Equipment financing is the process of obtaining business equipment using a loan or lease. Equipment financing loans allow you to purchase the equipment with payments made over time, similar to using an auto loan to buy a personal car. Equipment leasing, on the other hand, gets you the equipment you need without the intention of owning it. You’ll make a regular lease payment to continue using the equipment as if it were your own. When the lease is up, you can give the equipment back or renew the lease. Sometimes you may have options for purchasing the equipment at the end of the lease.

Equipment financing works by providing you with the equipment your business needs for a periodic payment which includes interest. After the set term of months for your loan or lease is over, you’ll either own your equipment outright or will need to make a decision about your lease. Generally, you can renew your lease if the equipment is in good condition and still helpful to your business. You can finance almost any type of major equipment your business needs to run smoothly, expand and maintain competitiveness.

Securing financing for business equipment might seem daunting. If you try to get a loan from a traditional lender like a bank or credit union, it can be. Depreciation on equipment usually makes traditional lenders wary of lending large sums for businesses to purchase equipment. However, alternative lenders usually provide customized financing solutions for your equipment needs. At Kairos Equities, we can help you design an equipment loan or lease program for business equipment up to $10 Million. We don’t require a downpayment and our equipment financing is available for new or pre-owned equipment.

Many business owners find they can save money both on the cost of business equipment and taxes by financing equipment and taking the Section 179 deduction. Using the Section 179 deduction in combination with equipment financing can have added value. If your equipment qualifies, you could save money now on your taxes by deducting up to 100% of your equipment cost. You’ll also be protecting your cash reserves by making periodic payments for the equipment instead of purchasing outright. Depending on the equipment, combining financing with the Section 179 deduction could greatly help your bottom line.

6 months.

Our minimum credit score to qualify is 575.

It’s pretty easy to qualify and apply for equipment financing.

• • To get equipment financing, you’ll typically need to be in business at least 12 months, have $50,000 or more in annual revenue, and have a credit score of 650 or higher. If your credit score is lower than 650 but you can show proof of solid cash flow and revenues for the past 3-6 months, you can still qualify.
  • And don’t worry if you don’t meet all of these requirements – exact qualifications will vary by lender and equipment type. The best way to figure out what you qualify for is to fill out our application
  • No down payment or collateral? No problem. One of the big benefits of equipment financing is that your equipment can also act as your collateral – which means you can secure a loan without draining the last of your liquid cash or risking your personal assets. Your lender will determine how much you can finance by reviewing the type of equipment you’re buying, its lifetime value, and whether it’s new or used. That cool contraption you’re thinking about buying seems a lot cooler when it saves you from shelling out for a down payment, huh?
  • Because the collateral is literally part of your loan, it’s often not as difficult to get approved as many small business owners think it is.

You can finance just about any kind of business equipment.

• • Many small business owners hear about equipment financing and think of tractors and backhoes. Yes, construction equipment is totally financeable – but so is a bunch of other stuff.
  • In fact, there’s an equipment financing option to cover tools and resources for just about every small business industry. Big or small, basic or complicated, doohickey or doodad – whatever you need, we’ll help you cover the costs.
  • Here are just some of the small business needs you can cover with equipment financing:
    • Forklifts, workbenches, and conveyor belts
    • Point-of-sale payment processing software and hardware
    • Commercial ovens, grills, deep fryers, freezers, food processors, and more
    • Office furniture and fixtures – everything from cubicles and desk sets to rugs and lighting
    • Software, including operating systems, CRMs, accounting programs, and more
    • Appliances like telephones, refrigerators, coffee makers, and more
    • Food trucks, delivery vehicles, company cars, and trailers
    • Solar panels and HVAC units

• Your costs can vary as much as your equipment can.
• Your equipment loan payments are determined by four things: your loan amount, interest rate, term, and collateral. These factors can vary widely across industries and equipment types. That’s why we work with a variety of lenders who specialize in industry-specific loans – so we can help you find the best deal.
• Oh, and here’s some food for thought: be sure to consider both the short-term and long-term gains your new equipment will yield.
• To determine whether equipment financing is getting you some real bang for your buck in the short term, you should weigh the costs of your monthly payment against the benefits your new equipment will bring. Here’s an example: if the 3-D printing equipment you’re financing costs you $600 in monthly payments but enables you to take on an extra $2,300 in monthly orders, then your cash flow increase considerably outweighs your costs and makes the loan worthwhile.
• This same concept applies to the man-hours you’ll save by leveraging a software purchase to automate several hours of invoicing and payment processing, or being able to attract new business because your upgraded sorting equipment lets you offer significantly faster shipping times than your competitors.
• To figure out whether you’ll also see a hearty long-term return on investment, consider the longevity of the equipment you’re financing. Equipment that only gives your business a minor lift and may be obsolete in a few years when you pay off your loan may not give you the long-term leg up that you’re looking for – whereas taking out a 4-year loan on equipment that will last upwards of 12 years is probably a sound investment…

• Equipment quote from vendor
• Driver’s license
• Personal credit score
• Recent utility bills
• Personal and business tax returns
• Business plan

• Equipment leasing is like paying rent — you make regular payments to use the equipment but you don’t own it. When the lease term ends, you can either return the equipment or renew your agreement. Unlike many equipment loans, equipment leasing typically doesn’t require a down payment.
• Depending on the type of equipment, leasing could be more advantageous than financing. Technological products like computers, for example, can go obsolete within a few years. Leasing allows you to use that computer until your lease term ends, then you could lease a more modern computer afterward.
• It’s essential to weigh the long-term costs of your equipment. If the equipment is necessary and won’t go obsolete soon, paying a lease indefinitely may be more costly than financing. In addition, the depreciation on the equipment may not be tax-deductible if you’re leasing.
• Capital lease vs. operating lease
• While most leases are equivalent to a rental arrangement, some leases allow the lessee to purchase the equipment when the lease term ends. If you think you might want to own the equipment after leasing, be sure to note which type of lease you agree to.
• A capital lease allows you to purchase the equipment when the lease term expires, but it typically locks you into the lease so that you can’t cancel it.
• An operating lease is similar to a conventional rental agreement: You make regular payments but aren’t paying toward ownership of the equipment. As the lessee, you can usually cancel the lease with prior notice.

While new machines come with the latest and most up-to-date features, they often also come with sizable price tags. Depending on the industry, type of equipment and business needs, sometimes a less expensive used machine may be a better option.

New machines frequently provide:

• Increased capability and efficient energy use
• Improved features that increase productivity and throughput
• Lower maintenance costs

Pre-owned equipment benefits include:

• Reduced cost of acquisition compared to new machinery
• Lower depreciation compared to new equipment
• Immediate availability

As you assess various equipment options, understanding your business’s requirements, challenges, and goals can help determine if new or used machinery is the right choice for your business. The right financing partner can offer options for either type of investment.