Equipment Financing

Equipment financing refers to a loan used to purchase business-related equipment. Instead of using your working capital to purchase the qualifying equipment, equipment financing allows you to finance the full equipment cost and repay the interest and principal over fixed terms. Once the payback period is complete, you will own the piece of equipment outright.

Financing and leasing are similar in some ways, but quite distinct in others. Though both options help you to break down the cost of equipment into manageable amounts, they differ in structure.

When you use financing to acquire equipment, you maintain ownership during and after the plan. With leasing, your lender technically has ownership of the equipment and you’re paying for use of it. This does not necessarily mean the lender can take back the equipment at the end of the lease.

Most often, the equipment is on a lease-to-own plan that would allow you to take ownership of the equipment after the lease. Both options have advantages and a knowledgeable financing consultant will be able to help you find the best fit for your company.

If you find a lender with experience working with newer companies, the process doesn’t have to be difficult. You may have to rely on your personal credit history or accept a slightly higher interest rate, but at the end of the day, getting equipment financing for a new business is 100% possible.