Businesses can purchase equipment through equipment loans, business term loans, SBA financing, vendor-arranged financing, or, where appropriate, a business line of credit. Equipment leases offer an alternative to buying outright, while financing against existing assets may help fund additional purchases. The best fit depends on the equipment’s useful life and value, the business’s repayment capacity, upfront cash requirements, and whether ownership or flexibility matters more.
Equipment financing lets a business acquire machinery, vehicles or other equipment while spreading the cost over time through a loan or lease. With an equipment loan, the business generally owns the equipment and pledges it as collateral; with a lease, the financing company generally retains ownership during the lease term. Approval, upfront payment, cost and repayment terms depend on the business, the equipment and the applicable capital provider.
Companies with valuable equipment but limited cash flow may be able to use equipment-secured loans, equipment refinancing, sale-leasebacks, or asset-based financing to access capital. Equipment can serve as collateral if the business owns it and the capital provider accepts its value, condition, and lien position. However, collateral does not eliminate the need for a credible repayment source, and actual availability, amounts, pricing, and terms depend on the applicable capital provider and transaction.