Equipment can be essential to operating and growing a business—but purchasing it outright can put significant pressure on cash flow.
Equipment financing can help eligible businesses acquire the vehicles, machinery, technology and other equipment they need while spreading the cost over time, subject to the applicable financing agreement.
RockDrive Business Capital helps businesses explore business financing options from independent financing providers and review the available terms before making a decision.
What Is Equipment Financing?
Equipment financing is business financing specifically intended to help purchase or acquire eligible business equipment.
Rather than paying the entire cost upfront, an eligible business may finance some or all of the equipment purchase and make payments according to the terms of the financing agreement.
Depending on the product, the equipment itself may serve as collateral for the financing.
Financing structures, ownership arrangements, payment schedules, rates, fees and other terms vary between providers and products.
What Types of Equipment Can Be Financed?
Eligible equipment varies by provider, but financing may potentially be available for:
Construction Equipment
Excavators, loaders, lifts, generators, compressors and other construction machinery.
Commercial Vehicles
Trucks, vans, trailers and other eligible vehicles used for business purposes.
Manufacturing Equipment
Production machinery, fabrication equipment, packaging systems and other manufacturing assets.
Restaurant Equipment
Commercial ovens, refrigerators, freezers, cooking equipment and other eligible restaurant equipment.
Medical and Dental Equipment
Eligible diagnostic, treatment and practice equipment.
Technology and Office Equipment
Computers, servers, telecommunications systems and other eligible business technology.
Retail Equipment
Point-of-sale systems, refrigeration, displays and other equipment required to operate a retail business.
The types of equipment eligible for financing depend on the provider, equipment, age and condition of the asset and other underwriting requirements.
EXPLORE EQUIPMENT FINANCING OPTIONS
How Does Equipment Financing Work?
Although requirements vary between providers, the process generally involves:
1. Identify the Equipment
Determine what your business needs and the expected purchase price.
2. Apply for Financing
Provide information about your business, financial position and the equipment you intend to acquire.
3. Provider Review
The financing provider may consider the business’s revenue, operating history, credit profile, cash flow and details of the equipment.
4. Review Your Offer
If approved, review the financing amount, interest or other costs, payment schedule, term, down payment requirements if applicable, ownership provisions and other conditions.
5. Acquire the Equipment
After the applicable documentation and funding requirements have been completed, the equipment can be acquired according to the financing arrangement.
Why Finance Equipment Instead of Paying Cash?
Even a business with enough cash to purchase equipment outright may choose to explore financing.
The primary reason is cash-flow management.
For example, imagine a construction business needs a $75,000 piece of machinery.
Paying $75,000 immediately reduces the cash available for payroll, materials, marketing and unexpected expenses.
Financing the equipment may allow the business to acquire the asset while retaining more cash for other operating requirements. Businesses looking specifically to preserve day-to-day liquidity may also want to learn more about working capital financing.
That doesn’t automatically mean financing is the better decision. The business should compare the total financing cost against the benefits of retaining that cash.
Equipment Financing vs. a Business Term Loan
Both can potentially be used to acquire business assets, but the structures can differ.
Equipment financing is specifically connected to the purchase of eligible equipment, and the financed equipment may serve as collateral.
A general business term loan can potentially be used for a broader range of business purposes, subject to the provider’s terms.
The appropriate option depends on the equipment being purchased, your business’s financial profile and the financing terms available.
Equipment Financing vs. a Business Line of Credit
A business line of credit generally provides access to approved funds that can be drawn as business needs arise.
Equipment financing is generally associated with a particular equipment purchase.
For a significant planned equipment acquisition, dedicated equipment financing may be worth exploring.
For smaller or recurring business expenses, a line of credit may offer a different type of flexibility.
Explore Business Lines of Credit →
Equipment Financing vs. Revenue-Based Financing
Equipment financing is generally tied to acquiring a specific business asset, while revenue-based financing may be used for broader business purposes depending on the provider and agreement.
The most appropriate option depends on the purpose of the financing, the amount required, the business’s revenue and cash-flow profile, and the available repayment terms.
Learn About Revenue-Based Financing →
Who May Qualify for Equipment Financing?
Requirements vary between providers.
Providers may consider:
Time in business — The operating history of the company.
Business revenue — Revenue and cash flow can affect eligibility.
Credit profile — Business and/or personal credit may be considered. If credit is a concern, see our guide to business funding with bad credit .
Equipment type — The type, age, condition and expected useful life of the equipment can matter.
Equipment value — Providers may consider the purchase price and underlying value of the asset.
Down payment — Some financing arrangements may require an upfront contribution.
Industry — Requirements and availability can vary according to industry.
Businesses comparing potential financing amounts can also read how much business funding you may qualify for .
Approval and financing terms are not guaranteed.
New vs. Used Equipment
Financing may potentially be available for both new and used equipment, depending on the provider.
For used equipment, providers may consider additional factors such as age, condition, remaining useful life and resale value.
Before purchasing used equipment, businesses should consider both the financing terms and the expected maintenance and operating costs of the asset.
How RockDrive Business Capital Works
1. Tell Us What You Need
Provide information about your business and the equipment or financing you’re considering.
2. Explore Available Options
RockDrive can help eligible businesses explore financing options available from independent providers. You can also review our business financing options to compare different funding structures.
3. Compare the Terms
Review financing amount, costs, payment schedule, term and other applicable conditions.
4. Make Your Decision
Decide whether an available option makes financial sense for your business.
Frequently Asked Questions About Equipment Financing
Can I finance used business equipment?
Potentially. Some providers finance eligible used equipment, although requirements may differ according to the equipment’s age, condition and value.
Do I need a down payment?
It depends on the provider, financing product, applicant and equipment. Some arrangements may require a down payment while others may offer different structures.
What credit score is needed for equipment financing?
There is no universal minimum credit score. Credit requirements vary according to provider, equipment and overall applicant profile.
Can equipment financing be used for commercial vehicles?
Certain commercial vehicles may be eligible for equipment financing. Eligibility depends on the vehicle, intended business use and provider requirements.
Does the equipment act as collateral?
In some equipment-financing arrangements, the financed equipment serves as collateral. The exact security arrangements will be specified in the financing agreement.
How quickly can equipment financing be approved?
Approval and funding times vary depending on the provider, applicant, equipment and documentation requirements. RockDrive does not guarantee a particular approval or funding timeframe.
What documents might be required?
Providers may request business bank statements, identification, financial information, equipment quotes or invoices and other documentation depending on their underwriting requirements.
Get the Equipment Your Business Needs
The right equipment can help a business improve productivity, increase capacity and pursue new opportunities.
RockDrive Business Capital can help you explore equipment financing options that may be available to your business.
If you are still comparing different ways to finance your business, visit our Financing Options page to review additional funding structures.