Equipment Financing

Equipment financing is a secured loan or lease where the equipment itself is the collateral - vehicles, machinery, kitchen gear, medical devices. Because the asset backs the debt, approvals are easier and rates lower than unsecured funding at the same file strength.

Why it matters

For a young business, collateralized funding is often the first real ticket: the lender's risk is the asset, not your short history. It builds the file while buying a revenue tool.

Key facts

• Terms typically match the equipment's useful life: 3-7 years, with the asset titled or liened to the lender.
• Down payments of 10-20% are common; stronger files get 100% financing.
• Leases (fair-market-value or $1 buyout) trade ownership for lower payments - the accounting and tax treatment differ.
• The lender files a UCC-1 financing statement on the asset, which shows up in lien searches future lenders run.

In practice

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