What kinds of equipment can be financed?
Most business equipment with a clear value and a useful life of several years can be financed: production machinery, forklifts and warehouse racking, delivery vans, commercial printers, servers and network gear, store fixtures and point-of-sale systems. New and used equipment both qualify with many funders, though used equipment may get a shorter term.
Real examples from established companies:
- A metal fabricator replaces an aging press brake before it causes missed deliveries.
- A distributor adds narrow-aisle forklifts and racking to fit more inventory in the same building.
- A managed services provider refreshes server and backup hardware for a new contract.
See how this plays out for manufacturers and wholesale distributors.
Why does equipment financing often cost less than unsecured options?
Because the equipment itself backs the loan, the funder has a clear asset to rely on, which usually supports better pricing and longer terms than unsecured borrowing. For a strong-credit business, the combination of a documented asset and documented cash flow is one of the most favorable profiles a funder sees.
Value still matters. Funders look at the vendor quote, the equipment's age and condition, how specialized it is and how easily it could be resold. Highly customized equipment may be valued more conservatively, which can mean a larger down payment or additional collateral.
Should I finance with a loan or a lease?
With an equipment loan, your business owns the asset and repays it monthly. A lease typically offers lower payments and easier upgrades, with ownership at the end depending on the lease type. The decision usually turns on how long you will use the equipment and how your CPA treats each structure.
- Loan: suits long-lived machinery you plan to run for many years.
- Lease: suits technology that becomes outdated quickly, such as computers or specialized software-driven tools.
- Tax treatment: depreciation and deductions differ by structure; ask your CPA rather than choosing based on a vendor's summary.
What lien comes with equipment financing?
Equipment financing usually carries a specific lien on the financed asset rather than a lien on everything the business owns. That matters for established companies, because assets that are not pledged stay available to support a credit line or future borrowing. Confirm what the security agreement and public filing actually describe.
If a funder asks for a general lien on all assets for a single machine, ask whether a specific lien is possible. Strong cash flow and credit often make that request reasonable. Your attorney should review the final documents.
When should you not finance equipment?
Think twice when the asset will be obsolete before the term ends, when the equipment will sit idle waiting for work that is not yet contracted, or when cash is so tight that even a lower monthly payment strains operations. Small, frequently replaced items may be simpler to buy with operating cash.
Also check your existing agreements. Some bank loans restrict additional debt or liens, so read covenants before signing a new equipment deal. Our underwriting guide explains what reviewers check.
What you’ll typically need
- Vendor quote or invoice with make, model and condition
- Recent business bank statements
- Business tax returns and year-to-date financial statements
- Schedule of existing business debts
- Owner identification and ownership details
Frequently asked questions
How much of the equipment cost can be financed?
It varies by funder, equipment type and your credit profile. Strong-credit established businesses buying standard equipment typically see a higher financed share than newer companies, while specialized or used equipment may require a down payment. Ask each funder to show the financed amount and any required cash contribution.
Does the equipment have to be new?
No. Many funders finance used equipment, including machinery bought from dealers or other businesses. Used equipment may receive a shorter term or a more conservative valuation based on age, hours and condition. A detailed quote or appraisal-style description helps the funder value it.
Is a vendor quote required?
Usually. The quote or invoice tells the funder exactly what is being purchased, its price and its condition. Many funders pay the vendor directly at closing. If you are buying from a private seller, expect the funder to ask for more information about the equipment and ownership history.
Should I talk to my CPA about depreciation?
Yes. How equipment is depreciated or deducted depends on the structure you choose and your tax situation, and those rules change. 1Prime Capital does not give tax advice, so ask your CPA before deciding between a loan and a lease or timing a purchase.
Can equipment financing sit alongside my bank line of credit?
Often, as long as your existing agreements allow additional debt and liens. Many established companies keep a bank line for working capital and finance equipment separately, which preserves line availability. Review your current loan covenants, and share them with any new funder early.
Get the equipment working for you sooner
Send the quote and your financials, and we will compare equipment financing from our funding partners.
Updated September 14, 2026 · 1Prime Capital Funding Team