# Equipment Loan

Canonical URL: https://fundmyequipment.com/learn/glossary/equipment-loan/
Last modified: 2026-05-29T19:39:17+00:00
Type: efin_glossary

## Summary

A loan secured by equipment, with title in borrower's name from day one and lender holding a lien.

## Content

An equipment loan is a standard installment loan used to purchase business equipment. The equipment serves as collateral. The borrower owns the equipment from day one (subject to the lender's lien) and depreciates it for tax purposes.
Standard terms

Loan amount: typically 80-100% of equipment cost (sometimes including soft costs like delivery and installation)
Term: 24 to 84 months, depending on equipment useful life
Down payment: 0-20% depending on credit and equipment
Rate: APR ranges from 6.9% (excellent credit) to 24.9% (challenged credit) as of 2026
Collateral: the equipment itself, perfected via UCC-1 filing
Personal guarantee: required for most small-business deals

Loan vs lease
Loan: you own the equipment from day one. You depreciate it. You can sell it. Lien releases at payoff. Lease: lessor owns; you use; specific buyout terms at maturity.
Section 179 with a loan
You can claim Section 179 (and bonus depreciation) on financed equipment in the year you place it in service. You do not need to pay cash. This is one of the main tax advantages of an equipment loan over leasing.
Refinancing equipment loans
Equipment loans can be refinanced if rates drop or your credit improves. Refinancing typically requires a new UCC-1 filing and pays off the original lender. See our equipment loan refinancing guide.