Equipment Financing Requirements
Equipment financing typically requires 6+ months in business, $10,000+ monthly deposits, a 600+ personal FICO, and a quote or invoice for the equipment being purchased. Because the equipment itself secures the loan, approvals are faster and rates are lower than unsecured working capital, terms run 24–84 months at 7–25% APR for most prime and near-prime borrowers per Bankrate (2025).
Equipment financing is often easier to qualify for than other business funding because the equipment serves as collateral. Most lenders require at least 6 months in business, a 600+ personal FICO, and an equipment quote or invoice from a vendor. Some lenders go down to 550 FICO when the asset is a strong, easily-resellable category like trucks, lifts, or restaurant kitchen equipment. Down payments are sometimes required, especially for newer businesses.
Key takeaways
- The equipment itself usually serves as collateral.
- 600+ FICO is typical; some lenders accept 550+ for resellable assets.
- An equipment quote from the vendor is required.
- Down payments range from 0% to 20% depending on credit and asset type.
- Funding amounts run from $10,000 to $1,000,000.
- Section 179 may allow you to deduct the equipment cost, talk to your accountant.
Who this is for
This page is for owners purchasing trucks, machinery, kitchen equipment, medical devices, shop tools, or other capital equipment. Equipment financing preserves working capital by spreading the asset cost over time.
If you need a general working capital loan rather than a specific asset, equipment financing is not the right product. Look at working capital or a line of credit instead.
What you need to qualify
Standard requirements for equipment financing through the BizBee network:
| Requirement | Typical standard |
|---|---|
| Time in business | 6+ months (12+ for best rates) |
| Personal FICO | 600+ (550+ for strong asset categories) |
| Monthly revenue | $10,000+ in business deposits |
| Equipment quote | Required (must be from a verified vendor) |
| Down payment | 0% – 20% depending on credit and asset |
| Documents | Bank statements, ID, equipment quote/invoice |
| Asset category | New or used equipment; some categories restricted |
Best funding options
Equipment financing and related BizBee products:
Equipment Financing
Asset-secured financing from $10K to $1M for trucks, machinery, and tools.
Working Capital
Use this if you need general operating funds, not a specific asset.
Term Loan
Larger, multi-purpose option when an equipment-specific structure is not required.
Inventory Financing
Asset-backed financing for inventory rather than equipment.
Why equipment financing is the cheapest non-SBA option
The equipment itself collateralizes the loan, which radically reduces lender risk and lets pricing run far below unsecured products. According to Nav's 2025 lender survey, the average equipment loan closes at roughly half the APR of comparable unsecured working capital for the same borrower profile. That structural advantage is why ELFA reports nearly 8 in 10 U.S. businesses use equipment financing or leasing.
Because the loan is asset-secured, even owners with mid-500s FICO can sometimes qualify, particularly when buying revenue-producing assets (commercial trucks, kitchen equipment, medical imaging) with strong resale markets.
Loan vs. lease: when each wins
A loan transfers ownership at funding and gives you the depreciation and Section 179 benefit. A $1 buyout lease behaves nearly identically but keeps title with the lessor until payoff. A fair-market-value (FMV) lease has lower monthly payments but requires a balloon or return at term end, best for equipment that depreciates rapidly or that you plan to upgrade.
Talk to your CPA before signing. The right structure depends on your tax position, expected useful life of the asset, and whether you intend to keep or replace it at term end.
How underwriters read your equipment quote
Lenders verify the vendor (legitimate dealer vs. private party), the asset (new vs. used; specialized vs. general purpose), and the resale market. New commercial trucks and CNC machines underwrite faster than used specialty equipment because liquidation values are predictable.
Used equipment is fundable but typically requires a larger down payment (10–20%) and shorter terms. Private-party purchases require an independent appraisal in most cases.
Matching loan term to equipment useful life
The single most expensive equipment-financing mistake is mismatching loan term to asset useful life. Financing a 5-year asset over 7 years means paying interest on equipment that's already depreciated past the point of productive use. Financing a 10-year asset over 3 years means crushing monthly cash flow for an asset that will still be producing revenue long after the loan is paid off.
Useful life by category (industry rule of thumb): Class-8 trucks 7–10 years, commercial trailers 10–15 years, CNC machines 10–20 years, restaurant kitchen equipment 7–10 years, medical imaging 7–10 years, IT hardware 3–5 years, software/SaaS 1–3 years. Match the term to the lower bound of useful life and the math almost always works.
Bank equipment lenders enforce this discipline through term caps tied to asset class. Online lenders often allow longer terms (84 months on assets with 60-month useful life) — flexibility that's seductive for cash flow and expensive over the asset's life. If a vendor or broker pushes a term that exceeds the asset's productive life, treat it as a yellow flag and re-model the deal.
How to decide if this is right for you
Before requesting an equipment financing quote, confirm these five items.
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1
1. Get a written vendor quote or invoice
Required to fund. Must show vendor business name, equipment description, and total price.
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2
2. Confirm 6+ months in business
Some lenders fund startups for soft-cost-low new equipment; most prefer 6–12 months.
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3. Pull your FICO
600+ qualifies broadly; 680+ unlocks 7–10% APR pricing.
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4. Decide loan vs. lease with your CPA
Tax position and useful life drive the right structure.
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5. Check Section 179 timing
If buying before year-end, confirm with your CPA that the asset will be 'placed in service' in time to claim the deduction.
When this makes sense
- You are buying capital equipment and want to preserve cash flow.
- Your credit is in the 550–650 range and you would not qualify for an unsecured loan.
- You want predictable monthly payments aligned to the equipment's useful life.
- You may benefit from Section 179 tax treatment, confirm with your CPA.
When to be careful
- You are financing a fast-depreciating asset over a long term.
- The vendor offers in-house financing at much higher rates than a marketplace.
- You are tempted to over-equip beyond what current revenue supports.
- You need general operating cash, not a specific asset.
How this plays out in practice
Trucking company adding a second tractor
Situation: 3-year-old trucking LLC, 720 FICO, $80K/month, wants $145K for a new Freightliner.
Recommendation: 60-month equipment loan, 8–11% APR likely. Section 179 deduction available if placed in service before Dec 31.
Restaurant kitchen overhaul
Situation: 5-year restaurant, 650 FICO, $40K/month, needs $60K in new kitchen equipment.
Recommendation: 48-month equipment loan at 12–15% APR, or FMV lease if owner plans to upgrade in 3 years.
Startup contractor buying used skid steer
Situation: 8-month-old contractor, 640 FICO, $14K/month, wants $35K used skid steer from a dealer.
Recommendation: 36-month used-equipment loan with 10–15% down; expect 14–20% APR given short time in business.
Dental practice financing a $220K CBCT scanner
Situation: Established practice, owner FICO 760, 8 years in business, $1.4M annual collections, financing new CBCT imaging equipment.
Recommendation: 84-month equipment loan at 7.5–9.5% APR with 0% down; useful life 7–10 years aligns to term. Confirm Section 179 + bonus depreciation timing with CPA before December placed-in-service deadline.
Get equipment financing quotes.
Submit your equipment quote and we will match you with lenders who specialize in your asset category — soft pull, no upfront fees.
Frequently asked
Common questions
Key facts in one line
- Equipment financing typically funds 100% of the equipment's invoice cost.
- Bankrate (2025) reports equipment loan APRs commonly run 7–25% depending on credit and asset type.
- Terms typically match the useful life of the equipment, ranging 24–84 months.
- 600 personal FICO is the common minimum; 680+ unlocks the lowest rates and longest terms.
- Equipment Leasing & Finance Association (ELFA, 2024) reports 78% of U.S. companies use some form of equipment financing.
- Section 179 of the IRS code allowed up to $1.16M in equipment expensing in tax year 2024 (IRS Publication 946).
Glossary
Terms worth knowing
- Equipment financing
- A loan or lease secured by the purchased equipment itself, used to acquire revenue-producing assets.
- $1 buyout lease
- A lease structured so the lessee owns the asset at term end for a nominal $1, economically similar to a loan.
- Fair Market Value (FMV) lease
- A lease where the lessee returns the asset or buys it at appraised value at term end. Lower monthly payments.
- Section 179
- IRS provision allowing immediate expensing of qualifying equipment up to an annual cap ($1.16M in 2024).
- Useful life
- The expected productive lifespan of an asset, used to set loan or lease term length.
- Placed in service
- IRS terminology for when an asset is ready and available for use in the business, the date that triggers eligibility for depreciation, Section 179, and bonus depreciation in a given tax year.
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