Equipment financing is used by business owners to enable them to acquire equipment—like machinery or vehicles—for their business. Small business equipment financing may be in the form of a loan or a lease. This type of funding allows businesses access to expensive hard assets they would not otherwise be able to afford.
Equipment financing is a form of an asset-based loan, in which the equipment that is being purchased—or leased—is used as collateral to secure the loan. Equipment loans and leases allow small businesses to purchase expensive equipment without the need to pay for the machinery in full upfront.