What Business Loan Services Offer Funding for Equipment Purchases?

Types of Equipment Financing Services

1. Equipment Loans / Term Loans Secured by the Asset

A lender advances capital specifically for the purchase of equipment. The asset itself serves as collateral (or at least part of the security package). Over the loan term, you repay both the principal and interest.

• U.S. Bank offers equipment financing with flexible repayment schedules and no down payment required, for terms generally ranging from 24 to 60 months.
• Bank of America similarly lists equipment loans under its small business financing line.
• Crest Capital, a specialist lender, will finance new or used equipment (including soft costs like installation) with quick decisions and minimal paperwork.

Pros:

• You own the asset from day one
• Interest can often be tax-deductible
• More control over end-of-term disposition

Cons/risks:

• Depreciation risk if the equipment becomes obsolete
• You bear maintenance and residual value risk
• Loans typically require good credit and business financials

2. Equipment Leasing / Rental / Lease-to-Own

Rather than taking a loan, you “rent” the equipment. At the end of the lease term, you may have options: return the asset, renew the lease, or purchase it (often at fair market value or a small residual price).

• First Citizens Bank offers both equipment loans and leasing arrangements tailored for flexibility.
• Midland provides equipment financing and lease options, often structuring monthly payments that accommodate cash flow.

Pros:

• Lower monthly payments compared to outright loans
• Maintenance or upgrades may be bundled (in full-service leases)
• Less risk around equipment obsolescence

Cons:

• You may never fully own the asset unless you exercise a purchase option
• Lease terms may impose restrictions or penalties
• Total cost may exceed the loan if residual values are low

3. SBA-Backed and Government-Assisted Equipment Programs

In the U.S., small businesses can access programs that reduce lender risk or offer favorable terms for purchasing equipment.

• The SBA 504 loan program allows a portion of the financing to be used for machinery and equipment with a long useful life (10-year terms) at favorable rates. Wikipedia+1
• Some lenders combine conventional equipment loans with SBA guarantees or local development incentives to lower cost or down payment requirements.

Pros:

• Lower interest rates or partial guarantees
• More capital available for small borrowers

Cons/constraints:

• More documentation and approval processes
• Strict eligibility criteria and use restrictions
• Longer approval timelines

4. Vendor / Dealer Financing / Captive Finance Arms

Manufacturers or equipment vendors often establish financing divisions to increase sales by offering in-house loans, leases, or payment plans. These may offer promotional rates or integrated service packages (warranty, maintenance).

• GEFA (Germany) / SG Equipment Finance supports vendor loans, leases, and asset financing in transport, industrial, and technology sectors.

Pros:

• Tighter alignment between equipment and financing
• Possible bundling of maintenance, upgrades, or service contracts
• Promotional or zero-interest deals are sometimes available

Cons:

• Interest rates may be higher than independent lenders
• Less flexibility in structuring repayment or buyout terms

5. Asset-Based Lending / Floor-Plan Financing / Structured Credit Lines

For businesses with multiple assets, lenders may offer credit lines secured by a pool of assets (equipment, receivables, inventory). The funds can be drawn partly for new equipment.

• Some commercial banks offer asset-based lending (ABL) facilities that enable equipment purchases to be drawn against the existing asset base. J.P. Morgan
• In structured deals, the lender may treat the new equipment as part of the collateral package.

Pros:

• Flexibility — you can allocate part of the facility toward equipment
• Often larger borrowing capacity

Cons:

• More complex legal and monitoring structure
• Higher cost or tighter covenants
• Requires a strong balance sheet and asset quality

How Providers Underwrite Equipment Loans

Key factors in approval and structuring:

• Credit score & business history: Most lenders expect two or more years in business and a solid credit history.
• Equipment type and useful life: Technology or assets with short lifespans face tougher scrutiny.
• Residual value/salvage value: Lenders assess the amount of resale value remaining.
• Loan-to-Value (LTV) ratio: Some lenders will finance 100%; others may require a down payment or limit financing to 80–90%.
• Soft costs inclusion: Some lenders allow you to finance delivery, installation, and warranties (up to ~25%). U.S. Bank+1
• Repayment schedule structures include straight amortizing, seasonal, deferred, and step payments, which are standard options.

Choosing the Right Service: Decision Matrix

Example Providers & Use Cases

• Crest Capital — specialized equipment lender, offering simplified online applications and same-day decisions. Crest Capital
• U.S. Bank — offers equipment financing with flexible repayment and no down payment for many borrowers. U.S. Bank
• Midland — focuses on larger equipment deals (from $50,000 to $5 million) via loans or lease structures. Midland
• First Citizens — offers both loans and leasing for business equipment. First Citizens Bank
• GEFA / SG Equipment Finance — supports vendor financing for large industrial and transport equipment in Europe and global markets. Wikipedia

Pitfalls & Risk Mitigation

• Overestimating residual values — equipment may depreciate faster than expected.
• Misaligning repayment with cash flow — use seasonal or deferred structures when revenue fluctuates.
• Equipment becoming obsolete before loan maturity — consider shorter terms or leasing.
• Hidden costs or maintenance obligations in leases — read the fine print.
• Default risk — the lender may repossess the equipment.

Conclusion

If your business needs equipment but lacks sufficient cash, several financing options are available: direct equipment loans, leasing, SBA-assisted programs, vendor financing, or asset-based credit lines. The right choice depends on your business scale, creditworthiness, type of equipment, and cash flow pattern. Always run the math (interest, residual, payments) and stress-test scenarios before making a commitment.

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Sources

1. U.S. Bank — equipment financing terms and structure
2. Crest Capital — equipment financing offering and terms
3. Midland — financing and lease solutions for equipment
4. First Citizens Bank — flexible business equipment financing and leasing
5. Wikipedia — GEFA / SG Equipment Finance vendor financing model
6. Wikipedia — SBA 504 program for equipment funding

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