Key takeaways
- The asset can help support the transaction
- New and used equipment have different requirements
- Compare ownership, tax, and end-of-term economics
How equipment financing works
The financing is tied to a specific asset and generally uses that asset as collateral. Amount, down payment, and term depend on the equipment and applicant profile.
Document the assumptions behind this part of the decision and compare them against the actual financing agreement. Terms, eligibility, and legal treatment vary by provider and product.
What lenders evaluate
Underwriting may include business revenue, time in business, owner credit, equipment type, age, useful life, seller, invoice, and expected business use.
Document the assumptions behind this part of the decision and compare them against the actual financing agreement. Terms, eligibility, and legal treatment vary by provider and product.
Loan versus lease
A loan typically leads to ownership once repaid. A lease provides use of the equipment and may include purchase, return, or renewal options at the end.
Document the assumptions behind this part of the decision and compare them against the actual financing agreement. Terms, eligibility, and legal treatment vary by provider and product.
Build a complete budget
Include shipping, installation, training, maintenance, downtime, software, insurance, taxes, and working capital needed to put the asset into service.
Document the assumptions behind this part of the decision and compare them against the actual financing agreement. Terms, eligibility, and legal treatment vary by provider and product.
Important
This guide is educational and does not provide financial, legal, tax, or accounting advice. SourcePoint is a marketplace, not a direct lender. Review provider-specific terms and seek qualified advice where appropriate.
Frequently asked questions
Is a down payment required?
It depends on the program, equipment, business history, credit, and transaction. Some structures offer high advance rates, while others require meaningful equity.
Can software be financed?
Some lenders finance eligible software and technology costs, particularly when bundled with hardware or implementation. Pure soft costs can be harder to finance.