Equipment financing is used exclusively to acquire business-use equipment. Because every industry has it’s own type of equipment, the types of equipment loans are diverse. For nearly every type of equipment you can think of there’s going to be a lender that finances that specific equipment.
A business equipment loan is very similar to an auto loan, where the purchased item itself acts as collateral. Because of this, qualifying for an equipment loan can be relatively easy. Approvals are typically based on credit score, years in business, financial history and value of the equipment.
What Types of Businesses is it Good For?
Every type of equipment and every type of industry, but here are a couple examples. In the construction industry, there are lenders that offer equipment financing for heavy machinery. In agriculture, there are lenders that specifically help small farmers.
How Much Will Equipment Financing Cost? Equipment Loan Calculator
Equipment financing interest rates range from seven to forty-five percent. With equipment financing, the purchased equipment itself is used as collateral for the loan. There are also lenders who will lend on application only as long as collateral is available and a down payment of 50% is available as well.Most of the time, the immediate ROI from the equipment pays for the loan earlier than expected, making it an awesome financing option.Equipment financing may also be available under the SBA 7(a) loan program. See our SBA 7(a)
section for additional detail.