Running a business often means needing new equipment — whether it’s desks for your office, ovens for your restaurant, or dental X-ray machines for your clinic. But equipment is expensive, and not every business has the cash to pay for it upfront. Even if you do, you might prefer to use that money for other things, like marketing or payroll.

That’s where equipment financing comes in.

There are two main ways to finance equipment:

• Equipment loans (you borrow money to buy it).

• Leases (you rent or lease the equipment).

Let’s break them down.

Equipment Loans

With an equipment loan, you borrow money from a lender and make monthly payments until it’s paid off. The equipment itself usually serves as collateral for the loan.

Who offers them?

• Banks

• Credit unions

• Alternative/online lenders

• SBA-backed programs (like the SBA 504 loan for big purchases)

What can you finance?

Almost anything your business needs: computers, kitchen equipment, tools, vehicles, or heavy machinery.

Rates & Terms:

• Banks and credit unions: 6%–12% interest, terms up to 7–10 years

• Online lenders: faster approvals (sometimes within days), but higher rates (and shorter repayment periods, often 6 months–2 years)

• SBA 504 loans: good for expensive equipment, 10% down payment required

Down payment: Usually 20% (10% for SBA loans).

Tax benefit: You can deduct the loan interest as a business expense.

What you’ll need to apply:

• Business plan (why you need the equipment and how it helps your business grow)

• Financial statements (profit & loss, cash flow)

• Resume or business experience

• Collateral (the equipment itself often qualifies)

Equipment Leasing

Leasing lets you use equipment without fully owning it upfront. You make monthly payments, and at the end of the lease, you may have the option to buy the equipment (sometimes for as little as $1).

When leasing makes sense:

• Technology that quickly becomes outdated (computers, software, medical devices)

• Equipment that wears out fast

• Situations where you want lower monthly payments

Pros of leasing:

• Easier to qualify for than loans

• Often no down payment

• Payments may be lower than loan payments

• Sometimes lets you upgrade equipment during the lease

• Lease payments are often fully tax-deductible

Cons of leasing:

• Can cost more long-term than buying

• You’re locked into payments, even if you stop needing the equipment

Choosing Between a Loan and a Lease

Ask yourself:

• How long will I need the equipment?

• Do I want to own it long-term, or will I need to upgrade soon?

• Would I rather keep more cash on hand for other business expenses?

If you want ownership and long-term use, a loan is often better.
If you want flexibility or are dealing with fast-changing technology, leasing may be smarter.

✅ Bottom line: Equipment financing gives you options to get the tools your business needs without draining your cash. The right choice depends on your budget, credit, and how long you’ll use the equipment.