With equipment financing, the equipment you buy is the collateral. That makes it one of the easier types of business financing to get, even for newer businesses, and it is open to owners who do not qualify for SBA loans.
Loan vs lease
| Equipment loan | Equipment lease | |
|---|---|---|
| Ownership | You own it from the start (lender holds a lien) | The lessor owns it; you may buy it at the end |
| Down payment | Often 10–20% | Often first and last payment |
| Best for | Equipment with a long useful life | Technology that goes out of date fast |
| End of term | You keep it | Return, renew or buy (fair-market value or $1 buyout, depending on the lease) |
Ask your accountant about the tax treatment; it can affect which one you choose.
Equipment financing vs SBA 7(a)
| Equipment financing | SBA 7(a) | |
|---|---|---|
| Speed | Often days | Weeks to months |
| Paperwork | Lighter | Heavier |
| Rate | Usually higher | Usually lower, capped by SBA |
| Term | Matches equipment life | Up to 10 years for equipment |
| Eligibility | Lender’s own rules | SBA rules, including 2026 citizenship rule |
If you can wait and qualify, an SBA loan is often cheaper. If you need it fast or don’t qualify, equipment financing is a strong option.
What to compare
- Total cost: monthly payment × number of months + down payment + fees.
- Rate and whether it is fixed.
- Prepayment terms.
- Buyout terms on leases.
- Insurance requirements.
Tips
- Get the vendor’s cash price before discussing financing.
- Used equipment can be financed too, often with shorter terms.
- Vendor financing promotions can be good; read the fine print.
Run the numbers in our calculator.
Frequently asked questions
Is equipment financing easier to get than an SBA loan?
Usually, because the equipment is the collateral. It is also open to owners who don't meet SBA rules.
Should I lease or buy equipment?
Buy equipment with a long useful life; lease technology that goes out of date quickly. Ask your accountant about taxes.
Can I finance used equipment?
Yes, often with shorter terms.
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Educational information, not legal or financial advice. We are not a lender and are not affiliated with the SBA. Disclaimer