Equipment Financing for Small Business: 2026 Complete Guide

Every growing business eventually hits the same wall: the equipment you need to scale costs more than the cash you have on hand. Whether it's a fleet of delivery trucks, a CNC machine, medical imaging equipment, or a commercial kitchen buildout, equipment financing lets you acquire the assets you need today while paying for them over time from the revenue they generate.

What Is Equipment Financing?

Equipment financing is a loan or lease specifically designed to purchase business equipment. The equipment itself typically serves as collateral for the loan, which means approval is often easier than for unsecured business financing — even for newer businesses or owners with less-than-perfect credit.

Equipment Loan vs. Equipment Lease: What's the Difference?

Equipment Loan

With an equipment loan, you borrow the purchase price of the equipment and repay it over a set term — usually 2 to 7 years. At the end of the term, you own the equipment outright. This is the best option for equipment with a long useful life that you plan to keep for many years.

Equipment Lease

With an equipment lease, you pay to use equipment for a set term, then have the option to purchase it, return it, or upgrade. Leases typically have lower monthly payments than loans and can be a smart choice for technology or equipment that becomes obsolete quickly.

What Equipment Can Be Financed?

Almost any business equipment can be financed, including:

• Construction and heavy equipment (excavators, cranes, lifts)
• Commercial vehicles and trucking fleets
• Restaurant equipment (ovens, refrigeration, POS systems)
• Medical and dental equipment
• Manufacturing machinery (CNC, laser cutters, presses)
• Technology and software (servers, workstations)
• Agricultural equipment (tractors, combines)
• Fitness and salon equipment

Equipment Financing Requirements in 2026

Requirements vary by lender, but typical criteria include:

• Time in business: As low as 6 months for some programs; 1–2 years preferred for better rates
• Credit score: 600+ for most programs; 650+ for the best rates
• Down payment: 0% to 20% depending on equipment type and credit profile
• Revenue: Minimum monthly revenue requirements vary; typically $10,000+/month

Because the equipment secures the loan, approvals for equipment financing are often faster and more accessible than general business loans. In many cases, a one-page application and equipment invoice is all you need to start the process.

How Much Does Equipment Financing Cost?

Interest rates on equipment loans typically range from 5% to 20%+ annually, depending on your credit profile, time in business, and the type and age of equipment. Newer, mainstream equipment in strong demand (commercial vehicles, standard machinery) typically qualifies for the lowest rates. Specialty, used, or highly niche equipment may see higher rates due to resale value uncertainty.

Equipment Financing vs. Other Business Financing Options

Before committing to equipment financing, consider how it compares to other capital sources. A working capital loan provides flexible cash — but at typically higher rates and shorter terms than equipment-specific financing. A business line of credit can be drawn for equipment but works best for smaller purchases and ongoing operational needs. For larger business acquisitions involving real estate, commercial real estate financing may be more appropriate.

The right choice depends on the size of your purchase, how long you plan to hold the equipment, and how the asset fits into your overall capital structure. The team at PMF LA can help you navigate all available options.