What is equipment financing?
Equipment financing is a way for businesses to acquire machinery, vehicles, or technology using the asset as collateral. Structures include equipment loans (you own the asset) and equipment leases (you pay rent and may buy, renew, or return at term end).
How do equipment financing rates work?
Rates depend on credit, time in business, revenue stability, asset type, and term length. Banks and captives may offer lower APRs to strong borrowers; independent and online providers serve a wider range of profiles with broader pricing. Some agreements use factor rates rather than APR, so compare total cost of capital.
Should I choose an equipment loan or an equipment lease?
Choose a loan if you want immediate ownership and straightforward depreciation. Choose a lease if you prefer lower payments, flexibility to upgrade, or specific accounting treatment. The best option aligns with ROI, cash flow, and end-of-term goals.
Can I finance used or heavy equipment?
Yes. Used assets and heavy equipment can be financed, though terms may be shorter and inspections/appraisals more common. Brand, maintenance history, and resale marketability influence pricing and structure.
What is UCC financing and a UCC-1 filing?
UCC financing refers to the Uniform Commercial Code framework for secured transactions. A UCC-1 filing publicizes a creditor’s security interest in your equipment. PMSI filings attach to the specific asset, while blanket liens cover broader business assets.
How fast can equipment financing close?
Smaller tickets with complete documentation can close in days. Larger, specialized, or used assets may take longer due to appraisals, site inspections, or custom build timelines.
Are lease payments and loan interest tax-deductible?
Potentially. Loans typically provide interest expense and depreciation; leases may allow expensing of payments depending on classification. Section 179 and bonus depreciation may apply to qualifying purchases. Always consult a CPA for your specific situation.
