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Compare equipment finance options for your business

Compare equipment loans from these 4 top lenders.

Best equipment financing options Compare options

Equipment financing can help your business cover the cost of expensive machinery when you want to expand or just need an update. You can often finance business equipment directly through the manufacturer or seller. But you might find a better deal through a bank or alternative lender.

Our team reviewed over 220 lenders that offer business loans before selecting the best equipment financing options. We focused on lenders that specialize in equipment loans, before comparing interest rates, fees, terms and requirements.

We were also careful to include providers that don't require a down payment and those that allow you to purchase equipment directly.

Best equipment financing options of July 2022

Best overall

National Funding business loans

Finder rating 4.65 / 5

National Funding is an online lender that specializes in equipment financing. It offers low-cost direct loans with rates from from APR to APR. This includes a relatively low origination fee compared to other business lenders of 1% to 3%. There’s no down payment and you can use the funds to purchase new and used equipment. National Funding also works with high-risk industries, including cannabis companies. While it can connect you with another provider if you don’t meet its requirements, its partners will likely offer different rates and terms.

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Best SBA loans

SmartBiz business loans

Finder rating 4.5 / 5

SmartBiz is an online service that can help your small business connect with an SBA 7(a) lender that offers government-backed loans you can use to finance equipment. It’s best for first-time SBA borrowers who don’t have a lot of time to spend on the application. It’s also better for equipment with a big price tag, since loans start at $30,000. It can cut down the time you spend on an application too. But these services aren’t free — you’ll pay a referral and packaging fee. If you’ve struggled to qualify for low-cost equipment financing elsewhere, it could be worth the extra cost.

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Best marketplace for equipment financing

Lendio business loans

Finder rating 4.75 / 5

Lendio is one of the largest online business loan marketplaces out there. Compare multiple equipment financing offers from its network of over 300 partner lenders by filling out one simple online form. Its partners offer equipment financing ranging from $5,000 to $5 million with terms from one to five years. Rates start at 7.5% APR — a little higher than your typical equipment financing loan from a bank. But you could also get your funds as soon as 24 hours after approval.

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Best line of credit

BlueVine business lines of credit

Finder rating 4.5 / 5

BlueVine offers fast, unsecured lines of credit that can be useful if you plan on growing your team over the next year or so. There’s no origination or monthly maintenance fee, and it offers relatively low rates for a lender that accepts fair credit scores of 600. BlueVine’s starting APR of 4.8% is low for an online lender — and comparable to what you might find at a bank. But most borrowers won’t qualify for that rate, and the weekly payments can be inflexible for businesses with irregular cash flow.

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What is equipment financing?

Equipment financing is a type of business loan specifically for purchasing business equipment — from construction equipment to office furniture. With this type of financing, the lender bases your loan amount and term on the equipment itself

Usually you can finance between 80% to 100% of the equipment's value and receive a loan term based on how long your lender thinks the equipment will be useful — often around five years. Typically equipment small businesses repay the loan with monthly payments. When the term is up, your business will own the equipment outright. But at that point, it might be time to take out another equipment loan.

Watch this video to learn more about how working capital financing works.

How much does it cost?

Equipment financing rates typically start at around 4% to 7.5% APR, according to online business loan marketplaces like Fundera, Lendio and Lending Tree. That often includes an origination fee of 1% to 5%. And, in many cases, you need to be able to cover a down payment of around 10% to 20% of the equipment's manufacturing price.

The monthly and total cost of equipment financing also depends on your loan term. This is based on the useful life of the equipment you're purchasing — usually around five years. Use our calculator to see how much the monthly payment on an equipment loan might cost your small business.

Equipment financing calculator

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How to qualify for an equipment loan

Equipment financing requirements vary depending on the lender. But small business owners typically needs to meet the following requirements, according to Lendio's partner providers:

  • Minimum credit score of 650
  • Annual revenue of at least $50,000
  • At least 12 months in business

Lenders have also started to pay more attention to cash flow during COVID-19. So having enough regular cash flow for the past six months can sometimes make up for a low credit score or less than a year in business.

Which businesses get the lowest rates?

The rate your small business qualifies for depends on the lender and your business's finances.

The lowest rates often go to people with excellent credit — usually businesses lenders prefer a personal credit score of 670 or higher. Annual revenue, cash flow, cash reserves and even the quality of your business plan can affect your rate. Established businesses also tend to qualify for lower rates than startups, as do businesses with cash reserves.

It also can depend on whether you want to purchase new or used equipment. Used equipment usually comes with a higher rate and shorter term than a new product. That's because it will be useful to your business for a shorter period of time.

Equipment financing collateral requirements

When you take out an equipment loan, the lender often puts a UCC lien on the equipment you purchase and may require a personal guarantee from business owners with a 20% stake in the company or more. This means that if your business defaults on the loan and you can't sell the equipment at a price that covers the full balance, you're personally responsible for paying off the remaining balance.

Types of equipment financing

The main type of equipment financing is a secured business term loan. These are available through banks and alternative lenders that lend to small businesses. You can use a term loan for purchasing equipment for almost all types of businesses.

Some lenders might specialize in funding specific industry. For example, Bankers Healthcare Group specializes in medical practice financing.

Government-backed loan programs

Small businesses that have struggled to qualify for a bank loan may want to consider a loan backed by the Small Business Administration (SBA) or the US Department of Agriculture. These tend to be less expensive than an online business loan — though credit approval can take weeks or months.

Equipment financing for bad credit and startups

It's possible to finance equipment even if your business is in the startup phase, or you have bad credit. Online lenders and microlenders sometimes accept bad credit — usually defined as a credit score under 580. And many can help startups purchase expensive machinery they need to get off the ground.

Some microlenders also offer financing to start a new business from scratch. But it can be difficult to find a loan over $50,000 with these providers.

Equipment financing vs. leasing

Equipment financing is a great option if you want to own the equipment outright. But leasing vs. financing might be better if your business needs equipment for less than the useful life of the equipment — or struggles to get credit approval on a loan.

An equipment lease involves borrowing business equipment for fixed monthly payments until the lease is up. When the lease is up, you often have the option to buy out the equipment or return it to the lessor.

But equipment leasing can get expensive if you end up using the equipment for longer than expected. If you're not sure which is right you, ask for quotes from leasing and financing companies to help you compare the total cost of each option.

Equipment loan statistics

Equipment financing has one of the highest approval rates compared to other small business loans. In fact, some 87% of equipment and auto loan applications were approved in 2020, according to a survey by the Federal Reserve.

That was higher than any other type of business loan included in the survey. But those numbers didn't include businesses that applied for an SBA loan to purchase equipment — which had a lower approval rate of 65%.

Recap: Best equipment loans

Here are our picks for the best equipment loans of 2022:

But these providers might not be right for every small business. Visit our guide to the best business loans to compare more options.

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