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Basics of Equipment Financing

What is Equipment Financing?

Equipment financing is specifically designed to help you purchase business equipment. You make periodic payments that include interest and principal over a fixed term. The equipment you intend to purchase serves as collateral and once the debt is repaid, you fully own the equipment, free of any lien. The structure of an equipment loan may include a lien on other business assets or a personal guarantee. Failure to pay your equipment loan may result in the repossession of your business assets or your personal assets - in the case of a personal guarantee.

It is important to note that equipment financing is not the same thing as equipment leasing. Equipment leasing entails paying the owner of the equipment periodic rent for temporary ownership and usage. After the lease term ends, the leased equipment is returned to the owner unless you have agreed on renewal terms or a buyout of the equipment.

Qualifying for Equipment Financing

Qualifying for equipment financing will depend on the individual lender and the type of equipment you intend to purchase. Other factors that lenders will also consider are your personal and business credit scores, your business plan, desired loan amount, and financial statements.

Why Use Equipment Financing?

The reasons why businesses use equipment financing rather than outright purchasing it include:

  • Not having the cash on hand to make an upfront purchase of an expensive equipment

  • Needing to have the latest equipment/technology

Accel Business Funding has provided business loans and business lines of credit and has funded many businesses for more than $380 million. When banks say NO, we say YES to funding in 24 hours!


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