> Marketplace disclaimer: Loanable is a commercial funding marketplace, not a lender. Funding partners underwrite applications and set pricing. Product availability, rates, fees, terms, and timelines vary. Nothing on this page is a guarantee of approval, pricing, or funding speed. This article is educational—not tax, legal, or accounting advice.
By the Loanable Editorial Team · Marketplace editorial · Updated October 2026
Say you need a new oven, a truck, a CNC machine, or a dental chair. You probably don't want to drain your cash to buy it. That's what equipment financing is for. This guide walks through how equipment financing works, from the first quote to the day the vendor gets paid. It covers what you can finance, what drives the cost, and what you'll need to apply. When you're ready to look at products, visit our equipment financing page.
What equipment financing is
Equipment financing is money used to buy or lease business equipment. The equipment itself usually serves as collateral. That's the key difference from most other business funding.
Because the asset backs the deal, partners can often focus on the equipment's value and useful life, not just your credit. If you stop paying, the funder can generally take the equipment back. In many cases, that means less need for other collateral.
Loanable doesn't lend the money. We're a marketplace. You apply once, and equipment funding partners in our network review your request and set their own terms.
How equipment financing works, step by step
The process is fairly consistent across partners. Here's the typical flow.
1. Define the need. Decide what you need and why. Think about how long you'll use it and how it will earn money or save time.
2. Get a quote or invoice. Ask the vendor or dealer for a written quote. It should list the make, model, year, price, and any delivery, installation, or training costs. Used equipment from a private seller may also need a bill of sale.
3. Apply. You share business details, the amount, and the equipment quote. On Loanable, one application can reach several partners.
4. Underwriting. The partner reviews your business and the equipment. They look at your revenue, credit, and time in business. They also consider the asset's value, age, and how easy it would be to resell.
5. Offer and approval. If approved, you get an offer. It lists the amount financed, the term, the payment, any down payment, and the end-of-term terms.
6. Documents and signing. You sign the agreement. The partner may also file a lien on the equipment, and may ask for proof of insurance.
7. Funding. In most deals, the partner pays the vendor directly. Some partners will reimburse you if you already paid for the equipment yourself.
8. Delivery and repayment. You take delivery and start making payments on the agreed schedule. When the term ends, you own the equipment free and clear, or you follow the lease's end-of-term options.
The quote is the piece people most often forget. Having it ready early can save days of back-and-forth.
Equipment loan vs lease at a glance
There are two main structures. Here's the short version.
- Equipment loan: You borrow to buy the equipment. You own it, and the lender holds a lien until it's paid off.
- Equipment lease: You pay to use the equipment for a set term. At the end, you may return it, renew, or buy it, depending on the lease.
Which one fits depends on how long you'll keep the asset, how fast it goes out of date, and how you want payments to work. We cover this in depth, including fair-market-value and $1-buyout leases, in equipment lease vs loan.
What you can finance
Most tangible equipment with a useful life and resale value can be financed. Common categories include:
- Manufacturing and production machinery
- Commercial kitchen and restaurant equipment
- Construction and landscaping equipment
- Commercial vehicles and trucks, where the partner's program covers them
- Medical, dental, and veterinary equipment
- Technology, like servers, POS systems, and specialized computers
- Salon, fitness, and retail fixtures
Used equipment can often be financed too. Partners may look harder at its age, condition, and remaining useful life. Soft costs, like installation, shipping, software, and training, are sometimes included. That depends on the partner and the program.
What equipment financing typically costs
There's no single market rate for equipment financing. Pricing depends on the partner, your business profile, the equipment, the amount, and the term. We don't publish typical rates for that reason.
Here's what usually shapes the cost:
- Your business profile. Time in business, revenue, and credit history all matter.
- The equipment. New, durable equipment with strong resale value is often easier to finance than older or very specialized assets.
- The term. Longer terms mean smaller payments but usually more total interest.
- Down payment. Some partners finance the full price. Others ask for a down payment, especially for newer businesses or used equipment.
- Fees. Look for documentation fees, origination fees, and any end-of-term charges.
Here is an illustrative example only, not a quote. A business finances a $60,000 machine and puts $6,000 down. It finances the remaining $54,000. The monthly payment and total cost depend entirely on the term and rate the partner offers. A longer term lowers the monthly payment, while a shorter term lowers the total interest. Use our loan calculators to try your own numbers.
Taxes are a separate question. Some businesses can deduct equipment costs faster under Section 179 or bonus depreciation. The IRS explains the rules in Publication 946. How a loan or lease affects your taxes depends on your situation, so talk to your CPA.
Who qualifies, and common blockers
Each partner sets its own criteria. These are the factors that most often come up:
- Time in business. Many partners prefer an operating history. Startups may still qualify, often with a down payment.
- Revenue. Steady revenue shows you can handle the payments.
- Credit. Partners may review both business and personal credit.
- The equipment's useful life. Partners generally want the term to fit within the time the equipment stays useful.
- Existing debt. Other loans or advances reduce how much new payment you can handle.
A common blocker is a quote that doesn't match the request. Make sure the amount you ask for lines up with the invoice.
Documents checklist
Requirements vary by partner and deal size. It helps to have these ready:
- A written equipment quote or invoice from the vendor
- Recent business bank statements
- A government-issued ID for each owner
- Basic business information, like legal name, address, and EIN
- Business or personal tax returns, often for larger amounts
- Financial statements, for some larger deals
- Proof of insurance on the equipment, usually before funding
Equipment financing vs other funding options
Equipment financing is built for one job: paying for an asset. Other products fit other needs.
- Working capital: For payroll, rent, or inventory, rather than a machine. See working capital.
- Term loans: A general lump sum you can use for many purposes. See business term loans.
- Line of credit: A revolving limit for recurring needs, like small tools or supplies. See line of credit.
- Merchant cash advance: Fast cash repaid from future sales, not tied to an asset. It's usually a costly way to pay for long-life equipment. See merchant cash advance.
- SBA loans: SBA 7(a) and 504 loans can fund equipment for eligible businesses, often with longer terms. See SBA loans, our post on SBA loans for equipment, and the SBA's own loan programs overview.
The SBA's article on questions to help determine your financing options is a helpful way to think through which tool fits.
Questions to ask before you sign
Equipment agreements can run for years, so read the details. Ask each partner:
- What is the total cost? Add every payment, the down payment, and all fees.
- What happens at the end of the term? For a loan, confirm the lien is released. For a lease, confirm your buyout or return options in writing.
- Can I pay off early? Find out whether early payoff saves interest or triggers a fee.
- Who pays for insurance and maintenance? Many agreements make you responsible for both.
- What if the equipment breaks or is late? Payments often start even if delivery is delayed, so check the timing.
- Is there a personal guarantee? Know what you're signing for beyond the equipment itself.
How a marketplace helps you compare equipment offers
Getting quotes from many equipment funders on your own means repeating the same forms. Each one may also run its own credit check.
Loanable is a marketplace, not a lender. You apply once with your equipment details. Funding partners in our network can review the request and come back with offers. You compare the payment, term, down payment, and end-of-term terms side by side. Then you pick the one that fits, or walk away. Learn more on how it works.
Frequently asked questions
How does equipment financing work?
You get a quote for the equipment, apply, and a funding partner reviews your business and the asset. If approved, the partner usually pays the vendor directly. You then repay over a set term, and the equipment typically serves as collateral.
Is it better to lease or buy equipment?
It depends on how long you'll use the equipment, how fast it goes out of date, and your cash flow. Buying with a loan builds ownership, while leasing can offer flexibility at the end of the term. See our guide to equipment lease vs loan.
Can I finance used equipment?
Often, yes. Many partners finance used equipment, but they may look more closely at its age, condition, and remaining useful life. Terms can differ from new equipment.
Do I need a down payment for equipment financing?
Not always. Some partners finance the full price, while others ask for a down payment. Newer businesses and used equipment are more likely to need one.
Does applying for equipment financing affect my credit?
It depends on the partner. Some start with a soft credit check, and others may run a hard inquiry before final approval. Ask each partner how they review credit.
How long does equipment financing take?
Timing varies by partner, deal size, and how quickly you provide documents. Having the equipment quote and bank statements ready usually speeds things up. No timeline is guaranteed.
Get the equipment your business needs
Equipment financing lets you put the asset to work while you pay for it over time. Start with a solid quote, know your numbers, and compare offers on total cost and terms. When you're ready, apply once to see what equipment partners can offer. You can also explore products on our equipment financing page.