# Financing Soft Costs (Delivery, Install, Training)

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Last modified: 2026-05-29T19:39:17+00:00
Type: efin_guide

## Summary

Financing Soft Costs (Delivery, Install, Training). Comprehensive guide.

## Content

Soft costs are the non-equipment costs of acquisition: delivery, installation, training, sales tax, software licenses bundled with equipment. Most lenders finance these alongside the equipment, up to a cap. Here's the mechanics.

What counts as soft costs

Freight and delivery
Installation (electrical hookup, foundation, mounting, networking)
Training (initial operator training)
Sales tax (in states that tax the equipment purchase)
Software licenses bundled with equipment
Initial supplies/consumables (tooling, fluids, calibration kits)
Inspection and acceptance testing
Permits and inspection fees for installation


What doesn't count

Ongoing maintenance after placed-in-service (operating expense)
Insurance premiums (operating expense)
Property tax (separate from acquisition)
Loan origination fees and doc fees (closing costs, not soft costs)


Typical soft-cost cap
Most prime equipment lenders finance soft costs up to:

15-25% of equipment cost for prime credit
10-15% for sub-prime credit
Sales tax usually allowed regardless of the soft-cost cap

Example: $100,000 CNC machine + $15,000 installation + $8,000 training = $123,000 financed total. The $23,000 in soft costs is 23% of equipment cost  -  under the typical 25% cap.

Above the cap
If soft costs exceed the lender's cap, options:

Pay the overage in cash at closing
Get the overage financed separately (working capital loan or line of credit)
Negotiate with the lender to lift the cap (sometimes possible on larger deals)
Restructure the deal so some "soft cost" items are billed separately and paid over time


Tax treatment
Most soft costs are capitalized into the equipment's cost basis and depreciated along with it. This includes delivery, installation, sales tax, and "necessary to place the equipment in service" costs.
Some items may be expensed immediately rather than capitalized:

Routine training (vs initial setup training)
Software licenses with shorter useful life than the equipment
Permits with annual renewal

Talk to your CPA. Capitalization vs expense affects Section 179 eligibility and timing.

How sales tax interacts with soft costs
State sales tax handling on equipment + soft costs varies:

Some states tax only the equipment, not the installation/training
Some states tax everything bundled together
Some states tax lease payments instead of the purchase (then soft costs roll into the lease)

See our state guides for state-specific sales tax treatment.

Documentation needed
To finance soft costs, provide:

Equipment quote that itemizes equipment vs soft costs separately
Detailed line items: freight to address, installation scope, training program, etc.
Vendor invoice or estimate for each component
If installation is by a third party (not the equipment seller), separate invoice or contract


Why itemization matters
Lenders want to see soft costs broken out because:

The cap is on soft costs as a percentage of equipment cost
If the seller bundles everything as "equipment," the lender can't evaluate the breakdown
Itemization protects against soft-cost overage being hidden in inflated equipment price


Apply for soft-pull pre-qualification at /apply/.Last reviewed: May 28, 2026. Not tax or legal advice.