9
Best Equipment Financing Options
Featured Partner Offers
1
OnDeck
$5,000 to $250,000
Varies by loan
625
2
BusinessLoans.com
$5,000 to $3 million
Varies by product
550
Compare the Best Equipment Financing Options
| COMPANY | FORBES ADVISOR RATING | LOAN AMOUNTS | TIME IN BUSINESS | LEARN MORE |
|---|---|---|---|---|
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$10,000 to $50 million
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2 years
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via Forbes Advisor
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up to $500,000
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2 years
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Via Forbes Advisor
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$5 million to $100 million
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2 years
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$5,000 to $300,000
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6+ months
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On Credibly’s Website
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No maximum
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3 years
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$5,000 to $350,000
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2 years
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$100,000 to $10 million
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1 year
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On National Business Capital’s Website
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Best Equipment Financing Options: A Closer Look
BEST OVERALL EQUIPMENT FINANCING
US Business Funding Equipment Financing
Loan amounts
$10,000 to $50 million
Time in business
2 years
Minimum Credit Score
650
$10,000 to $50 million
2 years
650
US Business Funding Equipment Financing offers flexible terms that range from three months to 10 years. Loans are available from $10,000 to $50 million with a full financial package, but borrowers can access up to $75,000 with a one-page credit application. There’s typically a 2 years time-in-business requirement, but US Business Funding Equipment Financing offers a program for businesses that have operated for just six months. Approval is possible within a few hours, and funding usually occurs within 24 to 48 hours after delivery and acceptance.
- Offers fast, 60-second approval
- 24-hour funding available
- Advertises 95% approval rates
- Does not publish maximum APRs
- Businesses may need to be in business for at least two years
- One-page application only available for loans up to $75,000
Eligibility: To qualify for most of US Business Funding’s loan programs, a company must have been in business for at least two years. Exceptions exist, however, and it may be possible to qualify based on company creditworthiness. The lender also has a program for businesses six months or older and freelancers who can demonstrate time in business with a business checking account or tax returns. Overall, the company boasts a 95% approval rate.
Turnaround time: Approval can often be completed within a few hours. Funding speeds are also fast and borrowers typically receive funds within 24 to 48 hours after acceptance.
BEST FOR SMALL LOANS
Crest Capital Equipment Financing
Loan amounts
up to $500,000
Time in business
2 years
Minimum Credit Score
650
up to $500,000
2 years
650
Crest Capital is an equipment leasing and financing company that offers application-only approval, meaning you don’t need to provide additional documents, like tax returns, for loans up to $250,000. Application-only approval may offer same-day authorization and does not require financial statements, account balances or balance sheets. Loan terms for these smaller loans are available from 24 to 72 months. Larger loans are available for up to $500,000 with more extensive application requirements and terms from 24 to 84 months.
- Offers application-only approval for loans up to $250,000
- Same-day approval available
- Does not impose extensive credit requirements
- Does not finance companies in business for less than two years
- Financing amounts are low compared to competitors
- Actual interest rates may be confusing
Eligibility: Crest Capital requires a minimum credit score of 650. To be eligible, businesses must also be in operation for at least two years.
Turnaround time: Lending decisions are typically made the same day, and the lender sends funds directly to the equipment vendor.
BEST FOR LARGE LOANS
First Citizens Bank
Loan amounts
$5 million to $100 million
Time in business
2 years
Minimum Credit Score
640
$5 million to $100 million
2 years
640
First Citizens Bank is an FDIC-insured bank that offers a range of personal and business banking products, including equipment financing for numerous industries. Financing amounts start at $5 million—higher than many financing companies—and go up to $100 million. The lender also offers flexible repayment terms from one to six years or more, though financing typically comes with terms between two and five years.
- Funding available in as little as one day
- 100% financing available
- Offered for a range of equipment and industries
- Doesn’t publish rates or fees online
- Loans start at $5 million
- Must contact equipment finance team for a quote
BEST FOR LOW CREDIT REQUIREMENTS
Credibly
Loan amounts
$5,000 to $300,000
Minimum Credit Score
700+
Time in business
6+ months
$5,000 to $300,000
700+
6+ months
Credibly is a fintech company that connects small and medium businesses with a range of business financing options, including equipment financing, working capital loans and merchant cash advances. Approval requirements are more lenient than those imposed by other top lenders, and loan amounts and repayment terms are flexible. Funding timelines are also appealing, with approval taking as little as four hours and same-day funding available.
- Low minimum credit score and time-in-business requirements
- Financing starts at $10,000
- Funding up to $250,000 available within one week
- $240,000 annual revenue requirement
- Only publishes general interest rates online
- Origination fee may apply
Lending Details
Eligibility
- Minimum credit score: 700+
- Minimum annual revenue: $240,000
- Required time in business: 6+ months
Funding Speed
Funding may be available as soon as the same day.
BEST FOR USED EQUIPMENT
Kapitus
Time in business
3 years
Minimum Credit Score
675
3 years
675
Founded in 2006 as Strategic Funding Source, Kapitus is an independent business financing company that has provided more than $5 billion in funding to U.S. borrowers. Unlike some equipment financing companies, Kapitus offers financing to purchase used equipment. There’s no maximum loan amount, but application-only submissions for financing up to $350,000 are available for well-qualified borrowers. Interest rates start at 8.99%, and there are weekly and monthly payment options.
- Ability to finance used equipment
- No down payments for qualified borrowers
- Only one-year time-in-business requirement with excellent credit
- Higher time-in-business requirement than other providers
- Doesn’t publish maximum interest rates online
- Must book a consultation to get pre-approved
BEST FOR FAST APPROVAL
JR Capital
Loan amounts
$5,000 to $350,000
Time in business
2 years
Minimum Credit Score
600
$5,000 to $350,000
2 years
600
JR Capital is a Scottsdale, Arizona-based online lender that provides equipment financing, working capital loans and lines of credit to businesses across several industries. Loan amounts are flexible, with no down payments and two-hour approval available. Repayment terms range from 24 to 84 months, depending on the age and mileage of the equipment. Rates start at 5.99%—lower than advertised by some competitors—and prospective borrowers can lock in their rates and terms for 60 days.
- Two-hour approval times and same-day funding for non-titled deals
- One-page application for up to $500,000 or $1 million with partner dealer
- Available for used equipment
- Confusing website makes offerings unclear
- Doesn’t publish fees or maximum interest rates online
- No online reviews
BEST FOR NEW BUSINESSES
National Business Capital Equipment Financing
Loan amounts
$100,000 to $10 million
Time in business
1 year
Minimum Credit Score
Varies, see eligibility criteria below
$100,000 to $10 million
1 year
Varies, see eligibility criteria below
National Business Capital Equipment Financing is a fintech marketplace that provides equipment financing with less extensive qualification requirements than other lenders. In addition to credit score and time-in-business requirements, borrowers must demonstrate at least in annual revenue. Loans are available through a network of more than 75 lenders and range up to $10 million with terms from one to 10 years.
- Lease and loan options
- Works with a wide range of business types
- Network includes over 75 lenders
- Substantial minimum revenue requirement
- Funding times start at two weeks
- Does not publish APRs and other fees online
Eligibility: Applicants with a credit score of at least 600 are not subject to minimum time-in-business or gross sales requirements. Likewise, there is no minimum credit score requirement for borrowers that have been in business for at least six months and can demonstrate at least $500,000 in annual gross sales. The application process only requires a soft credit pull, which doesn’t hurt your credit.
Turnaround time: The approval process reportedly takes a few hours to a few days, and funding may be completed in two+ weeks.
Most Popular is calculated from the number of times each affiliate product was selected by Forbes Advisor users over a six month time period.
How Does Equipment Financing Work?
Equipment financing is a type of loan that enables small businesses to purchase the equipment and machinery needed to operate. Equipment financing is offered through many traditional and online business lenders, with loan amounts ranging widely based on the cost of the items being financed. Likewise, loan repayment terms generally mirror the usable life of the equipment—often between three and 10 years.
Lenders typically allow businesses to finance between 80% and 100% of the equipment purchase, and a down payment of between 10% and 20% is common. Interest rates are also lender-specific and may range anywhere from 2% to 40%—or lower if you qualify for dealer or manufacturer financing. Traditional banks and credit unions may offer the most competitive rates and repayment terms, but they usually impose more stringent qualifications. Equipment financing is also available through online lenders, often with faster funding speeds and lower credit score requirements.
After applying for equipment financing, funding can be received in as few as two business days, though this also varies by lender and loan type. Monthly payments are then spread out over a loan term from a few months to 10 years or more. Equipment financing is secured by the equipment being purchased, so if the borrower defaults on the loan, the lender can repossess the collateral and resell it to recoup its losses.
Equipment Financing vs. Equipment Leasing
Equipment leases differ from financing in that the business owner pays to use the equipment for a set period rather than owning the underlying equipment, as is the case with financing. Leasing lowers the upfront cost of obtaining equipment and reduces the impact of depreciation on a business’s bottom line.
For that reason, equipment leasing may be a better option if you don’t plan to use the equipment for very long—usually three years or less. If you plan to keep the equipment for longer, equipment financing may be a better fit.
Related: Best Small Business Loans
Equipment Financing Requirements: How To Qualify
Equipment financing can help you manage costs while maintaining cash flow, but you still need to meet certain eligibility requirements. Eligibility requirements vary by lender, but equipment financing companies generally consider these eligibility factors:
- Industry. Your industry will impact your approval odds, required down payment, available interest rates and other factors because some industries pose more risk to lenders than others. For example, businesses in the construction industry are often considered riskier than those in the transportation industry.
- Length of time in business. Lenders often require businesses to have been operating for at least 12 months to qualify for equipment financing. You can still access equipment loans if you have a startup, but you must demonstrate sufficient cash flow and may need to provide a larger down payment.
- Annual revenue. Your business is more likely to get approved for equipment funding if it has at least $50,000 in annual revenue. Depending on the lender, you may need to provide financial records and tax returns to demonstrate your business’s ability to repay the loan.
- Credit scores. You should have a personal credit score of at least 650 to qualify for equipment financing. If you have a low credit score—or a limited credit profile—you may still qualify based on the business’s revenue.
Pros and Cons of Equipment Financing
Equipment financing is a popular way to acquire necessary tools, machinery and technology without facing high upfront costs. Still, there are some advantages and disadvantages to consider before financing your next big business purchase. These are some pros and cons of equipment financing:
Pros
- Ability to retain cash. Financing lets you spread the cost of equipment over time, keeping your cash reserves available for other business expenses.
- Cheaper than other financing. Equipment financing may have low monthly payments and competitive interest rates, especially when secured by the underlying equipment.
- Equipment ownership. Financing equipment instead of leasing it means your business will own the equipment after paying it off.
- Tax savings. Interest paid on equipment financing is usually tax deductible as a business expense. Future depreciation of the equipment can provide additional tax benefits. Always consult a tax professional to determine the best course of action for your business.
Cons
- Long-term commitment. You usually can’t try equipment before buying it like you can with a lease. What’s more, monthly payments tie up future income and may impact financial flexibility.
- Higher costs. Interest rates and fees increase the overall cost of purchasing equipment. You may also have to make a large initial down payment.
- Slower acquisition process. Obtaining financing may involve a credit check and documentation, which can take longer than purchasing something with cash.
- Maintenance costs. If you purchase equipment instead of leasing it, your business will need to cover maintenance costs.
How To Compare Equipment Financing Loans
There are several types of equipment financing available, so identify your business’s needs and each lender’s costs and eligibility requirements before applying. Evaluate these factors when comparing an equipment financing loan:
Evaluate Your Business’s Needs
Prequalify to Compare Interest Rates
Determine Your Available Down Payment
Calculate the Cost of Equipment Financing
Evaluate Each Lender’s Customer Support Options
How To Apply for Equipment Financing in 4 Steps
The process of applying for equipment financing varies by financial institution, but there are some general guidelines you can follow. Take these steps to get equipment financing business loans through a bank or online lender:
- Determine how much you need to borrow. Before getting equipment financing, evaluate whether it’s a necessary expense and calculate whether the new piece of equipment or machinery will improve profitability. Calculate the cost of the equipment, your down payment and the payments you can comfortably afford.
- Check your personal and business credit reports. Equipment financing is secured by the underlying collateral, but lenders still want to know that borrowers are likely to repay the loan. Check your personal credit score and, if available, your business credit score before applying for a loan. This can help you evaluate your approval odds and provide insight into ways to improve your credit profile before applying. You should have a personal credit score of at least 650 to qualify.
- Shop around for the best deal. Lenders offer a range of financing options, interest rates and repayment terms, so research which offers are likely to best fit your business’s needs. Prequalify with several lenders, if possible.
- Submit a formal application. Once you identify a lender that fits your borrowing parameters, submit an application through its website or at a branch. Each lender has its own application procedures and requirements, so contact the financial institution for more information on how to apply for equipment financing.
Many manufacturers and vendors also offer equipment financing. If you don’t want to work with a bank—or don’t think you’ll qualify for traditional financing—search for a vendor that offers in-house financing on the equipment you need. Likewise, many vendors offer equipment leasing arrangements that don’t require a down payment or rigorous eligibility requirements.
Alternatives to Equipment Financing
There are several alternatives available if you need to purchase equipment for your business but want to explore options beyond equipment financing. The best financing tool depends on your business’s needs and financial situation, so compare options before committing to a loan or other product. These are some of the most common alternatives to equipment financing:
- Cash reserves. If you don’t need equipment immediately, consider setting aside cash instead of taking out a loan. Purchasing equipment with cash means you won’t pay interest or fees, and it’s a great option if your business has strong cash flow and a desire to avoid debt or monthly payments.
- Term loan. A term loan lets you borrow a fixed amount and repay it over a set timeframe with interest. These loans are available through online and traditional lenders, including government-backed Small Business Administration (SBA) loans. Unlike equipment financing, the repayment term won’t be tied to the equipment’s useful life, making term loans best for equipment with long-term value.
- Equipment leasing. Leasing can help your business access the equipment it needs without owning it outright. This option is ideal if you want to conserve cash or if your business relies on state-of-the-art equipment that requires frequent updates.
- Equipment renting. Renting equipment provides short-term access to tools and machinery without the commitment of ownership or long-term leases. Choose this option if you need equipment for a limited duration or have fluctuating equipment needs.
- Business credit card. For smaller equipment purchases, a business credit card can help spread the cost over time. This alternative works best if your business can pay off the balance quickly to avoid high interest rates. A credit card may also be a good option if you have a startup that won’t qualify for other types of financing.
- Business line of credit. Unlike a loan, a business line of credit lets you access funds up to a set limit as needed. Lines of credit are usually best for ongoing expenses, but you can also use them to purchase equipment.
- Crowdfunding and investors. If you have a strong network or social media presence, crowdfunding can help your business raise the money it needs to purchase equipment. Securing funding from individual angel investors can also help you access equipment—usually in exchange for equity or a share in future profits.
Methodology
We reviewed 14 popular lenders based on 19 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
- Loan cost: 31%
- Loan details: 25%
- Customer experience: 19%
- Eligibility and accessibility: 15%
- Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms and applicable fees. We also looked at minimum credit score and time in business requirements and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like online applications, prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Loans Rating & Review Methodology.
Find the Best Small Business Loans
Frequently Asked Questions (FAQs)
What are equipment financing loan rates?
Equipment financing loan rates vary by lender, borrower creditworthiness, amount of time in business and the type of loan. However, rates typically range from 2% to 40%. The most competitive interest rates are available to established businesses that are creditworthy and have demonstrably stable revenue.
How do you qualify for equipment financing?
Businesses qualify for equipment financing based on their industries, length of time in business, annual revenue and general creditworthiness. Applicants in less risky industries—like transportation—are more likely to qualify for equipment financing with lower down payments and interest rates.
Likewise, established businesses and business owners with strong personal credit scores have better approval odds and interest rates than startups and those with bankruptcy or other financial issues in their credit histories.
Can you get equipment financing with bad credit?
You can get equipment financing with bad credit, but it may be necessary to make a larger down payment or pay higher interest rates. Because equipment financing is secured, lenders may be more comfortable extending loans to borrowers with subpar credit or startups without an established business credit profile.
Can startups get equipment financing?
Startups can get equipment financing, but they often qualify for higher interest rates and larger down payments than more established businesses. Not only do new businesses not have established credit scores, but they also lack the history of financial records and revenue that lenders look for during the approval process.
Startups can improve their chances of approval by providing a strong business plan and revenue projections and having a creditworthy owner personally guarantee the loan. A personal guarantee legally requires the individual to repay any unpaid business debt with their personal money. Alternatively, startup owners may look to business credit cards or less traditional forms of financing, like hard money loans, which are secured by your property.