How to Get Funding for Purchases or Leases
When a critical piece of equipment fails, becomes outdated or you simply need more tools to support your growing business, the costs can add up — and quickly.
Through equipment financing, you can secure the machinery and technology you need without depleting your cash reserves.
At Fast Capital 360, our lending partners can provide you with funding to buy or lease equipment and keep your business moving in the right direction.
What Is Equipment Financing?
Business equipment financing is funding you obtain to purchase or lease equipment, tools, technology or machinery you need to operate your business. With traditional equipment financing, the item you’re interested in acquiring serves as collateral for your loan. This means if you’re unable to make your payments, your lender can seize the equipment to recoup its losses.
In the U.S., 79% of companies use financing to obtain equipment, according to the Equipment Leasing & Finance Foundation. These include loans, leases and lines of credit.
How Does Equipment Financing Work?
With a business equipment loan, you can fund the acquisition of machinery, office furniture, vehicles or other resources for your company — from commercial ovens to tractors, construction vehicles to computers and more.
With business equipment financing, you could receive up to 100% of the equipment’s value in some cases. For risky investments, such as items with a high depreciation rate, lenders may require a 10%-20% down payment.
The amount of funding you receive is determined by your business’s ability to repay the loan as well as the price and condition of the equipment you’re planning to purchase.
With most equipment financing programs, the equipment itself secures the funds. As a result, it’s possible to get equipment loans or leases even if you have less-than-perfect credit, though higher interest rates will likely apply.
When Does Equipment Financing Make Sense?
According to the Federal Reserve Banks’ State of Small Business Credit Survey, equipment and auto loans were among the top-5 loan types for small businesses. Fourteen percent of those surveyed agreed. Why should you consider equipment financing?
Only Need Equipment
Traditional equipment financing is best for borrowers who only need funds to acquire equipment. However, if you also need capital to pay for other business costs, purchases or investments, you would need another type of loan.
Need Funds Fast
Unlike a conventional business loan, which could take weeks to fund, when you apply for a loan to finance equipment, you could receive funding within 2 days of approval.
Don’t Have Collateral
With a traditional equipment loan, the equipment you’re acquiring secures your financing. This means you don’t have to provide additional collateral, such as property, and in some cases, you may not need to offer a down payment.
What Does Equipment Financing Cost?
At Fast Capital 360, our lending partners offer equipment loan rates starting at 8% with terms ranging from 1-5 years.
The length of your agreement largely depends on the useful life of the financed item. For instance, you can expect a longer term on a commercial equipment loan or lease if you’re financing a truck or piece of construction equipment versus computer equipment that will become obsolete within a few years.
Payments are made daily, weekly or monthly, depending on the specifics of your agreement.
Equipment Financing Example
Let’s say you were approved for a $20,000 loan with an equipment loan rate of 10% over a term of 3 years, or 36 months. Using our equipment loan calculator, you would see your estimated monthly payment would be $645. This would mean over the term of the loan, you’d pay $3,220 in interest.
Keep in mind, some lenders may also charge a one-time upfront fee, which could vary depending on the repayment term, interest rate or loan amount.
How to Qualify for Equipment Financing
Qualifying for equipment financing doesn’t have to be difficult. At Fast Capital 360, your time and business are paramount, so we make the process as straightforward as possible.
What Our Lenders Evaluate
Our lending partners will review your business cash flow, including income and expenses, existing debt obligations and credit score to let you know how much capital you can borrow.
You might also want to share information about the equipment you’d like to finance, such as the following:
- Condition (i.e., new versus used)
- Number of miles or man-hours the equipment has been operated
- Seller information (i.e., private seller or vendor)
Fast Capital 360 Minimum Qualifications
To qualify for a business equipment loan through one of our lending partners, you’ll need to meet the following:
- 2+ years in business
- $160,000+ in annual revenue
- 620+ credit score
If you don’t meet these requirements or are looking for a business equipment loan for bad credit, we can still help. Our lending partners offer alternative financing options, including short-term loans and merchant cash advances, available to qualifying applicants with credit scores in the 500s.
Equipment Financing Through Fast Capital 360
How to Apply for Equipment Financing
If you’re searching for easy equipment financing, look no further. Fast Capital 360 brings together some of the best funding providers through one straightforward application. Applying for financing through our lending partners is fast, simple — and most importantly — you can get preapproved without impacting your credit.
Whether you’re in search of a heavy equipment loan, construction equipment loan or other financing option, all it takes is 3 steps:
- Tell us about yourself and your business
- Attach recent bank statements
- Get multiple financing offers
Pick the offer that works best for you and you could receive equipment funding within 2 days.
Equipment Financing: Frequently Asked Questions
Equipment loans can be used to purchase or lease new or used equipment and are often best used for high-ticket items. Funding in this niche industry can include the following:
- Vehicle loans
- Construction equipment financing
- Restaurant equipment loans
- Medical equipment loans
- Heavy equipment financing
- Farm equipment loans
- Manufacturing equipment financing
Equipment loans differ from other types of small business loans in how they’re structured. Unlike some other forms of financing, the use of traditional equipment loan proceeds is restricted. You can only use the funds to purchase a specified piece or lot of equipment. This is in contrast to a business term loan, line of credit or alternative financing product, which allows you to spend funds flexibly.
One of the drawbacks of traditional equipment financing is that the loan proceeds must go to buying or leasing business equipment, tools and machinery. Additionally, some lenders may require a down payment.
When deciding if you should purchase or lease your business equipment, consider the following:
- How long will you need the equipment?
- What is your business’s current financial situation?
- Will the equipment become quickly outdated?
- Will you be able to maintain the equipment on your own?
Business equipment loans are used to procure equipment you want to own. Durable machines such as cash registers, refrigerators or commercial manufacturing tools — items you plan to use for 3 years or more — are great examples of things you can get with an equipment loan.
You should consider leasing business equipment if the item you plan to finance will become outdated quickly, if you’re not in a position to provide a down payment or you will only need the equipment for a short amount of time or a one-time project.