Equipment
Equipment financing, explained
Credible Lending Editorial · Updated · 5 min read
The short answer
Equipment financing is a loan to buy business equipment in which the equipment serves as collateral. You own the asset, repay over a term matched to its useful life, and keep working capital in the business. Because the loan is secured, it's often easier to qualify for than unsecured financing.
How does equipment financing work?
- You get a quote from a dealer, manufacturer or private seller.
- The lender confirms the equipment's value and approves an amount.
- Funds go to the seller and the equipment is delivered to you.
- You repay in fixed installments. The lien is released when the loan is paid off.
Should I finance, lease or pay cash?
| Option | You own it? | Cash impact | Best when |
|---|---|---|---|
| Finance | Yes | Small upfront, fixed payments | The equipment lasts years and earns steadily |
| Lease | Usually not | Lowest monthly cost | Technology you'll replace in 2–3 years |
| Cash | Yes | Large upfront hit | You have more cash than you'll need for a year |
For most revenue-producing equipment, financing wins: the machine starts earning immediately while the cost is spread across the years it earns.
What equipment qualifies?
Most revenue-producing business equipment: medical and dental devices, manufacturing machinery, construction equipment and work vehicles, commercial kitchens, and technology like servers and point-of-sale systems.