How equipment term loan works
An equipment term loan is the most straightforward way to buy equipment. The lender pays the vendor, you take title, and the equipment secures the loan. Because the collateral is the asset itself, approvals are faster than a bank loan and you rarely need to pledge real estate or other business assets.
Payments are fixed for the life of the loan, so you can plan cash flow around a known number. Many borrowers also take Section 179 depreciation in the year the equipment goes into service, which can offset a large share of the first year's payments. Ask your CPA how it applies to you.
Best for
- Equipment you'll keep for its whole useful life
- Owners who want the depreciation and the title
- Purchases from dealers, manufacturers or private sellers
Program terms
Every product and structure is available through the same equipment program: $15,000 to $10 million and more, application-only approvals up to $1 million, 12 to 84-month terms, A through C- credit and no industry restrictions.