How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 8 equipment financing options
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
Funding Circle - Online term loan with Fundera by NerdWallet | 5.0/5 Best for Online equipment loans for businesses with strong credit | $500,000 | 660 | with Fundera by NerdWallet |
OnDeck - Online term loan with Fundera by NerdWallet | 5.0/5 Best for Equipment financing for startups | $250,000 | 625 | with Fundera by NerdWallet |
Fora Financial - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Equipment financing for bad credit | $1,500,000 | 500 | with Fundera by NerdWallet |
National Funding - Equipment Financing with Fundera by NerdWallet | 4.5/5 Best for Equipment financing with no down payment | $150,000 | 600 | with Fundera by NerdWallet |
Triton Capital - Equipment financing with Fundera by NerdWallet | 4.0/5 Best for Fast equipment financing | $250,000 | 600 | with Fundera by NerdWallet |
TAB Bank - Term loan | Best for Bank equipment financing | $300,000 | 660 | |
SBA 7(a) loan with Fundera by NerdWallet | Best for SBA equipment loans | $5,000,000 | 650 | with Fundera by NerdWallet |
SBA CDC/504 loans | Best for Low-interest equipment loans | $5,000,000 | 680 | Read Review |
Here are 8 equipment financing options
Best for Online equipment loans for businesses with strong credit
Best for Equipment financing for startups
Best for Equipment financing for bad credit
Best for Equipment financing with no down payment
Best for Fast equipment financing
Best for Bank equipment financing
TAB Bank
Max Amount
$300,000
Min. Credit Score
660
Best for SBA equipment loans
Best for Low-interest equipment loans
Our pick for
Online equipment loans for businesses with strong credit
Funding Circle - Online term loan
Max Loan Amount
$500,000
Min. credit score
660
Est. APR
15.22-45.00%
Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
May fund quickly
Max loan
$500,000
Min. Credit score
660
Apr range
15.22-45.00%
Our pick for
Equipment financing for startups
OnDeck - Online term loan
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
35.40-99.90%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
Max loan
$250,000
Min. Credit score
625
Apr range
35.40-99.90%
Our pick for
Equipment financing for bad credit
Fora Financial - Online term loan
Max Loan Amount
$1,500,000
Min. credit score
500
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Max loan
$1,500,000
Min. Credit score
500
Our pick for
Equipment financing with no down payment
National Funding - Equipment Financing
Max Loan Amount
$150,000
Min. credit score
600
Borrowers who can't qualify for more traditional loan options might consider National Funding for fast access to capital.
Max loan
$150,000
Min. Credit score
600
Our pick for
Fast equipment financing
Triton Capital - Equipment financing
4.0
NerdWallet rating with Fundera by NerdWallet
Max Loan Amount
$250,000
Min. credit score
600
Est. APR
5.99-35.00%
Triton Capital offers fast equipment loans up to $250,000 for businesses in a range of industries.
4.0
NerdWallet rating Max loan
$250,000
Min. Credit score
600
Apr range
5.99-35.00%
with Fundera by NerdWallet
Our pick for
Bank equipment financing
TAB Bank - Term loan
Max Loan Amount
$300,000
Min. credit score
660
Est. APR
8.99-35.99%
TAB Bank offers competitive interest rates for business owners with strong credit — and can sometimes fund faster than an SBA loan.
Max loan
$300,000
Min. Credit score
660
Apr range
8.99-35.99%
Our pick for
SBA equipment loans
SBA 7(a) loan
Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.
Lowest interest rate
Max loan
$5,000,000
Min. Credit score
650
Apr range
11.50-15.00%
Our pick for
Low-interest equipment loans
SBA CDC/504 loans
Max Loan Amount
$5,000,000
Min. credit score
680
Est. APR
2.60-3.20%
You cannot put an SBA CDC/504 loan toward working capital, existing debt or a rental real estate investment.
Max loan
$5,000,000
Min. Credit score
680
Apr range
2.60-3.20%
What is equipment financing?
Equipment financing refers to a loan that's used to purchase business machinery and equipment. These loans are typically structured as term loans that you repay, with interest, over a specific period of time.
You can use equipment financing to buy assets such as office and computer equipment, industrial machinery and business vehicles.
How equipment financing works
Equipment financing is a type of asset-based financing, which means the equipment itself is collateral for the loan.
You can get an equipment loan equal to up to 100% of the value of the equipment you’re looking to purchase — depending on which equipment finance company you use and your business’s qualifications.
Some small-business lenders may also pay for soft costs, such as delivery, installation, warranties, assembly and other one-time expenses required to get your equipment set up and running. Certain equipment financing companies will finance these costs on top of the full value of your equipment — offering, for example, 125% financing — 100% for the equipment, 25% for soft costs.
Other equipment financing companies, however, may finance only a percentage of the cost of the equipment, say 75%, and allot the remainder of the loan (25%) to your soft costs.
Because soft costs typically require a large investment upfront when you purchase your equipment — and don’t add value to the equipment long term — it can be helpful to find an experienced equipment financing company that will finance some of these expenses.
This way, you’re receiving the same interest rate to finance your soft costs as you are for the rest of your equipment loan — and you don’t have to use funds you have on hand or take out a separate loan to cover them.
Equipment financing rates and terms
Repayment terms and interest rates on equipment financing can vary depending on the equipment finance company, your business’s qualifications and how long the equipment you’re purchasing is projected to have value.
- Anecdotally, equipment financing interest rates range from 4% to 45% APR.
- Generally, terms on business equipment loans are based on the anticipated life of the equipment or machinery you’re purchasing. A shorter term may have you scrambling to make payments, and a longer term could mean you’ll be paying for the equipment after you stop using it.
Equipment financing vs. equipment leasing
Lenders may offer equipment leasing as an alternative to equipment loans. With equipment leasing, you rent the equipment from a vendor, lender or specialized equipment leasing company. At the end of the lease, you return the equipment, renew the lease or buy the equipment.
Equipment financing | Equipment leasing | |
|---|---|---|
How it works | You borrow money from a lender to purchase equipment. | You rent equipment from a lender. |
Ownership | You own the equipment at the end of the loan term. | The lender owns the equipment. At the end of the lease, you may have the option to renew or buy the equipment. |
Cost | Higher monthly payments, but costs less over time. | Lower monthly payments, but costs more over time. |
Best for | Equipment you plan to use for longer than 36 months. | Equipment you plan to use for 36 months or less. |
Pros and cons of equipment financing
Pros
- Affordable. Equipment loans can provide competitive interest rates and long terms. SBA 7(a) loans, for example, typically offer terms up to 10 years for equipment purchases.
- Equipment ownership. You’ll own the equipment outright once the loan is repaid. If you need cash for other business purposes, you might arrange a sale-and-leaseback agreement with the equipment finance company; that involves selling the equipment to a lender in return for quick cash and then leasing it back from that lender.
- Self-collateralizing. Because the equipment is often used as collateral for the loan, you may not need to rely as heavily on personal credit, time in business or other collateral to qualify. This could help startups and businesses with bad credit qualify for equipment financing.
- Tax savings. At tax time, the interest you’ve paid is deductible, and you may also qualify for a depreciation tax benefit.
Cons
- Outdated equipment. If the financed equipment becomes outdated, you’ll need to sell or dispose of it.
- Down payment. An equipment loan may require a high initial down payment.
Where to get equipment financing
Online lenders
Online equipment finance companies can offer access to equipment financing with more flexible qualifications than traditional bank or SBA loans. Some online lenders work with startups or businesses with bad credit.
Many online business lenders also offer streamlined application processes and fast financing — in some cases, funding loans within 24 hours.
Equipment loans from online equipment financing companies are typically more expensive than bank or SBA loans, however, with shorter terms and higher interest rates.
Banks and credit unions
Although banks and credit unions generally offer small business equipment loans with the most favorable interest rates and terms, they also have strict eligibility requirements. To qualify for equipment financing from a bank, you’ll typically need strong personal credit, several years in business and excellent financials.
If you can meet these requirements, however, getting an equipment loan from a bank or credit union will likely be your most affordable option. Plus, some institutions, such as Bank of America, have business divisions devoted to equipment financing across different industries.
SBA lenders
As an alternative to traditional bank financing, you might work with an SBA lender (typically a bank or credit union) to get an SBA loan. SBA loans have long terms — generally up to 10 years for equipment loans — and low interest rates. They also allow you to use the equipment you’re purchasing, as well as equipment you already own, as collateral.
To qualify for an SBA loan, you’ll generally need a good personal credit score, 690 or higher (although some SBA lenders may have lower score requirements), and strong business finances.
Specialized equipment financing companies
There are specialized equipment financing companies that offer loans based on the type of equipment you need for your business such as transportation equipment financing, commercial truck financing, communication equipment financing and farm equipment financing, among others.
These equipment financing companies can offer experts who are knowledgeable about the specific type of equipment you want to purchase for your business, something that may not be available at a bank or online lender. However, keep in mind that interest rates and terms offered by these finance companies are unlikely to be as favorable as those offered by a bank.
Get equipment financing in your industry:
- Learn more about gym equipment financing.
- Compare the best financing options for restaurant equipment.
- Find online lenders that offer dental equipment financing.
- Review options for farm equipment loans.
Find the right business loan
The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on September 26, 2023
Methodology
NerdWallet reviewed both traditional and online lenders in order to create our list of the best equipment loans.
Our list includes a variety of loan options to meet the diverse funding needs of small-business owners, with an emphasis on lenders that offer a streamlined underwriting and approval process.
Each small-business loan option on our list meets the following criteria:
-- Maximum loan amount of at least $150,000.
-- Transparent rates and repayment terms.
-- Funding available within two weeks of applying.
-- Personal credit score requirements of 680 or below.
-- No more than two years in business required.
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
Learn more
Frequently Asked Questions
Repayment terms on equipment financing can range from several months to 10 years. Generally, terms are based on the anticipated life of the equipment or machinery you’re purchasing.
Interest rates on equipment financing can fall as low as 4%, but as high as 45%. In general, banks will offer equipment loans with the most competitive rates and terms.
Startups may be able to get equipment financing. Because the equipment you purchase serves as collateral on your loan, lenders can be more flexible with their qualification requirements.