Equipment & Asset Financing
How equipment loans and leases work, Section 179 deductions, and the best lenders for buying or leasing business equipment.
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Equipment financing guide: how loans vs leases differ, typical rates and terms, Section 179 tax deduction, and when financing beats paying cash for business equipment.
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Common Questions
How does equipment financing work?
The equipment itself serves as collateral, making approval easier than unsecured loans. You receive funds to purchase specific equipment and repay over 2-7 years. Interest rates typically range from 4-20% depending on credit. At the end of the term, you own the equipment outright. Some programs offer $0-down options for well-qualified borrowers.
How does equipment financing work?
Equipment financing uses the purchased equipment as collateral, enabling up to 100% financing with no additional security required. The lender holds a lien on the equipment until the loan is repaid. Terms typically match the equipment's useful life (3-7 years for most equipment, up to 20 years for real property improvements). Because the equipment secures the loan, approval requirements are more lenient than unsecured loans.
Equipment leasing vs buying: which is better?
Leasing preserves cash and lets you upgrade to newer equipment at lease end — ideal for technology that depreciates fast. Buying (with financing) builds equity and is typically cheaper long-term for equipment with long useful lives. The break-even depends on the lease rate, equipment lifespan, and your tax situation. Section 179 deduction can make buying more attractive by allowing immediate expensing of the full purchase.
How does Section 179 interact with equipment financing?
Section 179 allows businesses to immediately deduct the full cost of qualifying equipment in the year purchased, rather than depreciating it over several years. Importantly, you can take the Section 179 deduction even if you financed the purchase — you don't need to pay cash. For 2025, the deduction limit is $1,220,000. This can dramatically reduce your net tax cost of acquiring equipment.
Key Terms
Equipment Financing
A loan or lease specifically for purchasing business equipment, which serves as its own collateral. Loan terms typically match the equipment's useful life (2-7 years). Rates: 4-20% depending on credit. Preserves working capital and may offer Section 179 tax deductions for the full purchase price.
Equipment as Collateral
Machinery, vehicles, or other business equipment pledged to secure a loan. The lender may take a UCC filing or title lien on the equipment; advance rates are typically 80–90% of appraised or orderly liquidation value.
Dun & Bradstreet (D&B)
A leading business credit bureau that maintains the Data Universal Numbering System (DUNS) and compiles credit and financial data on millions of businesses globally. Lenders use D&B reports to assess business credit risk.
USDA Business & Industry Loan
A USDA program that guarantees loans from commercial lenders to businesses in rural areas (populations under 50,000). B&I loan guarantees cover up to 80% of principal for projects that create or retain jobs in rural communities.