Equipment Financing FAQ

Approval size depends on credit profile, time in business, cash flow, and the equipment itself. As a rough range: under one year in business with personal credit only, typical first-time approvals run $25,000 to $75,000. Two-plus years with clean credit and consistent revenue, $100,000 to $500,000 is common. Established businesses with strong financials can finance multi-million-dollar transactions.

Rates vary by credit tier, term length, equipment age, and lender. As of recent data: A-tier credit on new equipment runs roughly 7% to 11% APR. B-tier credit on used equipment runs 11% to 18%. Startups and challenged credit can see 18% to 30%. A soft-pull prequalification gives you a real range without affecting your score.

Common terms range from 24 to 84 months. The right term depends on the equipment’s useful life and your cash flow priorities. Construction equipment and trucks typically finance over 48 to 72 months. Technology equipment over 24 to 48 months. Heavy production machinery up to 84 months.

Down payments range from 0% to 25%. Strong credit and prime equipment often qualify for no money down. Used or specialty equipment usually needs 10% to 20% down. Startups often need 15% to 25% down even on new equipment.

App-only deals under $250,000 with clean credit can fund in 24 to 72 hours. Deals requiring full financials usually fund in 5 to 10 business days. Deals over $1 million can take 2 to 4 weeks for underwriting and documentation.

Prequalification with us is a soft pull and does not affect your credit. A formal application triggers a hard pull, which can lower your score 5 to 10 points temporarily. Multiple equipment financing hard pulls within 14 days are typically counted as a single inquiry by FICO.

App-only deals usually need just a one-page application and a copy of your driver’s license. Full-doc deals require two years of business tax returns, year-to-date financial statements, and three months of bank statements. See the document checklist for size-by-size requirements.

Yes, though private-party transactions add documentation steps. The lender will want a bill of sale, title or serial verification, and an inspection or appraisal. Expect 1 to 2 extra business days versus dealer transactions.

Yes, equipment purchased with a loan and placed in service during the tax year qualifies for Section 179 deduction up to the annual limit. The deduction applies to the full purchase price, not just the down payment. Operating leases generally do not qualify, while capital leases and EFAs typically do. Confirm with your tax advisor.

Both can be tax-advantaged. Loans let you deduct depreciation and interest. Operating leases let you deduct full payments as a business expense. The right choice depends on your tax situation, equipment’s expected life, and end-of-term plans. Our finance vs lease comparison walks through specific scenarios.

We are an editorial site and lead-routing platform. We are not a lender. When you submit an application, we route it to partner lenders we have vetted. You always see lender identity before signing anything.

Both have trade-offs. Brokers shop multiple lenders, which often produces better terms for borrowers outside the prime credit box. Direct lenders cut out the middle layer, which can save fees on prime-credit deals. See how brokers work for a full breakdown.

Captive lenders are owned by manufacturers (Caterpillar Financial, Komatsu Financial, John Deere Financial) and finance only that brand’s equipment. Independent lenders finance any brand. Captives often offer promotional rates on new equipment. Independents are usually more flexible on used and mixed-brand fleets. See captive vs independent.

A denial is not the end. Different lenders have different appetites. We route applications to multiple lenders, so a no from one does not stop the process. Common reasons for denial: too short in business, recent bankruptcy, equipment age outside the lender’s box, or industry restrictions. Our team explains the specific reason if all lenders pass.

Most lenders charge a late fee (typically $25 to $50 or 5% of the payment) after a 10-day grace period. After 30 days, the loan is reported delinquent to credit bureaus. After 60 to 90 days, the lender can initiate repossession. Talk to your lender before missing a payment – most will work with you on a one-time deferral.

Most equipment loans allow prepayment, but some have prepayment penalties (typically 1% to 3% of the remaining balance for the first 12 to 24 months). Leases vary: $1 buyout leases are essentially loans and usually allow payoff. FMV leases typically do not allow early termination without paying remaining payments plus the FMV buyout.

Your loan or lease payment continues regardless of equipment uptime. This is why warranty coverage and gap insurance matter. Most lenders require physical damage insurance with the lender named as loss payee.

Often yes. Most lenders allow 10% to 25% of the loan amount in soft costs (delivery, installation, training, extended warranty). Larger soft-cost percentages require lender approval. See soft costs financing.

On a loan or $1 buyout lease, you own the equipment outright after the final payment. On an FMV lease, you typically have three options: pay the fair market value buyout and keep it, return the equipment, or extend the lease month-to-month. On a TRAC lease, the pre-set residual is what you owe to take title.