Equipment Loans, Explained
How business-purpose equipment financing actually works: loan and lease structures, what lenders check, and where Section 179 fits. No pitch, no forms — this is a research page. When you are ready to compare actual lenders, start with our equipment-lender rankings.
The three ways businesses finance equipment
Equipment loan
You borrow the purchase price, own the machine from day one, and the equipment secures the loan. Fixed payments, typically 2-7 year terms. Usually the cheapest path to ownership if you will keep the equipment past the term.
Equipment lease
The lessor owns the equipment; you pay for use. A $1-buyout lease is loan-like; a fair-market-value lease trades lower payments for an end-of-term decision. Better fit for fast-obsolescence equipment — read the buyout terms closely.
Cash (or line of credit)
Paying outright avoids interest but consumes working capital. Some owners finance even when they could pay cash, to preserve liquidity — that is a cash-flow decision, and the honest answer depends on your cushion, not a rule of thumb.
Run your own numbers first
Section 179 Calculator
Estimate the first-year deduction and tax savings on an equipment purchase, and compare cash vs. loan vs. lease. Pure client-side — nothing is submitted.
DSCR & Borrowing Power
See whether your cash flow clears the 1.25 coverage bar most lenders use, and roughly how large a payment your business could support.
Equipment financing by industry
Collateral type drives underwriting: a used excavator, a reefer trailer, and a dental chair are priced very differently. Start with the guide closest to what you are buying.
Heavy Equipment
Excavators, loaders, cranes, and other yellow iron.
Construction Equipment
Financing jobsite machines, attachments, and fleets.
Trucking & Transport
Trucks, trailers, and owner-operator considerations.
Restaurant Equipment
Ovens, refrigeration, and kitchen-line replacements.
Medical & Dental Equipment
Imaging, chairs, and practice technology.
By situation
The structure and your starting position matter as much as the industry.
Business-purpose financing only
Everything on MachineFunded covers financing for business use. We do not cover consumer or household lending, and nothing here is individualized financial, tax, or legal advice — rates, caps, and program rules change, so verify current terms with the lender, irs.gov, and your CPA before signing anything.
Equipment Loan FAQs
Ready to Compare Equipment Lenders?
See our side-by-side research on the equipment-financing lenders we track — rates, minimums, and the fine print — then go straight to the lender you pick.
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