Startup Equipment Loans

Why Equipment Financing Works for Startups

Traditional lenders want 2+ years of tax returns and proven revenue. Equipment financing is different. The equipment itself serves as collateral, making approval possible without extensive business history. Learn more about how equipment financing works and get the tools you need to launch successfully.

Banks say no to startups because of risk. Equipment lenders say yes because the equipment itself protects their investment. If you default, they repossess the asset.

Key Advantages for Startups

• Asset-Based Approval: Decisions focus on equipment value and your personal credit, not business history
• Fast Approval: 24-48 hour decisions versus weeks or rejections from traditional banks
• Minimal Documentation: No tax returns required for amounts under $150,000
• Builds Credit: On-time payments establish commercial credit history for future funding

Equipment lenders approve 60-70% of startups with 600+ credit versus just 10-15% for traditional bank loans. The difference is that your equipment protects the lender, which means they can say yes when banks can't.

Qualification Requirements

Credit Score Requirements

• 680+: Excellent terms with 8-12% APR and 0% down possible
• 650-679: Good terms with 12-18% APR and 10-15% down payment
• 600-649: Fair terms with 15-25% APR and 15-20% down payment
• Below 600: Challenging approval odds; consider co-borrower or improving credit first

Additional Requirements

• Business Formation: LLC or Corporation with EIN and business bank account open 30+ days
• Down Payment: Typically 10-20% (varies by credit and equipment value)
• Business Plan: Demonstrate market understanding and revenue path
• Equipment Quote: Written quote from vendor or manufacturer

Every 5% increase in down payment improves your rate by 1-2% AND increases approval odds by 10-15%. On a $100K loan, putting 20% down instead of 10% could save you $3,000-$6,000 over 5 years.

What Equipment Can You Finance?

Nearly any business-essential equipment with tangible resale value qualifies:

Construction Equipment

Excavators, bulldozers, loaders, skid steers, commercial vehicles, concrete mixers

Manufacturing Equipment

CNC machines, 3D printers, assembly equipment, forklifts, industrial tools

Medical Equipment

Imaging equipment, dental chairs, lab analyzers, surgical tools, patient monitors

Restaurant Equipment

Commercial ovens, walk-in coolers, POS systems, dishwashers, food prep equipment

Transportation Equipment

Commercial trucks, cargo vans, fleet vehicles, trailers, delivery vehicles

Technology Equipment

Servers, networking equipment, telecommunications systems, data centers

Agriculture Equipment

Tractors, irrigation systems, harvesting machinery, grain storage, livestock equipment

What Does Not Qualify: Equipment must be tangible with resale value. Software, inventory, and working capital don't qualify for equipment financing. For those needs, consider a business line of credit or working capital loan instead.

The Application Process

Step 1: Submit Your Application (15-30 Minutes)

Provide basic business information, personal details, equipment quote, and business plan.

Step 2: Initial Review (1-4 Hours)

Lender reviews credit, business formation, and equipment details.

Step 3: Approval Decision (24-48 Hours)

Receive approval with rate, terms, and down payment amount.

Step 4: Documentation and Closing (1-3 Business Days)

Sign agreements, transfer down payment, finalize details.

Step 5: Equipment Delivery (Immediate)

Lender pays vendor directly, you receive equipment and start building credit.

Total Timeline: 5-7 days from application to equipment delivery for most transactions.

Required Documentation

Personal Documents

• Valid photo ID (driver's license or passport)
• Social Security number
• Personal financial statement
• Proof of down payment funds

Business Documents

• LLC or Corporation formation documents
• EIN (Employer Identification Number)
• Business bank statements (3-6 months)
• Business plan with revenue projections

Equipment Documents

• Written equipment quote from vendor
• Equipment specifications and model details
• Proof of equipment use for business purposes

Loan vs. Lease: Which Should You Choose?

Equipment Loans

Best For: Long-term use equipment you want to own

Pros:

• Own equipment when paid off
• Section 179 tax deductions (up to $1.16M)
• No usage restrictions
• Better long-term value

Cons:

• Higher monthly payments
• Responsible for all maintenance

Equipment Leases

Best For: Rapidly depreciating tech or uncertain needs

Pros:

• 20-30% lower monthly payments
• Easier equipment upgrades
• Maintenance often included
• Preserve working capital

Cons:

• Never own the equipment
• Usage restrictions and mileage limits
• More expensive long-term

Strategic Approach: Finance long-term assets you'll use for years (vehicles, heavy machinery, medical equipment). Lease rapidly depreciating items where you'll want the latest version (computers, specialized tech, software-dependent equipment). This strategy minimizes total cost while maximizing flexibility.

Common Mistakes to Avoid

Applying Too Early

Submitting before your business bank account has been open 30+ days.

Fix: Wait until business account has 30+ days of history.

Overextending

Equipment payments that exceed 10-15% of projected monthly revenue.

Fix: Keep payments under 15% of revenue to maintain healthy cash flow.

Skipping Comparisons

Accepting the first offer without shopping around.

Fix: Rate differences of 2-3% mean thousands in savings over the loan term.

Ignoring Tax Benefits

Not taking advantage of Section 179 deductions.

Fix: Deduct full equipment cost (up to $1,160,000) in year one.

Tips for Approval Success

Strengthen Personal Credit

• Pay down credit cards below 30% utilization
• Dispute any errors on your credit report
• Make on-time payments for 6+ months before applying
• Avoid new credit applications 90 days before applying

Optimize Down Payment

• Each 5% increase improves rates and approval chances
• Save 15-20% for best results with fair credit
• Document source of funds with bank statements or savings records

Demonstrate Revenue Traction

• Show signed contracts or letters of intent
• Provide bank deposits from customers
• Include purchase orders or confirmed deals
• Document existing revenue streams

Choose Equipment Wisely

• Hard assets with strong resale value get better terms
• Vehicles, construction equipment, and medical devices are favored
• Avoid highly specialized or custom equipment

Ready to get started? Use our equipment financing calculator to estimate your monthly payments, or check your eligibility to see what you qualify for. Learn more about Section 179 tax deductions that could save you thousands on your equipment purchase.