Fast equipment financing is a stellar way to fund equipment purchases when your business needs it most. But how does it work, and what factors should you consider? 

We walk you through the fundamentals of equipment financing and your equipment financing options so you can make the right choice when purchasing equipment. 

How Equipment Financing Works

Equipment financing is a specific type of loan that enables you to buy the equipment needed in your industry. 

Say, for example, that you need to purchase equipment for your construction business. Equipment financing loans can help you achieve just that, granting you access to funding of up to $500,000. 

Keep in mind that the loan amount you receive will depend on your industry. Those in the restaurant industry likely won’t need the same capital for equipment as those in the construction industry.

How it works is straightforward. 

• You apply for the equipment financing loan you need to fund your equipment purchases. (You may pay a down payment, but there’s flexibility with these types of loans.)
• You receive a lump sum so that you have the capital needed to buy your equipment. 
• You make a monthly payment and pay back your loan over time. Repayment terms may last up to five years. Interest rates can range anywhere from 4% to 25%, depending on creditworthiness. 
• You wrap up your last payment and own your equipment. 

The one major advantage of equipment financing over traditional loans is that your equipment serves as collateral. You won’t need a personal guarantee, which protects you when your small business needs funding. 

Keep in mind that this isn’t an equipment lease. You are funding an equipment purchase. An equipment lease does offer some benefits. However, you may not own the equipment outright. 

Consider the key advantages of an equipment lease versus an equipment loan to choose the right option. 

Equipment Financing Lenders

There are a myriad of equipment financing lenders to consider. As with any loans, you’ll want to take care to do your due diligence before sending over an application. Here are a few top choices, with some even offering same day funding. 

• National Funding: National Funding offers equipment financing loans of up to $150,000. They feature loan terms of up to a decade, and factor rates starting at 1.10. All you need is six months in business and fair to excellent credit.
• US Business Funding: US Business Funding has an app-only program to apply for loan amounts less than $200,000. They don’t advertise information about maximum APRs. You may need two years in business and a credit score of at least 650.
• Triton Capital: Triton Capital offers loans of up to $250,000. They offer rates starting at 5.99% and terms of anywhere from 12 to 60 months. You may need at least one year in business, and they’re said to work with fair credit.

When shopping around for loans, always look closely at: 

• Required down payments. You may be required to pay anywhere from 10 to 20% of the total loan amount. Most equipment financing lenders will ask for a down payment. 
• Additional fees. Some equipment loans come with administrative fees, origination fees, and other fees. The more lenders tack on, the more your loan is going to cost you.
• Reporting practices. Some equipment loans may help you build your business credit. This will allow you to access better financing opportunities in the future. See if your lender reports to D&B, Experian, or Equifax. 

How to Speed Up Equipment Financing Approval

Equipment financing is a fast business loan to obtain. That said, you can make sure you’re avoiding any potential setbacks to ensure it only takes a day or two to get the financing your business needs. 

The best way to ensure rapid success is to make sure that you meet or exceed credit score requirements (as well as time in business, revenue, etc.), have all of your paperwork and business information in order, and are prepared for the application process of the lender. 

Careful research will ensure that review and approval go as smoothly as possible. Just keep in mind that terms are always subject to change with financial services. What one website reports and what another reports will vary.

It’s a good idea to reach out to a lender about eligibility requirements if you’re unsure. 

Equipment Financing Requirements

Requirements will vary from lender to lender. That being said, the types of requirements will generally remain the same. In order to qualify for equipment financing, you’ll need:

• Fair to Excellent Credit Scores: The higher your credit score, the easier it will be to get a loan with desirable terms. However, many equipment financing lenders will work with business owners who have fair credit. 
• Time in Business: Lenders will require you to have a certain amount of time in business. This may range anywhere from six months to a couple of years. Take note of this when researching equipment financing lenders. 
• Minimum Revenue: You will generally need to generate a specific amount of revenue per year to qualify. This can be as low as $50,000. However, it’s often $150,000 or greater. 
• Documentation: Continuing with the above, proper documentation is of the utmost importance. You need to be able to provide lenders with financial statements, articles of incorporation, and related documents and information to get through the application. 

Get Faster Financing with Credit Suite

Are you looking for financing for your business? Are you having trouble getting the terms and loan amounts you want because of poor or no business credit? Do you want to increase your cash flow with ease? You can find the support you need right here with Credit Suite. 

Credit Suite’s Fundability System helps you build business credit effectively. Our step-by-step solution is that we:

• Identify weaknesses that are causing lenders to turn you away. 
• Help you address those weaknesses to help you access funding more easily.
• Connect you with lenders you pre-qualify for. Our comprehensive database of thousands of lenders, vendors, and credit issuers makes it easy to discover financing opportunities. 
• Provide you with credit score monitoring to track your credit building progress and address issues faster. 
• Support you with a myriad of other features and Credit Suite financing solutions. 

Get started with Credit Suite to build your business credit and improve your fundability!