Best Equipment Financing Companies and Loans in 2023
Buying equipment can be a significant expense for entrepreneurs. Small businesses may need to purchase IT equipment or machinery to get up and running or replace outdated equipment to improve efficiency. Equipment financing can help if your business doesn’t have the extra capital on hand.
Reviewed by: Sarah Brooks, Personal Finance Writer and Editor
Many or all of the products featured here are from our partners who compensate us. This may affect which companies we write about and where the company appears on a page. However, any analyses, or reviews expressed in this article are those of the author’s alone, and have not been approved or endorsed by any partner.
American Express Business Blueprint™ - Best for Fair Monthly Revenues
Monthly fee: 3-9% for 6 month loans, 6-18% for 12-month loans, 9-27% for 18-month loans
Loan amounts ranging from $2,000 to $250,000
No prepayment penalties and no origination fees
Convenient application process
Pros & Cons
Fair monthly revenue requirements
Straightforward application process
Excellent customer service
No prepayment penalties
Complicated fee system
Potentially high rates
American Express Business BlueprintTM offers a business line of credit that can be used for equipment financing or nearly any other business funding or expense. You will need a credit score of 640 and 12 months in business to qualify, the average monthly revenue requirement of at least $3,000. However, all businesses are unique and are subject to approval and review.
If you qualify, you may be approved for a credit line between $2,000 and $250,000. Each draw is repayable as a separate installment loan. American Express Business Blueprint charges a monthly fee rather than an interest rate. Business owners pay a fee for each month they have a balance.
Fee ranges are as follows: 6-month loan: 3-9%, 12-month loan: 6-18%, 18-month loan: 9-27%
If you have fair monthly revenue and credit, American Express Business Line of Credit may be a good choice for a short-term line of credit. Just keep in mind that monthly fees can be high depending on the terms.
Lowest Interest Rates
Lendzi - Best for Low Interest Rates Equipment Loans
Excellent customer reviews on independent review sites
Pros & Cons
Multiple lenders to choose from
Competitive interest rates
Poor credit accepted
Excellent customer reviews
No collateral required
Startups may not qualify
Annual revenue requirements may be high
Rates high for those with poor credit
Lendzi offers some of the lowest interest rates on equipment financing loans. This is because they are both a direct lender and a partner with more than 75 additional lenders, allowing them to find the lowest rate possible for your small business. Lendzi’s online application is quick and seamless, and applying will not affect your credit score. Whether you need a small, $10,000 equipment financing loan or are looking for a loan up to $2 million, Lendzi can help.
Most equipment loans that Lendzi can get you are up to $2 million and have terms ranging from 12 to 84 months. The minimum credit score required is 550, and rates start at just 3.49%. Rates are typically lower with equipment financing loans as opposed to traditional small business loans because the equipment acts as collateral. If you default on the loan, the lender can confiscate your equipment.
In addition to a credit score of 550, lenders ideally want to see you’ve been in business for at least six months (ideally two years) and have a minimum cash flow of $100,000 to $130,000.
Lendzi is in the business of helping small business owners find the right loan to meet their needs. If you’ve previously been denied a loan or if you have poor credit, don’t let that stop you from applying to Lendzi. Qualified representatives are available to guide you through the entire process, making them one of our top picks for equipment financing loans.
Backd - Best for Equipment Loans with Good Credit Score
Industry best factor rate for MCA - as low as 1.10
APR for the Line of credit product starts at 35%
Flexible repayment terms up to 16 months
Get funding in as little as 24 hours
Check your rate with a soft credit pull
Pros & Cons
Easy online application
Fast funding times
Large loan amounts up to $2 million
Flexible payment options
Not available to startups
Rates are not disclosed prior to applying
Not all industries will qualify
Backd was founded in 2018 in order to get more businesses the funding they need to grow, thrive, and expand. While they don’t specifically offer equipment financing loans, they do offer working capital loans and business lines of credit, both which can be used to purchase much-needed equipment.
Backd working capital loans range from $10,000 to $2 million and do not require collateral. Terms are up to 16 months and payments are made daily, weekly, or semi-monthly. Backd also offers small business lines of credit up to $750,000 with unlimited terms. With a line of credit, you can draw on the funds at any time, pay them back, and draw on them again. If you are constantly needing to replace or update equipment, a line of credit may be your best option.
To qualify, you need to be in business for at least one year and have annual revenues of $100,000 or more.
Backd tailors their loans to your unique business, making them ideal for small businesses that may have struggled in the past with getting a loan. As long as you meet the minimum revenue requirement and have been in business for at least one year, we recommend giving Backd the chance to fund your small business.
National Funding - Best for No Down Payment Equipment Loans
National Funding offers loans you can use to cover the cost of new or used equipment. Depending on your finances and the cost of your equipment, you may get approved for up to $150,000 in funding and repay what you borrow every month. Best of all, there is no down payment required.
National Funding’s equipment loans cap out at $150,000 with repayment terms between two and five years. National Funding uses a factor rate rather than an interest rate, and rates begin at 1.10. To qualify for a National Funding loan, you’ll need a credit score of at least 600, be in business for two years or more, and show $250,000 or more in annual revenue.
If your business needs an equipment loan without a down payment, National Funding should be on your radar. Keep in mind that you must have $250,000 in annual revenue in order to qualify, though.
Biz2Credit - Best for Equipment Financing for Startup Businesses
Biz2Credit offers funding that is closely tied to the equipment itself, so there's no worry of borrowing more money than you can handle. Plus, their eligibility requirements should be attainable for less-established businesses looking for financing options.
Business owners can use Biz2Credit loans to finance up to 100% of the equipment value and loan terms will often match the estimated life of the equipment.
Biz2Credit also offers unique access to funding through Accounting firms. Accounting firms that are part of Biz2Credit's CPA Business Funding Portal can refer their clients to Biz2Credit for funding.
Biz2Credit’s eligibility requirements are more suited to new businesses than other lenders. However, keep in mind that you'll only be able to borrow up to 100% of the equipment value. If you need more funds, you will need to look elsewhere.
GoKapital offers equipment financing loans ranging from $30,000 to $5 million, making them our top pick for those that need more expensive equipment. Whether you need to finance new ovens for your restaurant business or commercial equipment and machinery, GoKapital can help.
GoKapital equipment financing offers rates ranging from 6%-35% with terms of one to five years. Credit score isn’t as much of a consideration, as they take businesses with scores as low as 580. However, they do require you to be in business for at least one year and have annual revenues of $360,000 or more. If you meet these requirements, you may be able to get up to 95% of the cost of your equipment financed through GoKapital.
GoKapital is offered in all 50 states, has competitive rates and terms, and offers large loan amounts. If your annual business revenue is high and you need a large loan amount in order to purchase or lease equipment, GoKapital can get you the funding you need.
Bluevine offers business lines of credit that can be used to buy equipment. A line of credit acts more like a credit card, where you draw against the line when needed. Interest is only paid on the amount you use.
Since Bluevine does not offer equipment financing loans, there is no collateral requirement. However, in order to borrow from the company, you will have to agree to a personal guarantee, meaning you'll be on the hook for paying off the loan even if your business defaults.
If you need flexible equipment funding or are looking to fund other areas of your business, a line of credit from Bluevine may be your best option.
Fundbox offers two types of loans that can cover your equipment: small business loans and small business lines of credit. If low fees and flexible repayment options are your top priority, Fundbox could be one of the strongest financing options for your small business.
For both Fundbox loans and lines of credit, you need to have a minimum credit score of 600, be in business for at least six months, and have $100,000 or more in annual revenue. The line of credit must be repaid within 24 weeks; and the short-term business loan must be repaid within one year.
If you’re looking for an equipment financing loan with fewer fees, you may want to seriously consider Fundbox. Unlike most lenders, they do not charge a prepayment penalty or an origination fee. That said, those lower fees do come at a trade-off as you need to be prepared to pay off your business loan within one year.
In this review, we highlight the terms, rates and fees of the best equipment financing companies and explain what makes them a good choice. We also share potential downsides of each company, and provide a rating methodology you can use to select the best equipment financing option for your needs.
Equipment financing is a type of small business loan that’s used to help businesses purchase the equipment they need. According to the Equipment Leasing and Finance Association (ELFA), 79% of U.S. companies use some kind of business fundingto acquire equipment. If you need new equipment to keep your business running, read on below. Our experts have compiled a list of the best equipment financing companies in 2023.
ELFA reports that 19% of companies who financed equipment purchases used secured loans. But there are dozens of equipment financing companies out there that also offer unsecured loans, making it hard to know which lender is right for you.
How to Choose the Best Equipment Financing Companies
Loan features: We looked into details of the business funding product, including loan amounts, loan terms, and repayment options.
Application process: We analyzed the details of the application process, such as the invasiveness of the application information, whether the equipment fincnaing company requires a hard or soft pull on your credit, and what the funding time looks like.
Interest rates and fees: We considered the costs of the loan, including any fees charged by the lender and their minimum and maximum interest rates.
Qualification process: We looked at what it took to qualify for equipment financing, including minimum credit score, amount of annual revenue, and length in business.
Customer support: We looked into various customer support features, such as the ability to talk to a customer service representative, the degree of multi-channel support, and the availability of educational information or tools.
Online user reviews: We read company reviews on independent review sites like Trustpilot to gain a sense of the level of customer satisfaction.
Perks and bonuses: Finally, we took into account any special service offerings, such as payment flexibility or advanced technology, as well as their overall level of transparency.
Main Features of the Best Equipment Financing Companies
Now that you’ve had a chance to learn about the top equipment financing companies in depth, this side-by-side comparison will help you decide which one is the best fit for you.
Min. Credit Score - 640
Min. Time in Business - 12 months
Min. Revenue - Average monthly revenue: at least $3,000
Loan Amount - $2,000-$250,000
6-month loan: 3-9%
12-month loan: 6-18%
18-month loan: 9-27%
What is Equipment Financing?
Equipment financing is a loan used specifically for purchasing equipment. It usually doesn’t include working capital loans that are meant to provide funding for day-to-day operations. ‘Equipment’ is tangible assets such as computers, freezers, vans, trucks, tools, and other functional machinery necessary for running the business. Equipment financing can also cover software.
Businesses spend approximately $2 trillion dollars investing in equipment each year. About 57% of that investment is financed through loans, lines of credit, or other financial products.
With an equipment financing loan, the total loan amount cannot exceed the total economic value of the equipment itself. You pay interest on the loan, but it is not as steep as other methods (such as credit cards or working capital loans) because the equipment acts as collateral for the loan. If you fail to pay, the lender will seize the equipment.
Remember that equipment financing is a loan, not a lease. You own the equipment and have to make payments; whereas with a lease, you are renting the equipment and do not own it. With equipment financing, you can claim depreciation on your asset to reduce your tax liability.
How Equipment Financing Works
Business equipment financing is usually viewed as a more cost-effective and lower-risk way compared to other forms of financing. It allows businesses to maintain their cash reserves because they do not purchase the equipment outright.
Each lender that offers equipment financing and small business loans will have different terms, but you can usually find a lender that will finance around 80% of the asset’s total purchase price.
Generally speaking, you will need to pay the initial 20% of the cost and then repay your lender over the term of the agreement. There are some equipment financing lenders, though, that do not require a down payment.
There are several types of business funding that you can use to finance an equipment investment including:
Secured business loans: This type of small business loan uses the equipment as collateral, potentially reducing interest rates for the term of the loan.
Business line of credit: As a type of short-term business loan, a business line of credit may be a good choice if you plan to pay off the debt quickly.
Term loan: These business loans may be either short- or long-term and used to finance equipment purchasing or leasing. However, you may be required to put up additional collateral to secure these loans.
SBA CDC/504 loan: These government-backed loans can be used to finance machinery and equipment as well as facilities and land. These loans are available only through Certified Development Companies (CDCs).
Equipment financing loans are best suited for startup companies that find it difficult to obtain traditional loans. However, any business that needs equipment can use this method, not just startups.
Here are some examples of businesses that could benefit from equipment financing and the types of equipment they finance:
Transportation: transportation equipment represents 22.4% of the total equipment financing volume in the U.S. This includes box trucks, dry van trailers, flatbed trailers, stepdeck trailers, removable gooseneck trailers
IT and related technology services: IT equipment represents 17.3% of the total equipment financing volume. This includes modems, routers, network switches, UPS, and servers
While every lender sets their own criteria for equipment financing loans, most work off of the same basic eligibility requirements. To approve borrowers for this type of business funding, lenders will take a close look at the following items:
Time in business: Most lenders want you to have at least 3-6 months of business history.
Annual revenue: Typically, lenders want to see you’re making at least $100,000 in revenue annually.
Credit score: You’ll need a personal credit score of at least 500. In some cases, a lender may ask for a business credit score as well.
Industry: Not all lenders service every industry. Some limit who can apply for an equipment financing loan.
Equipment Financing Rates
While equipment financing rates are very competitive (due to the collateral supplied), they tend to have high minimum loan amounts. Some lenders require business owners to finance a minimum of $20,000. If this is too high, a term loan or business line of credit may be more suitable.
There is little standardization for equipment financing rates because there are many different types of equipment. It’s important to distinguish equipment financing from inventory financing and equipment leasing, as the average rates will differ. Equipment financing rates and terms will depend on your specific situation, i.e., your credit score and what you require. A good equipment financing rate might be as low as 5% or even less
Equipment Financing Pros and cons
Fast approvals - Since the asset is being used as collateral, it’s usually much faster to arrange this type of lending. Most of the lenders on our list offer equipment financing to small business owners within 24 hours of approval.
Spread the cost - Financing is the perfect way to spread the costs over a long period of time so your cash flow doesn’t take a hit.
No additional collateral needed - Your other small business and personal assets aren’t at risk if you default on a loan. Only the asset you’ve applied to secure a loan will be seized if you default.
Tax benefits - You can write off all of your loan repayments as tax-deductible expenses, helping you to minimize your total bill at the end of the year.
Fuel growth - For small businesses that might not have the capital to purchase large pieces of equipment, loans are a real lifeline. The injection of cash can prove an incredible boost to growth.
Boost credit score - Like any loan, your credit will be affected. If you make your payments on time, you’ll see a gradual improvement in your score.
Tougher eligibility criteria - Most lenders seek applicants with good credit scores and strong business history.
Restricted applications - Your loan purpose is strictly limited to the specific asset you want to purchase. Other types of working capital loans will offer more flexibility for your small business.
At the end of the day, finding the best equipment financing companies is no different than finding a lender for a different type of loan. You'll want to shop around for multiple quotes before applying and read any terms and conditions carefully before signing on the dotted line.
However, none of that can happen until you’ve chosen the lender that’s the best fit for you. If. you're ready to take the next step toward getting the equipment funding you need, use the list above to help you get started.
Frequently Asked Questions(FAQ)
Can you finance used equipment?
In some cases, you may be able to finance used equipment. However, lenders prefer financed equipment to be new or in like-new condition.
Can I get equipment financing if I have bad credit?
Yes, some lenders will accept credit scores as low as 500. That said, if you have a lower score, you may be subject to a higher interest rate or additional qualifying requirements.
What’s the difference between equipment financing and equipment leasing?
Equipment financing allows you to buy new or used equipment outright, while equipment leasing allows you to rent it for a specified amount of time. Generally, it's a good idea to lease equipment that ages out quickly and buy equipment with a longer lifespan.
Can I get equipment financing for a startup?
Luckily, it is possible to get equipment financing as a startup. You'll just have to find the right lender and you may face a lower funding cap.
Should I buy or rent heavy equipment?
There are pros and cons both to renting or buying heavy equipment. Renting equipment may provide you with more up-to-date equipment and lower initial investment. But buying new or used equipment may be cheaper in the long run and give you more flexibility, especially if jobs run over their projected timeline.