Keep your business in motion with modern equipment.

Equipment financing is probably the easiest type of business capital for a small business owner to obtain (after unsecured business lines of credit).

The process is usually quite simple (depending on the type of equipment you need). It usually starts with you getting a quote (from a vendor) for the equipment you want to purchase. Equipment financing lenders and lessors will ask to see the quote, require you to complete a financing application and eventually an equipment finance agreement (or promissory note).

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Business Equipment Financing

What is Equipment Financing?

There are several types of equipment financing programs. This includes equipment leasing and equipment loans. Equipment lease financing happens when you pay a monthly fee to borrow commercial equipment. The lease company owns the equipment and charges you to use it for a set term (i.e. 24 months). After the lease term is complete, you return the equipment, purchase it outright, or upgrade to new equipment. (If your equipment becomes obsolete in a short period of time, you’ll likely need an upgrade).

In the case of equipment loans, you simply borrow money from an equipment lender to purchase the equipment. Equipment lenders require you to pay a monthly fee, plus interest, until the loan is paid off. The equipment loan would have to be paid off within a set term (i.e. 4 years).

Which one is right for me? An Equipment Lease or Equipment Loan?

Determining what type of equipment financing is right for you depends on your specific business equipment needs. If you need business equipment for long term use, at least 5 years (or more), an equipment loan may be right for you. Business and commercial equipment should be bought (outright) when it will not become obsolete quickly. You may save money in the long run. A good example of this is construction equipment. Most construction equipment lasts for a long period of time.

Equipment lease financing is best for businesses that need to purchase business equipment that becomes outdated quickly. For example, computer hardware that may become outdated within 3 years or less may be better off leased. At the end of the lease, most lease financing companies allow you to purchase the equipment for $1.00, at fair market value or 10% of fair market value. This is after you’ve already spent a set term making a monthly payment toward the use of the equipment. You can end up paying even more if you want to purchase the equipment after the lease is up.

Purchasing the equipment for $1.00 (after the lease term is up) can be an excellent option. However, you’ll have high monthly payments during the lease term. Overall, leasing equipment can be more expensive than purchasing, but it makes sense when the equipment becomes obsolete quickly.

One other benefit of equipment leasing is that it is tax deductible. You can write off your monthly payments on your business taxes. This can reduce your overall tax burden. Make sure you thoroughly understand the equipment finance agreement that you sign because it will outline whether you are allowed to purchase the equipment for $1.00, at fair market value or 10% of fair market value at the end of the lease term. It may be wise to consult with an equipment financing expert to help you determine whether an equipment loan or equipment lease is right for your small business.

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How Can I Get Approved for Equipment Financing the Simple Way?

Equipment financing is not very difficult to obtain. Equipment lenders and leasing companies usually require the owner of the business to have at least a 650 credit score. Some equipment lenders and lessors may accept business owners with bad credit. This is because they use the equipment as collateral to secure the loan or lease. Some also require you to be in business for at least one year and generating at least $50,000 in revenue. It’s all about what type of equipment financing you apply for, your business industry, your business revenue, personal credit score, and in some cases your personal income.

How much equipment financing can I get?

This depends on what type of equipment you are purchasing and if you can meet the credit, income, and business revenue requirements. Equipment financing can be as little as $1,000 or as much as $5,000,000. It all depends on your business needs and your business industry. Everything from laptops to cellphones to tractor-trailers can be obtained via equipment financing. And all of these have very different price ranges.

Where do I go to get equipment financing for my business

When you know what a lender (or in this case a lessor) expects of you to get approved for equipment financing, you can work to prepare yourself to get it. Before you do that though, it would be wise to contact an equipment financing expert. LenCred specializes in helping entrepreneurs and small business obtain capital in the simplest way possible and equipment financing is one of the ways. We understand the differences between equipment leases and equipment loans. We also understand how to help you choose the financing option is right for your small business. If you’re interested in learning more about how the LenCred team may be able to help you get equipment financing for your business, click here to contact us.

What to look for in an equipment financing expert

The right equipment financing expert will analyze your personal credit history, personal financial situation and small business needs to determine what type of equipment financing is right for you. After they help you determine what will work best for you, they will be able to direct you to the most appropriate equipment lender or equipment lease company.

Pay attention to what type of questions the equipment financing expert asks you. The right questions should be asked so the right answers can be given and the right equipment financing solution is selected. Selecting the wrong equipment financing solution could result in a number of things. This includes spending more money, losing out on special tax benefits, or getting stuck with obsolete equipment. LenCred is an equipment financing expert that can lead you to the most appropriate financing option and lender or lessor.