loans offer ownership and are better for long-term use (36+ months), leasing offers lower upfront costs and easier upgrades, making it ideal for technology that becomes obsolete quickly. 

NerdWallet +2

Application Requirements
Lenders typically look at the business's credit score, time in business, and the type of equipment being purchased. Some lenders may require a 10%–20% down payment, though some offer 100% financing.