What is equipment financing in plain English?

Equipment financing is a loan or lease where the equipment you're buying is the collateral. The lender pays the equipment vendor, you make monthly payments over 24–84 months, and at the end you either own the equipment outright (loan) or have an option to buy or return it (lease). Because the equipment secures the deal, APR is meaningfully lower than unsecured financing.

What APR can I expect on equipment financing?

Bank-direct equipment loans for established merchants run 6–14% APR. Fintech equipment lenders run 8–22% APR depending on credit. Specialty / startup equipment lenders charge 10–28% APR. As a rule of thumb, equipment financing APR is half to two-thirds the APR of unsecured term loans for the same merchant.

What's the difference between an equipment loan and an equipment lease?

A loan: you own the equipment immediately, pay it off, no end-of-term decision. A lease: the lender owns the equipment, you pay rent, and at the end you can buy it (capital lease, typical $1 buyout) or return it (operating lease). Capital leases have nearly identical economics to loans. Operating leases have lower monthly payments but you don't build ownership equity.

What credit score do I need for equipment financing?

Bank-direct equipment financing wants 680+. Fintech equipment lenders accept 600+. Specialty programs at Beacon Funding and some Smarter Finance USA tracks accept down to 550. Lower credit usually means a 10–25% down payment requirement and a higher APR.

What's Section 179 and why does it matter?

Section 179 of the IRS code lets you deduct the full purchase price of qualifying equipment in the year you put it in service, up to ~$1.16M (2026 cap). For a $50K piece of equipment, that's potentially $10K-$18K in tax savings depending on bracket. Most equipment financing structures preserve Section 179 — confirm with your CPA before signing.

What kinds of equipment can I finance?

Almost anything titled or serial-numbered: trucks and commercial vehicles, restaurant equipment (ovens, walk-ins, POS), construction equipment (excavators, lifts), medical and dental equipment, manufacturing machinery, photography and broadcast gear, fitness equipment, salon and barber equipment. Soft costs (installation, training, freight) can often be rolled into the financing.

Can I finance used equipment?

Yes — most equipment lenders finance used equipment, often up to 8–10 years old. The APR is slightly higher (1–3%) than new equipment because the collateral value declines faster. Some lenders cap loan-to-value at 70–80% on used equipment, requiring a larger down payment.

How does an equipment financing application work?

For deals under $250K, most lenders use an application-only process — no financial statements required, just a one-page app, EIN, owner SSN, and the equipment quote. Above $250K, expect to provide 2 years of business tax returns and a personal financial statement. Approval typically takes 24–48 hours; funding to vendor 1–5 days from approval.

Equipment Financing: APR Ranges, Top Lenders & Section 179 (2026)

Equipment financing is one of the cheapest forms of business credit — 6–22% APR with the equipment itself as collateral. Buy a $75K oven, $50K truck, or $200K dental chair without draining cash, and write off the full purchase under Section 179. Here's how it works, what it really costs, and which lenders approve fast in 2026.

TL;DR

Equipment financing is a term loan or lease where the equipment is the collateral. Typical APR: 6–22% depending on credit and lender. Terms: 24–84 months. Min credit 550 (specialty) to 680 (bank). Funding 1–15 days. Section 179 lets you deduct the full purchase in year one. Best for buying titled or serial-numbered equipment $25K–$500K; cheaper than any unsecured option for the same merchant.

What is equipment financing?

Equipment financing is a loan (or lease) used to acquire business equipment, where the equipment itself serves as collateral. You don't pledge separate assets or sign a blanket UCC against your business — you're pledging only the specific machine, truck, oven, or other piece you're financing.

Because the lender has clear collateral to repossess on default, equipment financing prices materially below unsecured options. A merchant who would pay 15% APR on a generic term loan typically pays 9% on equipment financing for the same dollar amount and term. That delta — often 30–50% off the equivalent unsecured cost — is the entire reason to use equipment financing instead of cash, LOC, or term loan when you're buying equipment.

The two main structures are an equipment loan (you own the equipment from day one, pay off principal + interest, lender holds a UCC lien) and an equipment lease (lender owns the equipment, you pay rent over a fixed term, then either buy out the residual or return it). Most small-business deals use the $1-buyout lease, which is economically equivalent to a loan but offers slight tax treatment differences.

How equipment financing works

You get a vendor quote for the equipment, including tax, freight, installation, and training (collectively "soft costs").
You apply for financing with the equipment lender — often just a one-page application for deals under $250K, with the vendor quote attached.
The lender underwrites against your credit, business cash flow, and equipment specs (make, model, year, condition). Approval typically in 24–48 hours.
You receive an offer with: financed amount, down payment requirement (0–25%), APR, term (24–84 months), monthly payment.
The lender pays the vendor directly upon your signature and any down payment. Vendor ships equipment.
You make monthly payments on schedule. The lender files a UCC-1 against the specific equipment. At end of term (loan) you're done; (lease) you exercise the buyout or return.

How much does equipment financing cost?

Cost varies by credit profile, equipment type, term, and structure (loan vs. lease). Below: real-world APRs by merchant profile in 2026.

Merchant profile	Typical APR	Down payment	Term
A-paper (24+ mo, 680+, $50K+/mo)	6 – 10%	0 – 10%	36 – 84 mo
B-paper (12+ mo, 620+, $15K+/mo)	10 – 18%	10 – 15%	24 – 60 mo
C-paper (550 – 619 credit)	18 – 28%	15 – 25%	24 – 48 mo
Startup (3 – 12 mo TIB)	14 – 28%	20 – 30%	24 – 48 mo

Worked example: $75,000 commercial oven, 60-month equipment loan at 11% APR, no down payment. Monthly payment ≈ $1,632. Total paid over 60 months ≈ $97,900 — that's $22,900 in interest. Compare to financing the same $75K on a B-paper MCA at factor 1.32: you'd owe $99,000 paid back in 9 months at roughly $11,000/mo debit. Equipment financing monthly payment is 7x smaller and total cost is similar — but spread over 60 months versus 9.

Best for / Not best for

Best for

Buying titled / serial-numbered equipment ($25K – $500K)
Restaurants, trucking, construction, medical/dental, manufacturing
Section 179 tax planning — full deduction in year one
Anyone who'd otherwise pay cash for equipment (preserve LOC for working capital)
B-paper merchants who can't qualify for unsecured term loans

Not best for

Working capital, inventory, marketing (use LOC or term loan)
Software or non-titled assets (most lenders won't collateralize)
Equipment under $5K (cash or business credit card cheaper)
Equipment over 10 years old (limited lender pool, high APR)
Heavily customized equipment with low resale value

Top equipment financing providers for 2026

We rank equipment financing providers on: speed to vendor payment, industry breadth, qualifying transparency, used-equipment acceptance, and quality of the dealer/vendor program.

Lender	Best for	Amount	APR	Speed	Min credit
Currency Capital	Heavy equipment, trucks, machinery — strong tech platform	$25K – $500K	APR 8 – 22%	1 – 5 days	600+	Apply →
Crest Capital	Equipment + commercial vehicles, online speed	$5K – $1M	APR 6 – 18%	1 – 3 days	650+	Apply →
Beacon Funding	Specialty equipment, lower credit threshold	$5K – $500K	APR 10 – 25%	1 – 5 days	550+	Apply →
Balboa Capital	Equipment + working capital combined	$5K – $500K	Equipment 8–22%; working capital factor 1.18–1.40	1 – 5 days	620+	Apply →
CIT (First Citizens)	Larger equipment + commercial lending at scale	$50K – $50M+	APR 6 – 18%	5 – 15 days	680+	Apply →
PNC Equipment Finance	PNC Bank customers + larger ticket deals	$50K – $25M+	APR 7 – 16%	5 – 15 days	680+	Apply →
Smarter Finance USA	Startup-friendly equipment financing	$5K – $250K	APR 9 – 28%	1 – 5 days	600+	Apply →

Advertiser disclosure: Fundnode may earn referral fees from funders listed when you apply through us. This does not affect editorial rankings — see our methodology.

How to apply for equipment financing

Get the vendor quote first. Lenders need exact make, model, year, condition (new/used), and total cost including soft costs (tax, freight, install). Don't apply for a placeholder amount.
Check whether the vendor has a financing partner. Major equipment vendors (John Deere, Caterpillar, restaurant supply houses) often have captive or partner finance programs with promotional rates (sometimes 0% APR on new equipment for limited windows).
For deals under $250K: use the application-only program. One-page app, EIN, owner SSN, vendor quote. Decision in 24–48 hours.
For deals $250K+: have 2 years business tax returns, YTD P&L, balance sheet, and personal financial statement ready. Underwriting takes 3–7 days.
Negotiate term length, not just APR. A longer term lowers monthly payment but increases total interest. For equipment with a 5-year useful life, don't finance over 84 months.
Confirm Section 179 eligibility with your CPA before signing. Most equipment loans qualify; some operating-lease structures don't. The wrong structure can cost you tens of thousands in tax savings.

Alternatives to equipment financing

SBA 504 loan — for very large fixed-asset purchases ($500K+). Lower fixed rate (often 6–7%), 20–25 year terms, but slower (60–90 days) and more paperwork.
Vendor / dealer financing — captive financing from major equipment vendors, often with promotional rates. Always compare to a 3rd-party offer before signing.
Business line of credit — for smaller equipment under $25K or when you need flexibility on the exact equipment you'll buy.
Merchant cash advance — only if equipment financing is denied. Much more expensive but no equipment-specific eligibility.
Equipment lease (operating lease) — lowest monthly payment, no ownership at end, useful for rapidly-depreciating equipment (computers, monitors, technology refresh cycles).

See our breakdown of restaurant MCA vs equipment financing and trucking MCA vs equipment financing for industry-specific economics.

Frequently asked questions

What is equipment financing in plain English?: Equipment financing is a loan or lease where the equipment you're buying is the collateral. The lender pays the equipment vendor, you make monthly payments over 24–84 months, and at the end you either own the equipment outright (loan) or have an option to buy or return it (lease). Because the equipment secures the deal, APR is meaningfully lower than unsecured financing.
What APR can I expect on equipment financing?: Bank-direct equipment loans for established merchants run 6–14% APR. Fintech equipment lenders run 8–22% APR depending on credit. Specialty / startup equipment lenders charge 10–28% APR. As a rule of thumb, equipment financing APR is half to two-thirds the APR of unsecured term loans for the same merchant.
What's the difference between an equipment loan and an equipment lease?: A loan: you own the equipment immediately, pay it off, no end-of-term decision. A lease: the lender owns the equipment, you pay rent, and at the end you can buy it (capital lease, typical $1 buyout) or return it (operating lease). Capital leases have nearly identical economics to loans. Operating leases have lower monthly payments but you don't build ownership equity.
What credit score do I need for equipment financing?: Bank-direct equipment financing wants 680+. Fintech equipment lenders accept 600+. Specialty programs at Beacon Funding and some Smarter Finance USA tracks accept down to 550. Lower credit usually means a 10–25% down payment requirement and a higher APR.
What's Section 179 and why does it matter?: Section 179 of the IRS code lets you deduct the full purchase price of qualifying equipment in the year you put it in service, up to ~$1.16M (2026 cap). For a $50K piece of equipment, that's potentially $10K-$18K in tax savings depending on bracket. Most equipment financing structures preserve Section 179 — confirm with your CPA before signing.
What kinds of equipment can I finance?: Almost anything titled or serial-numbered: trucks and commercial vehicles, restaurant equipment (ovens, walk-ins, POS), construction equipment (excavators, lifts), medical and dental equipment, manufacturing machinery, photography and broadcast gear, fitness equipment, salon and barber equipment. Soft costs (installation, training, freight) can often be rolled into the financing.
Can I finance used equipment?: Yes — most equipment lenders finance used equipment, often up to 8–10 years old. The APR is slightly higher (1–3%) than new equipment because the collateral value declines faster. Some lenders cap loan-to-value at 70–80% on used equipment, requiring a larger down payment.
How does an equipment financing application work?: For deals under $250K, most lenders use an application-only process — no financial statements required, just a one-page app, EIN, owner SSN, and the equipment quote. Above $250K, expect to provide 2 years of business tax returns and a personal financial statement. Approval typically takes 24–48 hours; funding to vendor 1–5 days from approval.