Final Word

Equipment financing can help new businesses pay for expensive, but vital equipment needed to run their business. For many startups, it means getting much-needed cash, even when your business is young. Keep in mind that good credit borrowers will qualify for the best rates, but there are still equipment financing options for those with poorer credit.

Frequently Asked Questions (FAQ)

What is the best equipment financing option for a startup?

There’s no one-size-fits-all option when it comes to equipment financing. The exact loan that is best for you and your business depends on the industry you’re in, the amount you need to borrow, and the terms you’re looking for.

SBA loans, while they have rigorous stands, often provide the largest range of amounts and term lengths. Online lenders, on the other hand, prioritize faster turnaround times and potentially more lenient credit requirements. 

What is the average interest rate for equipment loans?

Equipment financing interest rates vary widely depending on the loan and lender you’re working with. Generally, you’ll find rates anywhere between 2% - 20%. You’ll find that options with more intense credit and income requirements offer lower interest rates, while those with looser requirements are on the higher end. 

Can I borrow 100% of the equipment value with an equipment loan?

Absolutely. Most lenders will let you borrow up to 100% of the equipment’s value. Some will require collateral, though. Others may also require a down payment. It’s important to ask if either is required before taking out a loan. 

How hard is it for a startup to get an equipment loan?

There is a huge range of business loan lenders, meaning there’s likely an option for everyone, even bad credit borrowers. While you’ll need to be prepared to offer up some paperwork and answer financial questions about you and your business, the process isn’t difficult, just potentially time-consuming. 

About the Author

Christopher Murray

Christopher Murray

Personal Finance Expert

Christopher Murray is a professional personal finance and sustainability writer and editor who enjoys writing about everything from budgeting and saving to unique investing options like SRI and cryptocurrency.

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