Equipment financing is a commercial loan that you can take out to purchase equipment for your business, allowing you to access the assets you need without buying them outright. Since the equipment itself usually secures the loan, if you default on payment, the financing company would take and sell the equipment to recoup losses. On average, equipment loans last three to seven years
Business owners can use equipment loans to finance assets such as commercial ovens, desks, shelves and displays, vehicles and manufacturing equipment. You’d be required to make period repayments consisting of interest and principle for a fixed amount of time. Once you pay off the loan, you’d gain full ownership of the equipment.
Some lenders may offer new or used equipment financing. A lender typically extends the majority of the capital needed (usually at least 80%), requiring your business to put down the remainder and pay the company back with interest in monthly increments.