Equipment Financing
Funding to buy a specific machine or vehicle, usually secured by that equipment and repaid over its useful life.
Equipment financing is capital raised to buy a specific asset — a vehicle, oven, lift, CNC machine, or similar — where the equipment itself typically serves as collateral. Because the loan is secured by the asset and amortized over its useful life, rates are often lower than unsecured options and the term is matched to how long the equipment will earn.
The structural logic is "match the term to the asset." A machine that produces for seven years is a natural fit for multi-year, asset-secured financing. Paying for that same machine with short-cycle working capital forces a long-life asset onto a short repayment window, which strains cash flow unnecessarily.
The reverse is also true: equipment financing is the wrong tool for payroll, inventory, or a net-30 gap, because those needs are not a single durable asset. Many operators run both — equipment financing for the machine, a revenue-based advance or a line of credit for the operating gaps around it.
Frequently asked
Is equipment financing secured?
Typically, yes — by the equipment being purchased. That collateral is part of why rates can be lower than unsecured working capital.
Can I just use working capital to buy equipment instead?
You can, but for a long-life asset, equipment financing usually matches the term better. Working capital shines for short-cycle needs, not multi-year assets.
How is the repayment term set?
Usually to align with the useful life of the equipment, so the asset is earning across the period you are repaying it.
Related terms
A bank loan partially guaranteed by the U.S. Small Business Administration — low cost, but slow and document-heavy.
A revolving credit limit you can draw from, repay, and reuse — flexible, but often slower to set up and qualify for.
The cash a business uses to cover day-to-day operations — payroll, inventory, and the timing gaps in between.
The full dollar amount you repay over the life of an advance — funded amount times the factor rate, plus any fees.
A financing structure where a funder buys a set amount of your future sales at a discount today — a sale, not a loan.
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